WiFi as banner ad: How Microsoft and Google are improving our cities' connectivity

By Nathaniel Mott , written on October 8, 2012

From The News Desk

Earlier this morning, Boingo announced a partnership with Microsoft that would offer New Yorkers and San Franciscans free WiFi connectivity until the end of the year. The deal, which is part of Microsoft's larger Windows 8 marketing effort, is also meant to remind app developers and startups that the company is launching its own App Store-like software marketplace, the Windows Store.

The partnership echoes an earlier alliance between Google and Boingo. Google sponsored WiFi hotspots across the US, including eight malls and 16 airports, to promote its daily deals product, Google Offers. The company then sponsored some 4,000 hotspots for Android, Mac, and Windows users to raise awareness of its Play Store, an application and media marketplace.

Of course, these aren't the only instances of branded WiFi access. Starbucks, the "Shit, I need to get online" office-slash-cafe of choice, siphons users through a landing page before offering Internet access. Even the Wall Street Journal joined the fray, sponsoring around 1,300 hotspots in – you guessed it – New York and San Francisco throughout September.

This means that if you connected to an open WiFi network in New York or San Francisco during most of 2012, chances are high that Google, the Wall Street Journal, or, now, Microsoft, paid for that "free" connection. The only question, then, is why?

When I spoke with Boingo's vice president of corporate communications, Christian Gunning, earlier this year, he said that the answer comes down to eyeballs. "There's so much noise in the advertising space, especially in the mobile advertising space, there are a still a lot of unknowns with what's effective," he said. By sponsoring a WiFi connection and showing a full-screen ad every time someone wants to check their Twitter or Facebook accounts, companies are (briefly) being granted a consumer's undivided attention.

It isn't enough to hang a banner ad or sponsored result once someone is already connected to the Web – companies are "being more aggressive and progressive in trying to reach channels where customers already are," Gunning said. Rather than waiting for customers to see their ads once they're already connected to the Web, the thinking seems to be that it's better to adopt the hybrid role of gatekeeper and billboard.

Given the fact that Google extended its deal to promote Offers and then formed a new one based around its Play Store, the model seems promising. It makes sense – people want WiFi but don't want to pay for it, companies want to reach customers and potential customers naturally, and are still trying to figure out this whole "mobile advertising" thing. (It will be interesting to see non-tech companies sponsor a connection. Politics in particular could be great, with slogans like "A Hotspot for Romney" or "ObamaFi New York.")

In this instance, what's good for Google and Microsoft's bank accounts may actually be good for consumers as well. During our talk, Gunning pointed out that, despite the fact that there's "no such thing as free WiFi," consumers expect not to pay for mobile connectivity. Since the cities can't shoulder all of the costs for building these networks – especially in New York's subway stations, which Gunning said are difficult and costly to build networks into – it's up to private companies to fuel the expansion.

The problem, Gunning said, is that for a long time there wasn't a clear economic advantage to building out a free WiFi network. Starbucks can get away with it because someone clacking away at their keyboard for a while might be more likely to buy another coffee or a snack, but that model doesn't help companies that aren't giving connections away to keep butts in seats. If this connection-as-advertising model pays off, however, this may change.

Unfortunately, with corporate sponsorship comes corporate responsibility. Does Google paying for an Internet connection mean that it has the right to decide what someone can or cannot do on that connection? Will Microsoft be able to block the Apple Store for as long as someone is using its "free" connection? The answer is probably (and rightfully) "no," but it only takes one over-zealous company to make people distrust these sponsorships.

At which point the question shifts from whether or not it's worthwhile for companies to sponsor a WiFi connection to if it's worthwhile for customers to use that connection. Since this would lead to a lack of eyeballs on a pre-connection ad companies will probably play nice, but it's hard to tell. What we do know is that this type of sponsorship is becoming more popular, and doesn't show any signs of dying off any time soon. Whether that's good, bad, or a little bit of both depends on where we go from here.

[Image courtesy Arkangel]