Free and Muni Wi-Fi Proliferates, Draws Advertisers

Free and municipal Wi-Fi hotspots cover a growing number of metropolitan areas, and are increasingly paid for with ads a user sees when she first logs on.

Hotspot and advertising company JiWire has now jumped into the fray with plans to offer ad-supported Wi-Fi through a relationship with Ultramercial. The ads will appear prior to gaining free Internet access at hotspots. Laptop wielders can avoid the ads by paying a fee to get online.

“It gives the user the choice whether they want to pay for content with traditional currency, or use the ads as currency,” JiWire VP of Marketing David Blumenfeld told ClickZ News. “You’re using your eyeballs for currency instead of your wallet.”

JiWire isn’t a provider of Wi-Fi, but runs a directory of hotspots, and sells ads to run on Wi-Fi provider networks. “What we bring to the table is a sales force and sales experience in selling to a Wi-Fi audience,” Blumenfeld said. “Using ad technology that’s available today and providing a unique secret sauce on top of that to serve and authenticate ads.”

While JiWire will likely serve national brand ads through its Ultramercial agreement, others in the Wi-Fi space believe local ads are more accepted by consumers, if ads will even be accepted at all.

Across the U.S., municipal Wi-Fi is in some stage of planning or deployment in over 300 cities, according to a new report on the topic from Forrester Research.

The report says ad-supported services could have broad implications for consumers, including providing free or low-cost broadband to residential users, those on the go, and Internet newcomers. Free and ad-supported access could address price issues concerning over half of the 60 percent of U.S. households currently using dial-up or who have no access from home.

One barrier to ad-supported Wi-Fi is consumer resistance toward advertising. Sixty-three percent of consumers believe there are too many ads in the media, though 46 percent realize the value proposition. Consumers are even coming around in terms of providing data to receive better-targeted ads.

“Consumers are less uncomfortable with the idea of giving out their zip code for ad-targeting purposes than more sensitive information like income, information abut their children, or even their birthday,” said Forrester Analyst Sally Cohen.

Gaining such information, and the ability to target by zip code or neighborhood, will fuel the prevalence of local advertising on municipal networks. Local is thought by some in the space to be more appropriate than national advertising.

“It lends itself to some great marketing, particularly for local businesses,” said Thom Campbell, senior media manager at Intel. “There’s a lot of good applications there for local advertisers. For a national advertiser or sponsor, right now Wi-Fi is just a flavor of advertising.”

Campbell illustrated his point by saying if he is working in nearby Washington Park and meeting a friend for lunch, ads can help locate a nearby restaurant. “Ubiquity is all in the matter of audience it can relate to,” he said.

Intel’s role in setting up and sponsoring public Wi-Fi hotspots has changed somewhat since it sponsored free access in New York’s Bryant Park back in 2002. At the time the purpose was to educate consumers about Wi-Fi, and give them a hands-on experience. The park now has a new sponsor, and Intel has shifted its focus to a more advisory role. Intel introduced a digital communities program in 2005 to promote the use of wireless technology and applications. It helps municipal governments, businesses and citizens in this manner, rather than sponsoring free access.

“This baton is now being passed on to the carriers of Wi-Fi themselves,” said Campbell. That baton lands in the lap of companies like MetroFi, which provides citywide Wi-Fi networks. MetroFi adopted an ad-supported model in December 2005, after two years spent building networks and infrastructure.

“When we [went to an ad-supported model] it changed the dynamic a little bit,” said Adrian van Haaften, VP of marketing at MetroFi. “What we need to do is blanket a city, we need to go where people are, live, and congregate as opposed to where the money is.”

Ads appear as a 720 x 90 pixel persistent ad on top of the browser, which rotates every few minutes. It can vary between a display, text or video ad. The provider can also serve interstitials. It operates in Portland, Oregon, Aurora, Illinois, and six cities in California. The network attracts a mix of advertisers.

“We’re definitely seeing a mixture of local and national,” said van Haaften. “Mostly because we’ve built the cities [and] had time to get the users up and using the networks. The more users, the more interest by some of the larger players, as well as the local advertisers.”

The economics of ad-supported Wi-Fi are still a question mark. “Right now you can argue that a paid session is going to make a little more money,” said JiWire’s Blumenfeld. “It’s not apples to apples. Sixty percent of people who come to the pre-opt-in page bail out before connecting. If 60 percent of potential users are not connecting, there’s a lot of people to capture in the free service.”

Last year Ultramercial made a deal to provide free mobile service on Virgin Mobile in exchange for watching ads on the Internet. Advertisers on Ultramercial services include Honda, the Navy, Chrysler, Intel, and RadioShack.

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