Thursday, November 12, 2009

Free airport Wifi as a marketing tool

Google is offering free Wifi in 47 US airports during the holiday season The idea is to flash a few web pages marketing Google's software and services to users in return for free Wifi service. According to this CNN article, Google is not the only company to do so - apparently Lexus and Ebay have also implemented similar ideas, or intend do so in the near future.

Free service is probably going to bring a torrent of airport Wifi users online - probably many more than the current number of (paying) users. Given that Wifi Internet channel space is a shared resource, it will be interesting to see how airport Wifi scales with the up-tick in usage. I just hope that the service doesn't deteriorate so much that the sponsoring companys' well-meaning message is lost to disgruntled users. And I do hope that engineers running these Wifi access points have done the networking provisioning Math beforehand.

Now the economics. The sponsoring company (Google) is probably going to pay a lot less than the retail price of airport Wifi connectivity. Why? Because the sheer volume of users will be much higher than when users have to pay individually. I think that the payment will include a fixed component depending on the number of access points participating in the service, and a variable component depending on the number of users accessing the service.

Lets assume that an average airport has about 20 accessible Wifi access points. Each access point can support (with any reasonable quality of service) about 10 concurrent users. If the airport is busy for, say, 12 hours in a day, and further say that we assume an average utilization of 50% of the total capacity of the access points, then we have (per day)

10 * 20 * 12 * 0.5 = 1200 hours of usage per day per airport.

I would assume that the sponsoring company (Google) would pay about $5000 per day as a fixed cost and then about $1 per hour usage. This brings the daily total cost per airport for the sponsoring company to $5000+$1200 = $6200.

So for 47 airports and 50 holiday season days, we are looking at a bill of about

6200 * 47 * 50 = $14.57m

That's not a bad deal for a big company like Google, considering the number of eyeballs they will capture. Lets say a user uses the free Wifi for 30 minutes on average. So, we are looking at about 12*10*20/(1/2) = 4800 users per airport, per day. That works out to over 11m users in the 47 airports over the 50 day holiday period. Even if we assume that most people make round trips and therefore use the Wifi connection 2 times, Google can still reach about 5.5 million unique users! No too bad for the $15 million spent.

And I haven't even started counting the goodwill ROI bonus for playing Santa during holiday season! Nifty nifty marketing.

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