Ad-funded mobile operator launches

A man uses a mobile phone in a Milan bar March 3, 2006. Blyk, the world's first fully advertising-funded mobile telecoms operator, launched in Britain on Monday in what is seen as a major test of the potential of advertising on mobile phones.

LONDON (Reuters) - Blyk, the world's first fully advertising-funded mobile telecoms operator, launched in Britain on Monday in what is seen as a major test of the potential of advertising on mobile phones.

The service will target 16 to 24-year olds, offering 217 texts and 43 minutes of voice calls every month for free in return for users agreeing to receive marketing.

Users will receive six text messages a day from over 40 brands including Adidas, Borders, L'Oreal, STA Travel and Manchester United after completing a set of profile questions when they sign up.

Blyk's Chief Executive and co-founder Pekka Ala-Pietila, former president of the world's top cellphone maker Nokia, told a London press launch on Monday that the service would give brands the chance to interact with young consumers, one of the hardest groups to reach.

He said they had chosen to launch in Britain first as it is one of the most fiercely competitive mobile markets, enabling the group to learn quickly, and it expects to become pan-European at a later date.

"This could mean no more phone bills for up to 4.5 million young people in the UK -- with no contract," Ala-Pietila told Reuters, explaining that from their research, 4.5 million people would fit into the text-and-minute usage on offer.

Blyk will rent airtime from Orange and use technology from Nokia Siemens Networks. Users will receive a SIM card to put in their existing mobile phone and those who want more than the free offering can add credit to "pay as you go".

The service has launched in time for the new college term and users will be invited to the network, generally by other users in a bid to create hype much like social networking.

"This age group is notoriously difficult to get to (for advertisers)," said Shaun Collins, managing director at CCS Insight. "Blyk is a media company that happens to be ... mobile."

After a slow start, mobile companies are making moves into the potentially lucrative advertising market, helped by new technologies and the spread of more advanced phones.

Last week Nokia said it was buying U.S. cellphone screen advertising firm Enpocket as it pushes into a market that is expected to balloon in coming years.

Strategy Analytics has projected that advertisers will spend $1.4 billion on mobile media this year, rising to $14.4 billion by 2011.

(additional reporting by Tarmo Virki in Helsinki)