(Annette Moser-Wellman)

How DOES Twitter make money? I hear that refrain constantly so I'm sure you wonder about it too. When I interviewed one of the founders a few years ago for the Media Management Center, Twitter was a fledging service popular with only early adopters in the Valley. When I asked Biz Stone how they would monetize the service, he told me they had a few models in mind. Now, when Twitter has fully bloomed - even Larry King is twittering! - we still see no advertising. We continue to wonder. One thing is sure: Making money on mobile advertising is tricky.

In a recent blog, I wrote about Tony Fish, one of the leading industry consultants on mobile. I asked Fish what companies were ushering in the era of mobile as the 7th mass media. Who was making money and how? He mentioned Blyk. Blyk is a company that optimizes a user's digital footprint - its interests, attitudes and behaviors - in exchange for the right to share advertising.

So, I interviewed Leif Fagelstedt, the COO of Blyk, and learned about their theory of mobile advertising and how the service works. The Finnish company provides a mobile service for young people in the UK. Blyk provides free texts and cell phone minutes in exchange for receiving relevant communications (offers, information and entertainment) from brands on their mobile phones. They also become part of an invitation-only community.

Fagelstedt outlined some strategies he has identified for monetizing the mobile space and predicted which would be the winners and the losers. "There are the content enablers like AdMob, ScreenTonic and others who serve advertising through operators with response rates similar to the on-line space in the area of 0.01%. There are companies that think search and banner advertising will be the next big thing. There are those who are trying to figure out how to give people something for free in exchange for receiving a certain number of ads. Our model is an engagement model. Blyk enables a two-way dialogue between brands and Blyk members much like the way you and I would communicate - through text messages. I text you, you reply. And, since Blyk members are profiled, we can provide our audience with information they are genuinely interested in and want to receive which drives unprecedented response rates."

In fact, from a consumer perspective, you could call Blyk a social network. They currently have 200,000 young people in their mobile network. Once opted-in, members receive useful and relevant information by way of advertising in a way only a 16-24 year old would love. From free mobile wallpaper to first-run music videos, check out the types of messages they receive.

But from an advertiser's perspective, Blyk is an extremely effective medium. They deliver an average response rate of 25% with a very important target audience. Blyk drives awareness, interaction and action with the young adult market for companies like MTV and Coca-Cola. Because the audience opts-in and gets great benefits for joining, they are open to sharing their interests and receiving advertising from the network. Fagelstedt describes these young people as "happy" because they have self-identified as those interested and willing to hear about new products and services.

Fagelstedt believes media is moving toward venues that can create true engagement with their audiences. And with a cell phone device that is always on and always at your side, mobile is uniquely suited to promote that engagement. "Everything you do in building new media needs to be based on the most common patterns and behaviors of what people like. The two most common things people do with their telephone is text and talk."

Blyk created 18 tribes or behavioral groups that share similar interests. This dynamic profiling is the basis on which they assign advertising relevance and the pace of information. They represent over 200 brands and have plans to expand beyond the UK this year. Interestingly, they are less interested in the US market. They are focusing on those geographies and cultures where PC penetration is low and mobile is high. They want those who are engaged with mobile as their primary means of communication and are interested in getting relevant information from their phone.

I don't know about you, but getting high quality information on my phone seems appealing. When it's rush house and I'm speeding to catch a boat across the Puget Sound, I just might look forward to that text message from Washington State Ferry with a webcam view of the commuter traffic lines. So the perhaps the future of mobile advertising hinges on consumer engagement. So then answer me this: How WILL Twitter make money?


Annette Moser-Wellman is President of Firemark, Inc., an innovation consultancy, and author of Six Competencies of the Next Generation News Organization and Running While The Earth Shakes: Creating An Innovation Strategy To Win In The Digital Age, both published by the Media Management Center.

This TechScout article is part of a series of Moser-Wellman interviews commissioned by the Media Management Center to explore opportunities and insights at the intersection of technology and the news media. Click here to view other articles in the TechScout series.

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