Blyk will have a challenging situation in the Netherlands; wholesale customer for Vodafone

Implications: - The announcement of new funding by Blyk indicates some investors still see potential in Blyk, despite non-flying results in the UK - The announced deal with Vodafone NL is one of the first wholesale deals for Vodafone in the Netherlands in a crowded MVNO-market, where over 90% over MVNO's are on the KPN network - the planned launch of Blyk in the Netherlands will stimulate the Mobile Advertising market and the turn around of the business model. 

Analysis: Blyk announced it picked up new funding, required for further roll out after launch in the UK end of 2007. Today, Blyk UK has 30,000 customers who receive 217 free text messages and 43 free minutes per month in return for advertising. With this business model, the traditional way of earning revenues from end users is turned upside down. It's the beginning of ad funding services as we know it in traditional media.

Ads are served based on end user profile, thereby limiting waste of advertiser spending as only relevant targets groups, as defined by the advertiser, are being served with an ad.

Blyk suffers from the fact that it start without a base, whereas reach is the number 1 item counting for advertisers. Blyk in specific, and the mobile channel in general, will only become a relevant alternative to traditional media if the end user group is large enough. In the UK, it is not yet.

Blyk moves ahead by announcing launch in The Netherlands, thereby making itself more attractive for international advertisers who want to advertise cross-border. At the same time, the Dutch market has 1/3 of the subs versus the UK market. And it has over 50 MVNO's.......A crowded market place to gain customers.

And of course, the network operators (KPN, Vodafone, T-Mobile) are not sitting still. KPN conducted 2 in-market trials already in 2007 and announced commercial launch of various services in 2008. So has Vodafone.....
Probably they are the players where the advertisers are looking at most as they have the reach....

Focus only at 16-24 will give Blyk a target group in the Netherlands of about 1,7 million customers. All of them already have a provider; 3 network operators and 50 MVNO's are going after them. Will number 51 be successful? Of course, offering free minutes and texts helps for acquisition. But are those customers truly interested in advertising?