Virgin’s Sugar Mama Is a Sweet Deal

SugarMamaPeople don’t want to receive ads on their cellphones, all agreed.  But there’s been virtually no consensus so far on how to get wireless subscribers to put up with what many see as a mobile version of spam (in fact worse than spam, because it costs $0.15 per).  So leave it to Virgin Mobile to turn the issue on its ear:  Pay users to watch.

And guess what—it’s working.  Really well.  Just last week, in fact, Virgin reported that it signed up roughly 330,000 of its 4.8 million U.S. subscribers for its Sugar Mama program, which “pays” them one minute of free call time for every 45 seconds they spend interacting with an ad on their phones or the company’s Web site.  Since the program was launched about a year ago, Virgin has given away upwards of 9 million mobile airtime minutes.

“When we started talking to people, they said, ‘Don’t sully my wireless experience with your advertising,'” explains Howard Handler, Virgin Mobile’s chief marketing officer.  “But when we started talking about it a little further, we heard, ‘My time is one of the most valuable commodities that I have, and if you are asking me to spend time looking at a message, I want to be compensated for it.'”

Marketers say the key to mobile ads—usually delivered to the phone with a text or picture message—is getting users to agree to receive them by offering up a compelling reward.  (And it doesn’t hurt, either, if they’re in their late teens / early 20s: an age group that dominates Virgin’s customer base).  And why is this demo ripe for the deal?  Well, basically, they’re poor—rendering them more willing to trade their personal time for free services. 

But why would marketers want to target a group willing to sit around and watch ads just to get free airtime?  If you can’t part with the $0.18 Virgin charges for an extra 60 seconds on its pay-by-the-minute plan, you probably aren’t out supporting the GDP in any kind of meaningful way.  Still, the 34-and-under market generally sports more disposable income than older folks with mortgages and dependents—and is also less price-conscious when spending that cash.

Even better, Virgin’s data shows some success in getting this audience to actually respond to what’s being advertised:  On average, Sugar Mama participants clicked on offers in the ads they viewed more than 5% of the time—which is, of course, significantly higher than the average response rate to most online ads of under 1%.

Pepsi, Xbox, and the campaign were the initial partners for Sugar Mama; but now Jive Records, Levi Strauss, New Balance, Nintendo, Showtime Networks, Sony Pictures, and the U.S. Navy, among others, have inked advertising deals with Virgin for the service.  One especially successful ad campaign in Virgin’s program, in fact, managed to produce a 21% click-through response, although Virgin won’t say which. 

5% won’t last forever, of course, just as with online banner ads.  But for now, calling a spade a spade and making a fair trade for users’ attention is doing the trick.  Who would’ve guessed it—truth in advertising works!