UK-based Blyk Raises 40 Million Euros; Looks for Expansion With New Funding

Blyk, the UK-based mobile virtual network operator (MVNO) whose revenues are based entirely on advertising has raised EUR 40 million (USD 51 million), a big funding round for any company . Blyk provides free mobile calls to 200,000 British 16-24 year old customers in exchange for them receiving advertising messages, a membership it reached much faster than expected. Its response rates of 25 per cent have attracted 180 advertisers. However, with advertisers, who feeling the credit crunch and pulling budgets from even the most tried and tested of media, will Blyk be able to maintain its revenues with its advertisement-funded model ?

Blyk’s third fundraising accompanied by a "new media partnership strategy", came from its existing investors Goldman Sachs and Sofinnova Partners. Blyk currently operates using a mobile virtual network, airtime bought wholesale from Orange in the UK and Vodafone in the Netherlands. Blyk’s co-founder and chief executive (and a former Nokia president), Pekka Ala-Pietila has said that the operator doesn’t need to work purely on its own for further international expansion.

Blyk’s strategy of partnering more closely with operators or local media companies has generated interest in Europe and Asia so much so that the operator considering plans of a fast expansion in new countries and also be flexible in pursuing different kinds of opportunities, according to Mr Ala-Pietila.

Blyk’s services, based on its ad-funded model that allows users to reduce their monthly bill in return of watching advertisements will expectedly by popular among the users in new regions. However, what remains to be seen is how such partnerships will work. Blyk may also start to offer consulting services to operators impressed by those response rates and its mobile advertising technology, according to Alexandra Rehak, mobile media analyst at Analysys Mason, a research group.

Commenting on the impact of world’s financial situation on mobile advertising, Mr Ala-Pietila said, "Obviously the advertising market in general is taking a huge hit and that is going to carry over into mobile even more than advertising at large, because it is new and untested". "Blyk’s whole business model is based only on advertising - they really have nothing to fall back on," he said. However, Mr Ala-Pietila insists that advertising on Blyk remains robust.

With more than 200,000 subscribers, Blyk is now considered as a "youth media" in the UK. Moving to a new country will present much tougher situation, however, the operator is willing to take the chance and explore more geographies. As Mr Ala-Pietila said, "Where there is high demand then it makes sense to move and ride with the wave when the time is right."

Source: Financial Times

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