A Spanish mobile application that pays users up to 25 euros a month to
send messages to friends if they accept advertising may erode telephone
operators' revenue as customers switch to free messaging services.
Chad2Win has attracted close to 100,000 users, who receive one cent for
every advertisement they see, and three cents for every ad they click
on, since its launch last month, director Fernando Troyano told Reuters.
part of a growing number of free texting services, is the first to
offer customers payment. Free messaging service WhatsApp said in August
it was processing 10 billion messages a day worldwide compared to the 21
billion paid for SMS messages sent daily.
research firm Ovum estimates operators lost $23 billion in messaging
revenue last year to these applications, which send the messages over
But success will prove challenging as companies,
including social network Facebook, have so far struggled to monetise a
service users expect for free.
Enders Analysis mobile analyst
James Barford said similar services that offer something for free in
exchange for advertising, including search engines and call services,
have ended in failure.
"There's an obvious issue in that the type
of person who is that careful with their money is not likely to be that
attractive to advertisers," he said.
Volkswagen, Panasonic and Spanish lender Caixabank have agreed to
advertise with Chad2Win, currently only available in Spain.
would take more than 800 clicks on ads to hit the 25 euro maximum
monthly payout for a user. Troyano said most users were unlikely to view
and click enough to make more than 5-10 euros.
To challenge the
free text services, Telefonica, France Telecom and Vodafone launched a
WhatsApp rival in Spain in November, called Joyn.
In Spain, where
one in four of the workforce is unemployed, the number of text messages
sent fell to 1.4 billion in the third quarter of 2012 from 3.7 billion
in the third quarter of 2007.
Barford said although it was
impossible to tell how much revenue loss stemmed from messaging services
or from a recessionary environment strangling spending, there are steps
operators can take.
"What they can do about it is reprice. Part
of the issue is that the cost of the data to send a WhatsApp message is
much less than a voice call. It is a question of pricing structure," he
© Thomson Reuters 2013