Wednesday, October 24, 2007

Ad Supported Software

Over the last few weeks I have been watching the developing saga of the not-so-secret-but-possibly-fiction Google phone, the ad support office experiments going on at Microsoft in response to Google Apps, as well as other similar "adware" services.

The Google phone is actually a great example of the questions that I am asking: How viable is the ad supported software play as a business model? At a 50,000 foot level, the generally accepted ARPU (average revenue per user) in the mobile industry is $x (will post this figure as soon as I find a voice + data number). Can Google charge advertisers for niche ads that reach me in a targeted way? If so, does that potential exceed the $125 per month T-mobile milks me for? As my good friend Jason quickly tells me, I am not part of the most interesting or valuable demo anymore, so apply this simple question to 13-25 year olds. People in the know should know this answer and if not they should have asked it years ago.

Step away from phones and look at any software as a service model out there. Is an ad supported strategy viable? Have they asked the question or run the numbers?

Mark Maunder is a guy you would like to know if you are into the start-up and technology scene in Seattle. In addition to building and delivering an online service in record time, he is a serial entrepreneur who has run ad supported businesses before, so I trust he knows what he is talking about. Despite the fact he is too busy to answer my emails anymore, I enjoyed reading his thoughts on the ad supported model as it pertains to Facebook applications.

I am not yet educated enough in this area to make any substantial comments or assertions, but it is so incredibly interesting that I intend to get educated... and fast.