Verizon to Test Advertising on the Third Screen

Carrier Will Trial Video Options As Well as SMS

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Verizon Wireless, the nation's No. 2 carrier with 51.3 million subscribers, is testing a program to open up its video phones to advertising.

Currently, advertising on the cellphone has been limited primarily to text messaging and ads that run on live programming or on Web pages accessed through the Web.

But in a major departure with the potential to significantly grow the number of cellphone subscribers with video service-as well as to open the floodgates of advertising-CEO John Stratton told the Madison & Vine conference Verizon Wireless is considering a two-tier mobile phone video service. One is an ad-free video experience, and the other a cheaper, ad subsidized model. While most people pay about $50 per month for their cellphone, video service at an extra $15 a month ups the bill by almost 30%.

"Customers we've seen are willing to accept advertising, but we believe we need to show them why," said Mr. Stratton, based on what he called "early conclusions" from company research. He cautioned that ads must be opt-in and cannot exceed a "certain threshold" and must be relevant to the phone user. Ads also could be targeted using the carrier's demographic, geographic and preference profiles, but cannot be personal. Ad delivery "needs to respect the privacy of the individual while connecting them in a more meaningful way with the message we send."

Mr. Stratton noted that while the mobile-ad model has yet to be built, the supply of ads will be limited and the demand, well, "given the billions of dollars being thrown at ever-shrinking mass-market advertising-would seem to be immense."

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