” “It’s true that every man has his price….”
– Peter (Vince Vaugn), Dodgeball

If I was to ask you if I could place a permanent advertising banner on the home screen of your mobile phone which showed various adverts and offers throughout the day in return for paying £2 off your tariff each month what would you say? Not enough? What if I chucked in a extra £10 and also asked the change the colours of your phone menu to match that of my brand? Still no? What if I was to give you a free iPhone 4 and reduce your line rental to £5 a month for all of the above plus changing your alarm clock sound to my brand jingle?

There is no doubt that some people will see advertising embedded into their mobile as a huge violation, but the key point here is that it will always be ‘some’ people, not everyone.  For every person who cries out in disgust there is someone who would lap up a discount on their tariff or mobile handset in exchange for ads. Everyone has their price.

As mobile technology gets better and cheaper at a rapid pace, the profits will come from software and services, not hardware. The device becomes a shell.

Android phones have now reached the price point where margins are so low that it’s not hard to see operators giving them away for free and mashing ads into them [Update: T-Mobile now selling a £20 Android phone on Pay As You Go]

Whilst the idea might sound horrendous it would be naive to think that it can’t be done well. A combination of the right data, interface, functionality and reward could find that sweet spot which provides a good user experience and adds value for advertisers. It’s in everyone’s best interest that the ads aren’t lame (like the examples I used above) because then both advertisers and consumers lose out.

Still it’s worth noting that research I’ve conducted in the past even the most intrusive ads will be accepted if the reward is big enough. A 20% off voucher for Pizza Express appearing on a homescreen banner might not be enough to entice a user in taking up a ad-funded handset but £5 off their line rental each month just might.

It’s going to take a while to get to the perfect blend of advertising on a ad-funded mobile, it was once my job to find the right balance, testing various concepts with consumers. It was a fascinating look at the psychology of mobile and advertising. What I can tell you is traditional ad-units won’t work, it will take a whole new approach.

I always think you need to slightly over-deliver in what you give back to the user in a ad-funded model. A perfect example of this is Spotify. They give you way too much shit in return for listening to a few ads, making it really hard to feel hard done by, that’s how ad-funded mobiles should be. And if you don’t like it you can pay for the ad-free version.

Today Amazon announced that they would sell a new ad-supported Kindle for $25 less than the original. The ads only appear on the home screen and screensaver, it’s a great deal in my opinion. This is a sign of things to come.

Expect various people in the mobile industry to start screaming generic comments like ‘It’s the most personal device there is!’ and ‘putting a advert on your phone homescreen is like putting one on your childs face!’ etc etc.

What’s your price?