Thanks to Russell Buckley at MobHappy for throwing it down and addressing the central question of ad-supported (free) mobile services. In this case, Russell talks about SMS advertising in his post Will Peer-to-Peer SMS Advertising be Huge?

Sticking to the high points:

In other words, the sms would need to be reduced in price – or even offered free. Let’s assume that an sms currently costs about US 10 cents to send – and I appreciate that this is a huge generalisation, but it’ll do as a round figure. In that case, to replace that revenue, the operator would have to charge $100 in advertising, for every 1,000 they send out.

Russell’s logic is sound. And we keep running into these same issues, and we must continue to ask ourselves: how much would the advertising have to cost?

I find myself talking to clients  about replacement value of advertising and new, incremental advertising revenues. These sound like simple concepts, but as Russell points out with a slightly different example, there are quite a few people who look at a trial campaign with a 25% click-through rate, take the ad revenues and plan on keeping 60% of every incoming dollar. From there, a simple trial becomes a $50 billion market opportunity.

Which is why we ground ourselves with a dose of reality that says that marketers have choices…which they do. Another aspect of sanity comes from sizing the total global advertising market — at somewhere north of $650 billion.

These are important points of comparison for defining new Anywhere Network revenue opportunities in a growing and revolutionary market.

Thanks, Russell