Free ad-supported Wi-Fi comes to airports but will it last?

I had just finished posting an article about the latest fad among advertisers, which is to partner with a company that provides paid Wi-Fi access (e.g. an airline or a city hotzone) and offer free Wi-Fi in exchange for an ad on the splash page. So far we’ve seen Toyota Prius’s Wi-Fi hotzones in public parks with their quirky Wi-Fi flowers, Google’s partnership with Virgin America, Bing and JiWire, Toyota Lexus and American Airlines.

Today, Boingo Wireless, an operator of Wi-Fi networks in airports, announced that recent Wi-Fi access sampling campaigns have generated up to 35% increases in revenue at select airports, while delivering click-through rates of up to 39% for sponsors.

These marketing campaigns are sponsored by national hotel chains, search providers that want to fuel trials of their newly launched search tool, and by consumer electronics manufacturers whose products are targeted at early adopters.

“Sponsored access works on many levels by providing a great amenity for passengers at no cost to them, and delivering a short-term boost to an airport’s paid Wi-Fi concession through incremental sponsorship dollars,” said Jim Janowiak, vice president of business development for airports at Boingo Wireless. “Because of the high value, the associated fees are significantly higher than traditional online advertising buys, which is what helps preserve overall revenues for the airport in light of cannibalization of core offerings during sampling campaigns.”

While sponsored access does not replace airport revenues associated with for-pay Wi-Fi networks, it does provide the airports the best of all possible worlds: ongoing revenue from the paid Wi-Fi network, plus incremental revenue during sponsored campaign windows. These promotional marketing programs usually run from one week to one month and tend to focus on a single airport or be targeted to several airports simultaneously that match up to a brand or product demographic or test market scenarios.

How it Works

Boingo’s sponsored access program gives advertisers a way to reach business travelers by subsidizing their Wi-Fi sessions. According to Boingo, these sponsored sessions last typically 15 to 20 minutes, but the user has to watch a 30-second video.

This works with people who are not in a hurry trying to catch a flight, otherwise it is extremely irritating and will turn people against the advertiser. The context matters. On a ten-hour flight, I would not mind watching a 30-second ad if I know I’m getting free Wi-Fi for the entire journey. As for Boingo’s suggestion that advertisers use customer surveys, downloadable content and location-based searches, instead of a 30-second ad, I think it depends upon the context.

Boingo maintains that their Wi-Fi sampling program provides a “deeper level of interaction than traditional online display advertising.” That’s true. But it also has a greater capacity to irritate people and turn them against the brand. So companies need to be careful about where and how they advertise: 30-second ads in airports is a bad idea, but it’s acceptable on long-haul flights.

Ad-supported Wi-Fi is no long-term solution; we don’t ask companies to sponsor electricity

There is, of course, a downside to the popularity of free (ad-supported) Wi-Fi. When people get used to having free Wi-Fi everywhere, they will be outraged when they can’t get access for free and the target of their wrath will be the operator — a company like Boingo or the airline or even the airport.

Because Wi-Fi has become such a must-have for people with iPhones and other portable devices, it’s like electricity. We don’t expect to pay for electricity each time we plug in our devices to an airport’s electrical sockets. We would find it silly to have electricity sponsored by advertisers. We’re getting to that stage with Wi-Fi.

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Buy these Research Reports now:

(1) Guide to the WiMAX Band (2.5 GHz): the technology, license holders and future prospects

(2) The U.S. Mobile Web Market: Taking Advantage of the iPhone Phenomenon

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