Free Wi-Fi Shows Mixed Promise for Advertisers
Free Wi-Fi use is on the rise, but advertising-based models may emerge as a more viable alternative than municipal service, Jupiter Research said in a white paper this week on Wi-Fi business models. The research examined various models in the context of the ever-growing number of Wi-Fi users, including in parks, hotels and airports, as well the increasing number of users who don’t -- and don’t expect to -- pay for service. “As advertisement- supported models undergo trials,” Jupiter recommends in the report, “advertisers should seek large-scale deployments and focus on local content.”
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The percentage of consumers who use Wi-Fi hotspots was up from 15% to 20% in only 8 months, from Sept. 2004 to April 2005, according to a survey conducted by Jupiter. Jupiter claims, however, that consumer “willingness to pay for Internet access via public Wi-Fi hotspots lags behind rising interest in the service.” Only 9% of those who have accessed Wi-Fi hotspots reported paying for the service as of April. Consumers clearly prefer and expect free access, the white paper said, and companies have successfully used the service to boost their businesses. Quick service, multi-front businesses, like fast food restaurants, have been most effective at making use of this model, Jupiter said. It cited Panera Bread, which manages 632 Wi-Fi locations, as well as Apple Computer stores, EZ Lube in Cal., and FedEx-Kinko’s locations, which have all evolved strong Wi-Fi presences. Publisher HarperCollins has established hotspots to encourage awareness of its products in bookstores around the country, Jupiter said. A HarperCollins spokeswoman said the program is in early pilot phases and “it’s premature to discuss details at this point.”
Another potentially powerful Wi-Fi model is the free city hotzone, Jupiter said, where the municipality operates a given hotspot and supports its operating costs with local advertising. The city of Fresno, Cal., operates a system like that in which the $10,000-per-year development-based hotspot is maintained through ad sales. This plan is encouraged, Jupiter said, by another recent survey it conducted, which shows that 30% of respondents enthusiastically support municipal Wi-Fi networks but only 6% would be willing to pay access charges.
As public and private carriers look to increase traffic and improve the user experience, Jupiter said a common goal is “to move beyond the captive portal approach” by using opt-in and noninvasive ads that are more visible, using a cost-per-thousand billing model much like Google’s. High profile Wi-Fi networks in Philadelphia and Dayton, O., are being planned with advertising-for-access models. In Dayton, a locally sponsored “welcome” page will reappear after every 12 min. of use. Wireless Philadelphia is now running the philadelphiacloud.com pilot with Pronto Networks in a 2- mile “redevelopment area.” Users there will be given the option to receive free Wi-Fi for accepting local ads in the topic of their choice, or to get access by paying a monthly usage fee.
Ultimately, ad-supported models won’t support national deployment because shrinking audiences for national ads online won’t match rising costs, Jupiter said. The most successful ad-supported hotspots will be small and local, in venues like shopping centers or downtown commercial districts. Such a hotspot was recently launched in the DuPont Circle neighborhood in D.C. by IT company TechAssist. The project won’t involve paid ads, but will require users to visit a home page that lists sponsors, chiefly local businesses. Free public Wi- Fi is also moving beyond single venues, the report said, and Jupiter urged advertisers to seek multilocation venues and hotzones “for sufficient scale.”