Pudding Media and Resistance to Call Monitoring

Implications: Advertising targeted to mobile voice calls will be challenged by the dubious synergy of talking and ad-viewing as well as privacy and legal issues.

Analysis: Pudding Media will test if there is a target market for mobile users willing to view ads in return for free talk time or other services.  For Sprint’s Pivot project with four cable MSOs, Comcast’s CEO recently expressed that subscribers did not perceive a synergy between cable and mobile services.  Pudding Media could face the same synergistic challenge of how the mobile user relates talking and ad-viewing.  Virgin Mobile USA launched a trial called Sugar Mama of 75 free calling minutes each month by viewing ads or completing surveys.  Virgin Mobile reported a 10% response from its 5 million subscriber base.  The advertising was not targeted from call monitoring and included leading brands such as PepsiCo and Nintendo.  Although the 10% acceptance appears significant, Virgin’s subscribers are mainly the prepaid youth market.  And the Virgin subscribers are heavy message “texters” accustomed to viewing information on handset screens.  The broader market might react differently with concerns about not only the privacy of their talking but also the person being called. 
Pudding’s pitch is the capability of relevant targeted ads and content.  Pudding’s VoiceSense technology converts voice to text for analyzing and matching ads.  The legal resistance could be the conversation surveillance without both the caller and the called party consenting.  Pudding is striving to partner with mobile operators eager to create advertising revenue.  But the operators will evaluate the trade-off of increased revenue and customer rejection.  The customer reaction could be a demand for disclosure of monitored calls.  Operators like AT&T and Verizon have successfully launched mobile banking, and mobile users might be hesitant to make a cellphone call to the bank for confirmation of a data entry.  Instead of creating ad-supported calling plans, Pudding’s technology could cause a consumer demand for privacy filters of surveillance technology on voice services.  As the Virgin Mobile trial shows, the “texter” market will view ad-supported offers.  But for ad-supported calls, the overall cellphone population might resist the call monitoring and be indifferent to viewing ads.