An app called Locket displays ads on users' home screens and pays them $.1 every time they unlock their phones.

Aquto compensates users for interacting with brands by expanding their phones' data plans.

With Placed, users opt in to have their location tracked by brands that want to measure, for instance, the effectiveness of their mobile ads. In return, they earn gift cards or money for charity.

One Placed app rewards users with donations to charity.

Qustodian, an app that launched in Spain a few years ago, compensates users for viewing ads from brands.

After users opt in to Swirl, the app pings them with offers from stores they visit.

Shopkick tracks when users enter stores and rewards them much like a loyalty card.

In Apps For Mobile Advertising, Brands Pay You To Listen

A new wave of advertising startups are offering free stuff, cash, and donations in exchange for just a branded moment of your time.

A small banner ad on an already small smartphone screen is not a great way to get attention, and offers that pop up uninvited are more annoying than television commercials. Several recently launched startups are offering brands another option for earning the attention of mobile users’ customers--paying them for it.

Currencies include mobile data, special offers, and cold, hard cash.

In some cases, the exchange is pretty straightforward. An Android app that launched last month called Locket, for instance, displays brand advertisements on its users’ lock screens. Every time they swipe to unlock their phones (up to three times per hour), they earn one cent, which they can later empty into their PayPal accounts, use to purchase gift cards, or give to a charity.

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Other examples are slightly more complicated. Aquto, which began rolling out in Europe this June, increases users’ mobile data plans if they interact with marketers by watching videos, signing up for offers, or completing other activities. Qustodian, an app launched in Spain a few years ago, serves advertisements based on users’ stated preferences and pays them for each one they read.

Though a relatively new concept in the United States, brands have been making these sorts of exchanges in emerging markets for years. “Ringback tone advertising,” for instance, grants users in countries like Turkey free airtime or phone credits in exchange for playing an advertisement to anyone who calls them. A popular service in South Africa that allows users to text “please call me” without charge when they've run out of airtime sells the remaining characters in these free messages to advertisers, so that a text from a friend might read, “Please call me. Drink Coke.”

“If the thought is, I will give people dollars and cents for watching advertising, you have to watch an awful lot of those before it ads up to any significant amount if you live in a developed economy,” says Paul Berney, the managing director of the Mobile Marketing Association (MMA) in Europe, the Middle East, and Africa. “But if you live in an emerging economy, air time or messaging time has real commercial value.”

The trick, then, when bringing this strategy to smartphones in the U.S., has been framing the transaction in a way that makes sense to those consumers.

Aquto, for instance, framed its deal as a way to avoid overage charges. “They can almost treat it as an insurance policy. Do a few things, and then you can get more data. And if you happen to go over a month, you don’t have to worry because that insurance is there,” says Aquto founder Susie Kim Riley. Locket’s cofounder, Yunha Kim, says it was a matter a phrasing. “It was the marketing hook of, ‘you see ads everywhere and you don’t get any value from it," she says, “Why don’t you get compensated for your time?” About 70,000 people downloaded Locket in its first month after launch.

The trend, which Berney categorizes with “a rise in permission-based advertising,” extends beyond display ads. A two-year-old startup called Placed, for instance, offers consumers incentives for sharing their location data with brands instead of extracting data about foot traffic from video feeds or mobile phone signals. Users who download its tracking apps get free gift cards or donations to charity in return. The startup recently opted in its 100,000th user.

Then there are companies like Swirl and Shopkick, which take brand loyalty programs out of cards at the cash register and put them into phones that can be detected when customers walk through the door—before they shop, not after. Swirl’s app can even detect what department its users are in and target its offers accordingly. The service requires a level of surveillance, argues the startup's CEO, Hilmi Ozguc, that wouldn't be permissible without an opt-in and trade-off for the consumer. “Nobody likes being tracked and spied on,” he says.

Berney says compensating consumers is just a shift in finding what works best on mobile phones.

“Nothing has changed,” he says. “Brands have been paying for display advertising, radio advertising, television advertising since the dawn of advertising, so we’ve always been paying to reach consumers. The difference is now we’re paying to reach them as individuals as opposed to reaching them on a mass audience.”

[Image: Flickr user Elvert Barnes]

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2 Comments

  • Anthony Reardon

    Thanks Sarah. I am following this trend closely. There is something I like about the data boosting idea, kind of like coming across a free WIFI hotspot. Then again, I am critical of this incentivized advertising. It is interesting though.

    With the cold hard cash motive, I think there is something to paying the market directly. However, I don't like the idea of earning pennies. You see billions of dollars pumped out into channels because they have vast audiences- a very small percentage of whom will react to advertisements. The model has to be smarter for direct to consumer technology- closer to 100%- so the pay should be proportional.

    With the charity motive, I think it is neat when companies build this into their business models, but get a bit skeptical when it is just an advertising tactic for effect. Fundamentally, the technology should be used to more directly engage companies on their commitment to do good, charities on their missions, and consumers on their desire to align purchasing behaviors with brands who support specific causes.

    Ultimately, I don't think putting something people don't want in front of them in exchange for an incentive is the way to go. It may have always worked in the past, but there are new emerging dynamics in play between direct to consumer technologies, modern business models, and more sophisticated consumers. When you try to apply the old models in the new context, it can come across poorly.

    So I think what this may call for is a slight refinement of what advertising and marketing mean. Marketing might be more like "connecting with people that want to associate with a given brand, its products, and services". Advertising might be more like "getting the word out to people that want to know". That implies a change in approach to marketing on the merits of what your company does and informing to demand. It also precludes the initiative of using artificial incentive structures to intrude what people don't want in exchange for something they do want.

    Best, Anthony