• by Steve Smith , Staff Writer @popeyesm, November 7, 2006

Mobile watchers will recall the ongoing plans by Xero Mobile to launch an ad-subsidized wireless service sometime later this year or early next. The idea is to give away or heavily discount the phones to a select audience of college students and trade air minutes for watching mobile video ads. In the Xero plan, students never get their wireless service free but will get discounted service by watching the ad spots.

This idea that we now explicitly trade directly with consumers for their attention, and even put monetary value on it, is only going to become more important as the consumer-centric media environment evolves. Of course all of this boils down to whether the advertiserssubsidizer has something of real value to trade for a few cells of my consciousness. While Xero got all the press, another company may have beaten it to the punch, with a much simpler plan that plays right into the ways that students already use their phones and live their lives.

MobileCampus is already feeding two daily SMS marketing messages to about 30,000 college students who have opted into this free, value-added service. Working with the universities, in this case the University of Texas and University of Florida, MobileCampus gives the school, its teams, and accredited groups a free SMS broadcast system. Any emergency warnings, notices of canceled classes or important alerts of any kind can go right to the student body, 90% of whom have cells phones, if they opted in. According to Micahel Kantor, chief revenue officer, the company recently saw 80% of U. of Florida freshmen sign up.

The secret sauce here is not just getting the school's alerts, but also getting discounts. In exchange for receiving free school-related messages, students get two SMS discount offers a day from local merchants. Student simply show the cell phone message to the cashier at checkout and they get the savings.

Generally, in most consumer surveys, mobile customers absolutely hate the idea of getting SMS ads, because they seem to associate even opt-in SMS ads with e-mail spam. There appears to be no such resistance to the MobileCampus model. At sign-up, the students declare which merchant category they most want to hear about, so there is a degree of relevance built in. Focus groups and early users suggest that the students actually welcome these sponsored messages, principally because they are not really ads. "Any message they send through us has to include a significant discount," says Kantor. "That is the equivalent of 10% of the purchase price. And last and very important, it must be a unique discount only offered to our subscribers."

Does it all add up to an effective model? According to Kantor the merchants are very pleased. They pay 19 cents to deliver each text offer to a student, but are realizing a 4.8% average redemption rate on the coupons.

MobileCampus is in its early stages, so it is anyone's guess how it will fare. More schools are being added to the mix this and next year, but who knows how resilient students will be after a year or two of daily coupons in their phone inbox?

What stands out about this model is its simplicity, its transparency, and its insistence on adding value to the consumer experience. Rather than wrap the user up in some complicated scheme to trade ad viewings for credits, this is just a straightforward deal: alerts in exchange for two marketing messages. Nothing complicated. Nothing to make the freshman brain hurt. It is also promotional rather than ad-driven. Instead of bartering with users for a sliver of their mindshare, the permission to interrupt them with an ad, this service just asks them for permission to save them even more money. It is also refreshing, apparently attractive to students, that the marketing network itself is guaranteeing the quality of the offers and that the discounts are exclusive. The consumer can see the value in the offer if it is not a regurgitation of the same deal they get in the weekly campus free paper.

There is a good lesson here, and not just in the creative possibilities for mobile marketing. It is not good enough to give to a user what you as a marketer or publisher thinks is of value to them You need to make sure they know, feel and agree to the value of what you are doing for them.

As I see many wireless carriers and content providers adopt the ad model, I have to wonder what is in it for the consumer? I know that ads will help the publishers make more money from their mobile deployments and develop better product. The carriers argue that these ad subsidies ultimately will help them keep the price of mobile content down. But will this added value be clear to consumers? Will they know and feel that having ads on the phone deck somehow is reducing their cost of use? Will they be able to see that this ad subsidization helps fund better content? I think part of the art of the new era of marketing is not just making ads that give value to the consumer, but making sure that you are communicating what that value is and why the consumer should give a damn about all your wonderful new schemes.