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Business Bytes, EconOptimisim

Why touch that dial? Advertising can benefit consumers

Jana, the world’s largest mobile payment network, with access to 100% of cell users in over 100 countries throughout the developing world, could be the dystopic novel Feed finally realized.  For those of you who were not young adults in the early 2000’s , in the novel people have a device wired directly to their brain from which they receive nearly constant offers for products.  On Jana, which is an opt-in network, people receive ads and surveys on their mobile phones and get mobile phone credit (mobile credit is approximately 10% of a consumer’s budget in the developing world) in exchange.

In the novel most of the characters constantly focus on consumption which alienates them from one another. The difference between this world and the stylized world of Feed is that here it is much clearer that advertising is part of a larger exchange between the consumer and the firm; in Feed the characters seem even less discerning than a sponge. Jana provides a way for both parties to win: the customer can now use her money to buy pay for something other than a phone bill and the company gets advertising and customer information.

It is this model that allows some tablets to be priced very low.  The forthcoming $25 tablet from Datawind will put ads on developers apps and split the revenue between itself and the developers.  Such a model also developers to offer apps for free that would otherwise command a premium.  Since so many in the developing world have no bank account, the only way to “purchase” an app is to be an audience for advertising. Amazon’s cheaper Kindle Fire also supports ads, with a $15 opt-out option.

What these tablets make clear is that a “virtual economy” is more than just buying items for an avatar. Accessing and using the Internet is an exchange between two parties at different price points: for extra money you can use a tablet to listen to an ad-free Pandora.  And it should be clear that avoiding advertisements is a luxury and that advertising extends services to those who might not otherwise enjoy them.  It’s more than some universal right to play Angry Birds. Large-scale access to the Internet grows a country’s GDP, which means more spending on education and healthcare. That is about as close to a utopia as the real world will likely get.

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