RealTime IT News

Wireless Advertising in the Real World

While wireless ad standards organizations deliberate and Internet ad companies build wireless strategies and technologies, a handful of content companies are taking the leap, launching entire businesses whose livelihood is based on the adoption of these new types of advertising.

In a quest to glean lessons from their early experiences and peer into the future of wireless ad models, we talked to three of these cutting-edge content firms, and to a venture capitalist who specializes in so-called "pervasive computing."

Probably the hottest venture-backed company in New York these days is a city guide software outfit called Vindigo, whose name is on every venture capitalist's lips and whose software is on every mover-and-shaker's handheld device. How does this nascent firm, and its investors, hope to make money? Advertising.

"The reality is that we think that advertising will be one of the single most important revenue streams for information delivery to mobile devices," said Jason Devitt, co-founder and chief executive officer of Vindigo.

Vindigo offers an innovative application for the Palm operating system free of charge to users, who download it from the Vindigo site and update it when they synch their device. So far, it's mobile but not yet wireless. What they (30,000 registered users, so far) receive is a comprehensive guide to the city, including everything from information on restaurants and bars, to movie showtimes and locations, to directions on how to get there. The company began with New York, and has now expanded to Chicago, Boston, San Francisco, and Washington D.C. It has content deals with companies like the New York Times' nytoday.com, Zagat.com, InShop, SF Gate, and ClubPlanet.com.

All of this content will presumably be supported by advertising dollars, although the company won't predict when it expects to be profitable. Who will be the biggest advertisers on the service? Bricks-and-mortar retailers, according to Devitt. The CEO compares it to a yellow pages-like model, which taps smaller, local advertisers.

"The real power of this kind of advertising is that you can reach someone who is on your street, in your neighborhood, and looking for your service," said Devitt.

Vindigo executives pooh-pooh the notion of ad targeting by sophisticated technological methods like GPS, saying that where a person is located isn't nearly as important as what that person is looking for.

That's the beauty of an application like Vindigo. Users are on the service actually looking for things like bars and restaurants, and are indicating, by the way they structure their searches, where they are located. The company uses that information to deliver text-based ads for similar services in the same area. Say, you're looking for a bar in New York's Greenwich Village. You click on the name of one bar, and at the bottom of your screen you see a message that says, "You're not far from [insert other bar name here]. Tap here for details."

Vindigo came to the text-based ad format after some trial and error. It originally intended to send a banner-ad like message.

"We experimented with that for a while," said Devitt. "You don't need to put an incredibly graphic, singing, dancing ad, when everything else on the medium is text. You're not competing in the same way as on the Web."

Vindigo's investors include General Atlantic Partners LLC, Flatiron Partners, and Carlin Ventures.

Another player in the adve