Next Advertising Frontier: Muni Wi-Fi Networks

Microsoft Corp. Wednesday announced an alliance with mobile advertising provider JiWire Inc. to begin placing ads on municipal Wi-Fi networks, starting with Portland, Ore., and Oakland County, Mich.

The two companies would not disclose terms of the alliance but said they will place ads in a variety of styles, including so-called ultramercials, which are interactive ads that Wi-Fi users agree to watch in return for free network access.

For example, a user might agree to watch an interactive ad for two minutes in order to get several hours or more of access, said Stefan Weitz, director of planning for Microsoft's MSN Web portal.

Microsoft is interested in using municipal Wi-Fi networks to expand the reach of MSN, Weitz said. Meanwhile, cities and towns are seeking ways to pay for construction and operation of Wi-Fi networks.

"We're still figuring out if municipal Wi-Fi is a disruptive technology," Weitz said. "The jury is still out, but we expect to reach more people and different people and just provide a ton of content, so municipal Wi-Fi is just one more avenue to increase that."

As for the value of using advertising to subsidize costs, Weitz added, "offering consumers free or subsidized service is how we think we'll see heavy utilization on these networks."

Founded in 2003, San Francisco-based JiWire built a reputation for tracking Wi-Fi hot spots globally, and its list now includes about 150,000 hot spots in 135 countries, said CEO Kevin McKenzie.

In recent years, JiWire has built an advertising client list of more than 50 of the nation's biggest companies, and these advertisers are willing to pay a premium to place ads on hot spots, McKenzie said. Hot spots in airports and hotels reach a coveted segment of the overall Internet audience, he said.

JiWire clients will typically pay US$35 to $150 for 1,000 advertising impressions, many times what a typical Internet ad would cost, McKenzie said.

Many cities and towns that are building or planning Wi-Fi services are wrestling with ways to recover costs or to provide free Internet access to some users, McKenzie noted. JiWire is approaching municipalities about advertising deals, starting with national advertising campaigns, and will be willing to share 50 percent or more of the revenue with the cities, McKenzie said.

Eventually, JiWire will move beyond running national advertising and find local advertising for municipal Wi-Fi networks, McKenzie said.

Weitz and McKenzie said that Oakland County will provide many opportunities to test a variety of advertisements because it is considered the nation's largest municipal Wi-Fi deployment; it will cover 900 square miles and serve 1.2 million people once finished.

The purpose of the JiWire-Microsoft alliance is to "see what we can do ... to balance the right amount of advertising with the user experience, and find what is the right mix and what is the audience tolerance."

In general, Weitz said he has grown more optimistic about the future viability of municipal Wi-Fi networks in recent weeks, after speaking at the MuniWireless 07: New England conference in early June.

At that speech, he noted some user problems with municipal Wi-Fi networks and a spate of negative press on projects around the country but said the challenges can be overcome.

"I'm more optimistic about municipal Wi-Fi," Weitz said Tuesday. "I've always been pretty bullish. Every day, more and more companies are entering the market."