Some business models are so implausible that it’s only a matter of time before they implode, or search for a crutch — as is the case for British company Blyk, a “free” mobile virtual network operator (basically a reseller of minutes bought wholesale from long distance companies) with an advertising-only revenue model. Today, reports emerged that the company is planning to shutter its retail operations in favor of offering its service through other mobile operators (Vodafone is a prime candidate), spelling doom for the virtual network operator model.
But these reports may be inaccurate, Blyk’s U.K. chief executive tells VentureBeat — at least they are for the time being. Essentially, Blyk is looking for help, but isn’t thrilled about equating that with failure.
“The speculation is sensational,” Antti Ohrling says, but he also wouldn’t deny that the company will abandon the virtual network model once its landed partners to offer its service. “When you want to expand more rapidly, partnering with the operator is by far the biggest way to do it.”
Scale is clearly a major issue for Blyk, which only has about 200,000 customers and 120 brand advertisers to its name. But it still claims to get a 25 percent response rate on its advertising — mostly in the form of text and image messages that it sends to its users. This figure could be attractive to potential partners, as is the company’s narrow focus on 16 to 23-year-olds, a key demographic for most advertisers. On top of that, it would be more cost effective for an operator to absorb Blyk’s business than to build such a platform from scratch. Those already rumored to be interested in working with the company include Orange, O2 and Vodafone, a high-caliber group.
In February, Blyk launched its own wireless application protocol — a portal used to access the mobile web from cell phones. This WAP is run by Velti, which announced yesterday that it had acquired San Francisco-based mobile advertising company Ad Infuse. How this will impact Velti’s relationship with Blyk remains to be seen, but it could also make the latter more appealing to established operators.
Whether or not it decides to strike a deal with Blyk, Vodafone is forging ahead with its own integrated Vodafone Marketing Services venture. This program has expanded its mobile ad platform to its full 18-country footprint. Vodafone ran 2,000 ad campaigns in the last year using a range of text and multimedia formats. A service like Blyk’s could complement and boost its success in this area, giving it a head start in the race to divvy up the U.K.’s $43.4 million mobile advertising market. This might not sound like a lot to start — but it’s doubled in the last year alone with no signs of slowing down.