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Cloud Nine Media and DragNFly Wireless are partnering to bring free, ad-sponsored WiFi to select malls across the US, beginning Q3 2012. Cloud Nine lets advertisers trade free WiFi access for 30 seconds of advertising in over 5000 locations, including airports and malls. Cloud Nine will provide sponsorship while DragNFly Wireless will build and managed the venue-branded guest WiFi. The target market will initially include 24 mall locations, and expand to additional locations over the course of the year.

Cloud Nine has run retail WiFi sponsorship programs in Westfield malls for advertisers including SmartUSA, Old Spice, Belkin, Symantec, AirLingus and others. The WiFi sponsorship model delivers targeted offers and video to users connecting to public hotspots in exchange for free access.

“Over $230 Billion is spent in US shopping centers each year,” notes Cloud Nine CEO Sebastian Tonkin. “With an increasing percentage of shoppers connecting to WiFi on their smartphones as they shop, retail WiFi sponsorship represents a massive opportunity to engage interested users on their own devices right at the point of purchase. We’re thrilled to be able to add DragNFly’s locations to our network and partner with them in exploring this exciting new space.”

Malls offer a unique opportunity to deliver hyperlocal advertising, by device type, in high traffic, in-market locations, to a population that relies more and more fully on mobile devices to make decisions while shopping. Some 197 million American adults visit a mall each month, staying an average of 1.3 hours per visit, says Cloud Nine.

Advertising-sponsored, free WiFi is not a new idea. Boingo and GoGo’s in Flight WiFi have also experimented with free WiFi in exchange for advertising.

Half of the busiest airports in the United States now have free Wi-Fi, reports the NY Times, including Denver, Las Vegas, San Francisco, Phoenix and Houston. AT&T provides free Wi-Fi at Dallas-Ft. Worth, provided you watch a 30-second commercial every 40 minutes.

Denver International Airport, which has offered free advertiser-supported Wi-Fi since 2007, is switching to a tiered pricing model. Working with Boingo Wireless, the airport gives travelers free basic Internet service or more bandwidth for a $7.95 day pass (for a laptop) or $4.95 an hour (for a smartphone). According to the NYTimes, the Boingo contract guarantees the Denver airport a minimum share of the Wi-Fi revenue — more than $500,000 a year for three years for the airport.

HotelChatter in its latest annual Wi-Fi report, found that although more hotels were offering free or tiered pricing, the ones that did impose a fee charged $13.95 a day. The report estimates that the cost to provide Internet service for a 250-room hotel ranges from $2.50 to $4.50 per room, per month. For such a hotel, “the average yearly revenue that we ballparked was around $200,000,” reports the NY Times.

New York City is installing free Wi-Fi on payphone kiosks. The hotspots are initially coming to ten payphones in three boroughs and will be open to the public to access for free.

Users must agree to the terms, then visit the city’s tourism website first. Currently, there are no ads on the service, but there may be in the future.

Lower costs of WiFi equipment and better management software, combined with higher demand from smartphones and tablets are making free WiFi hot zones more compelling. There’s a point where it may make good economic sense for parks and bus shelters as well.

If bus shelters can generate $20-$200/month in ad revenue, then “free”, solar-powered, citywide hotzones might be worth another look. Spend $2000 and pay it off in a year or two. You’d think newspapers would be all over it.

Global internet advertising expenditures will rise about 31.5% between 2011 and 2013, according to a July 2011 forecast from Zenith Optimedia. Internet ad spending is expected to total about $72.18 billion USD this year, and reach $94.97 billion in 2013.

Related Dailywireless articles include; “Free” Public WiFi with WiMAX Backhaul, FreedomPop: Now 500MB free/month, Sprint Brings WiMAX to Virgin and Boost Mobile, NetZero: Free WiMAX Service, Banner Ads: Google’s Next Thrust?, Free WiFi with Video Ads Expands, Free Push-To-Talk from Wave, Internet Ad Revenue Up 23%

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