Behind the Advertising Model for Hotspots

By Naomi Graychase

May 27, 2004

Just as magazines, television or the Internet can put ads into the hands or in front of the faces of consumers, public access Wi-Fi ultimately offer eyeballs--and wallets--that new companies are hoping to cash in on.

As wireless hotspots continue to crop up everywhere from fast-food joints to museum lobbies, the quest to penetrate new markets and find ways to actually turn a profit has brought some entrepreneurs to the conclusion that there's only one way to make money from today's Wi-Fi users -- the old-fashioned way -- advertising.

Starting this summer, two companies will be taking completely different approaches to the ad-supported hotspot model. DotSpot Wireless will be the first into the game when it rolls out its first installation at a car wash in Southern California in early June. The Newport Beach, Calif.-based company, which requires users to download its software in order to access the Internet using its hotspots, is targeting consumers who are stuck somewhere with nothing else to do. In fact, the company is hoping to place its hotspots in any place where people wait.

"Others are targeting where people relax," says DotSpot CEO Tom Knight, "we're targeting where people are forced to be there: doctors' offices; garages; car dealers."

In the DotSpot scenario, a user arrives at her doctor's office and, of course, must wait half an hour before being seen by her physician. Rather than flipping through outdated copies of People, she can whip out her wireless-enabled device and log on to People.com, free of charge. Of course, there's no such thing as a free lunch--DotSpot plans to blast intrusive ads at users every sixty seconds. The busy, flash-enabled ads will interrupt the user's session and dance across his or her screen either left to right, or bottom to top once every single minute that the user is logged on. "Every sixty seconds an ad will interrupt you, and since the average connection time is 30-45 minutes, that's 30-45 ads," says Knight. "All of the ads are immediately clickable to go away. They move across the screen and put your work in the background."

Because DotSpot's software will know where each user is making his or her connection, the ads can be specifically targeted to suit that user's anticipated needs. "We know where they are and what they're doing," says Knight, "So, for instance, if a user logs on at a carwash, we know that user takes good care of their car. Then we can target specifically and offer upscale car ads, for example."

The other major player on the ad-supported Wi-Fi block is FreeFi Networks , who will launch their initial service mid-way through July. The Santa Monica, Calif,-based company is taking a different tack, targeting public Wi-Fi systems at hotels, airports, cafés, and shopping centers -- the usual locations for a hotspot.

"Day use fees and subscription fees are just not happening," says FreeFi's Larry Laffer. "What we want to do is go to the fat part of the bat, which is places where business travelers access wireless networks -- hotels, airports, cafés -- but mostly in the hospitality and transportation industries. We will be essentially the ad sales and fulfillment for an ad network.

"The model has been established in the traditional online world; what we will do is sell advertising and secure locations to provide us with ad inventory."

FreeFi is prioritizing its users' experiences. Rather than requiring installation of software, ads on the FreeFi Network look more like simple banner ads.

Laffer, who did a stint in IBM's Center for E-business Innovation, says, "It's not anything that requires adware or spyware; we are dead set against that. I have a personal hatred against it." He says doing it successfully means not making any potential users angry.

As Laffer explains it, a user sitting someplace, like a hotel lobby, will log in to the hotspot as usual, but in the process will get kicked over to a FreeFi page that will launch the QwikBar--an inch-high graphic that spans the top of the user's desktop. Below that bar, the user can still work uninterrupted in his or her browser, e-mail client, etc. But users can't make the bar go away without ending their session.

Ads are constantly refreshed and accompanied by some sort of local branding from whatever venue is hosting the hotspot. "The ads are intended to be useful," says Laffer. "They are geared to the venue. At a hotel, there will be things for restaurants, car rentals, city guides, some news, weather -- things that will be of interest to the traveler."

FreeFi is also pursuing other commercial uses of their service. For instance, media downloads. "Our users could access some kind of video to go feature," says Laffer. "They could download a movie for the plane ride or something. This'll be a little different than Web advertising because it's always there. It's just always there. It holds more value than just advertising on the Internet."

While Laffer says he can't yet reveal any of FreeFi's potential clients, he says the company is pursuing advertisers in the automotive, travel and transportation, pharmaceutical, and hospitality industries, as well as MDUs and community networks who have launched free hotzones in their buildings.

Both DotSpot and FreeFi feel confident about their ability to move into untapped markets and employ their ad sales models. Both companies see themselves simply as new media outlets for advertisers. They're not trying to re-invent the wheel, just take it someplace new.



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