They Know Where You Are

Can location-specific advertising generate revenue for WiFi?

by Timothy J. McLaughlin

"Pick any restaurant around Rittenhouse Square," says Richard Rasansky. "Let's say Rouge, for example. Rouge is having a slow night, so they put out ads saying 'We're having this special tonight.' Now, everyone that's around Rittenhouse gets an ad from Rouge on their smartphone or laptop, and it helps them get traffic."

Rasansky is one of the founders of Network Acquisition Co., the group of investors that recently bought EarthLink's WiFi network. He's describing one way that advertising might work with free wireless.

When NAC (a catchier name is promised before the network's official launch) took over EarthLink's network, it proposed a hybrid business model: steady revenue from wired broadband for large businesses combined with a free public access network that could generate revenue from advertisements. This latter part is particularly interesting, because, while it sounds promising, no reliable model exists for ads on a WiFi network.

Some experts, such as Glenn Fleishman of WiFiNetNews.com, are confident that advertisements could become a steady revenue source for NAC. He thinks location-specific ads (such as the one Rasansky described) would have immense utility for customers.

Other experts are not so sure. Dr. Peter Fader is a professor of marketing and co-director of the Wharton School of Business' Interactive Media Initiative. He says it's easy to get caught up in the initial hype of location-specific ads.

"It's every advertiser's dream: I can find exactly the right customer at exactly the right second in exactly the right mode [of thinking]," Fader says.

But he says location-specific ads don't necessarily deliver those promises. Just because someone is in the right place does not mean he is also in the right state of mind to receive a company's message.

One way to be sure you've reached the right customer is to find out more about him. A wireless network could make this easier, since it is already identifying each unique device working on it. But this opportunity introduces concerns — not the least of which is privacy.

Esme Vos, founder of MuniWireless.com, says the general public is already used to "tracking" technology.

"Say you're having a heart attack and you call 9-1-1 on your cell phone," Vos says. "If you stop talking, the 9-1-1 dispatcher can ask the phone company to track your location based on the cell towers you're connected to."

She says the same concept can be used to find WiFi users on a network and send them advertisements. As long as the users remain anonymous to the advertiser, this practice isn't harmful, Vos says. But the minute advertisers start collecting information about users, the public should be alarmed.

Some companies may already collect information about Internet users, according to a study released by Free Press and Public Knowledge, two consumer-interest groups in Washington, D.C. — by assigning them a tracking code that helps collect information about the way they use the Internet.

Rasansky says NAC won't go that far.

"Tracking can get out of hand, but it can also be misunderstood. You want to be clear on both sides that if any information is tracked it is not user-identifying."

By the very nature of a wireless network, he says, the provider has to know where the user is so it can send and receive information. That doesn't mean the provider knows anything else about that user.

It's too early for Rasansky to offer details about what advertisements might look like on the finished network, but he says location-specific ads will play a very large role in advertising.

Craig Settles, a WiFi networking consultant and author of Fighting the Good Fight for Municipal Wireless, says NAC should be very cautious of the volume of advertising it puts on its network. "You have to give people total control over the network. As soon as they get spam, they'll walk away from it."

When asked what the network will look like for the average user, Rasansky says, "Well, what do you want it to look like?" Then, getting a bit more serious, he adds, "User feedback will be critical as we set up the network."

(editorial@citypaper.net)