Watching Wi-Fi-based Commercials

By Adam Stone

February 28, 2005

Atlanta's foremost WISP, 3rd Wave, knows customers will accept advertising to keep hotspots free -- it asked them. But will businesses bother to place the ads?

Rich Tanksley has been overtaken by circumstances—in a good way.

As director of business development at 3rd Wave in Atlanta, he has helped steer the firm on a course set by the local market, a course that has brought the hotspot business model to the forefront of the company's efforts.

With the widespread deployment of hotspots already in place, the company now has begun to reach for the Holy Grail of Wi-Fi: The coveted advertising revenues. So far, the effort is succeeding.

Seven years ago 3rd Wave came to life as a consulting business helping guide others through the telecom space. Over the last year the company installed a few hotspots as part of that service, and the demand for Wi-Fi soon eclipsed the consulting business. Company executives spun off the consulting arm and dedicated the efforts of 3rd Wave toward deploying hotspots all around town.

Demand continued to grow. Most recently, 3rd Wave deployed Wi-Fi throughout all three floors of the food court in Atlanta's upscale Lenox Mall.

At first the whole thing was free: Free to operators, free to users. But the overhead of managing the spots got to be too much. With 60 hotspots and 4500 users in the area, the company now charges operators $55 a month, with the understanding the operators will let users log on for free.

That $55 covers the cost of operations. Now Tanksley says he is ready to chase the real money in the form of advertising revenues.

"We have 4500 professionals hanging out somewhere, people who love us because we are providing for free something that they really enjoy," he said. "We think there are businesses out there who will want to get in front of 4500 rich, smart people."

So far, experience is proving him right. Take for instance the case of Jim Ellis Auto Dealerships, an automotive group with 12 locations. That firm has entered into an advertising relationship at with 3rd Wave at the Lenox Mall, agreeing to pay $1 every time someone logs onto the Wi-Fi network. In exchange, the auto dealership gets a full-page promotion when an individual logs on.

The Wi-Fi advertising complements Jim Ellis' larger program in the food court, which includes putting cars on display and offering an interactive site with automotive information.

"The hope is that we could attract people to come to the food court, with the niceness of having a hotspot there, an then we can use that to add to the branding effort," said Wayne Ussery, director of Internet marketing at Jim Ellis. With the free Wi-Fi offering, "we can brand our name and our Web site, and then give them something in return."

So far so good, but Tanksley is the first to admit that this ad-supported Wi-Fi play faces challenges, most notably in the city's own effort to deploy an urban Wi-Fi network.

In April 2004 the Atlanta City Council gave city officials the go-ahead to start creation of what it said would be the biggest high-speed wireless network in the world. Starting at city hall and the airport, the network eventually would encompass the entire city.

Tanksley isn't losing any sleep. Around the nation, he said, such efforts have been slow to get off the ground. "Everyone's talking about it and spending a ton of money on it, but we are actually doing it."

If anything, Tanksley worries about getting more hotspots deployed. "It's such a new idea to a lot of people," he said. When he talks about offering free Internet access, "they are worried that people will hang out and not buy stuff. They think people will be surfing porn at the coffee shop. So there is some work in just convincing people that it's a good idea.

"Then when we talk to the bigger companies, they still want to find a way to make money from it, and we have to convince them that if they do it for free they will get great publicity and great customer loyalty."

But Tanksley has an ace up his sleeve. It's called market research. Rather than just assuming he knew what people wanted, he and his colleagues tested the waters first. "We sent an e-mail survey out to all our subscribers saying: We want to have some advertising in order to keep the network free. We asked if they would be open to that and if so, what they would want to see," he explained.

Customers said yes, with reservations. They wanted no pop-ups and no banners. Other than that, they said, ads were fine. "So we basically got the buy-in from our users saying it was okay to advertise to them, even before we started selling ads."



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