Samba Mobile, Another Ad-Funded Free 3G Startup, Hits The Deadpool — But Its Tech Lives On As B2B Play

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Samba Mobile, a U.K. startup that was offering free 3G broadband in exchange for users watching video adverts on PCs and tablets, has shut down after less than two years of operation. Samba had launched its service to users in July 2012, and reported having some 10,000 users by November of that year.

A notice on its website primarily blames the closure on “high and increasing – and therefore unsustainable – data costs”. Samba had been reselling connectivity on the Three mobile network.

“We have been in negotiations with our wholesale data partners trying to cut the right deal to continue, but unfortunately this has not been possible. We have to pay for data in advance and, as we have reached the end of the latest billing period without agreement on lower costs, we have had to stop offering our service with immediate effect,” it adds.

It’s also pulling the plug on its service with immediate effort and no prior warning to users. It explains this is because it has to pay for data in advance, so having reached the end of a billing period without being able to reach agreement with its data providers to lower their costs it was forced to stop operating the service with “immediate effect”.

The business, which was founded in May 2010, had raised $1.4 million according to Crunchbase, including a second angel round in October 2012.

Investors in Samba included David Wheldon, formerly an ad director at Coca Cola, ex Tempus Board Member and a former Global Brand Director at Vodafone; Richard Brennan, one of the original founding execs of carrier Orange; and telco Digicel.

A further note on Samba’s website suggests that founder Ben Atherton plans to be back with more startups in future — no specific details yet though. He’s also a co-founder of the still operating mobile marketing platform Brandtone.

“We have run over 1,000 campaigns for our partners and have, to a large extent, proven that people are happy to consume advertising if they are in control of the experience and if they get something meaningful in return. We will be taking this experience into subsequent ventures,” it notes.

Samba is by no means the first ad-funded MVNO (mobile virtual network operator) to founder. The most high profile instance was Blyk, which tried offering free calls and texts in exchange for mobile users watching ads way back in 2007. It went on to pull in some $107.80 million in funding, before shuttering its direct consumer service in 2009, with the business being folded in to carrier Orange. 

We’ve reached out to Samba Mobile and its investors for more on the specifics of what went wrong with this latest attempt to make an ad-funded MVNO stick, and will update this story with any response.

Samba Mobile users who have bought a SIM or dongle this month will be refunded by May 1, according to the note on the company website, as will those who bought cash top-ups which have not expired.

However the startup says it won’t be paying out for Samba credit earned from watching ads, or for commissions for those who signed a friend up to the service in April.

Update: While Samba Mobile’s standalone b2c offering has been deadpooled, the startup’s video technology has not gone away — having been relaunched within two standalone social messaging apps as a b2b play, offering a way for their user-bases to earn messaging credits by watching video ads within the apps.

Specifically, Atherton said the Samba Selector video format has been added to TextMe and UppTalk — two over the top messaging apps, the latter an all-IP SIM-based mobile phone service, the former a sort of mobile-first version of Skype which offers texting, calling and videochatting, and lets you communicate with non-users via their phone number (a la Skype Out).

While TextMe’s basic service is free, certain types of messaging services require credits. Likewise UppTalk offers free messaging services within the U.S./Canada but international calling requiring a certain number of credits per minute. Which is where Samba’s offering comes in.

The two messaging services have had more than 50 million downloads on iOS and Android thus far — giving Samba far greater reach than it was able to manage on its own as a b2c business, being as its growth was hampered by the requirement to sell dongles and SIMs.

“Some time ago we realised there was a potential opportunity in the social messaging space, in terms of monetising their apps with our video. So we have been focusing on trying to build that business at the same time as trying to maintain our current business,” Atherton told TechCrunch.

“We’d started off thinking there’s something in this space for us here, and where we ended up was that we knew that those users of those service and many other social messaging companies wanted to give their users ways to top up that were highly appreciated by their base — so we rebuilt our tech platform as a mobile platform and we integrated it into those two apps, and we’ve got more integrations to follow.

“As a result we now have a global audience using our network of four million uniques and growing, so it’s allowed us to really rapidly scale our growth without being constrained by physical SIMs or the cost of data.”

At its peak, Samba’s b2c business had only amassed around 10,000 users — which makes this one no-brainer of a pivot, however dedicated and appreciative that core 10k user-base was.

How exactly does the social messaging integration of Samba’s technology work?  “If you have the UppTalk app or TextMe app on your phone, when you want to top up to get more call credit or text credit you go to the Samba top up option — which is one of the options in the menu — and you see the ad selector. So our ad selector, our selection technology, is effectively the same [as its b2c startup offering] but is mobilised,” said Atherton.

It’s also added a “social feedback loop” feature allowing ad watchers to rate and comment on what they’re seeing.

“We also have a product that does basic semantic analysis on the comments collected, and does some sentiment analysis but it also compares response rates vs [the Samba] pool,” he said.

“We could see other applications in other verticals going forward,” he added. “There’s some really exciting people that I’m talking to.”

As for why the economics of the b2c ad-funded MVNO failed to work again, Atherton points to how fragmented mobile comms have become, thanks to the rise of over-the-top IP-powered services — and says the value has therefore shifted to the apps and away from network services (as carriers have been warned it would for years).

“There’s massive fragmentation in telco, and all the OTT services is where the growth has been, and they’ve obviously assumed the data connection. So I think the quality of the product has been in the app and the way you monetize the app. I do think that’s where the future lies, and is going,” he said.