TextNow to dig further into ad-supported mobile services
Tristan Huntington, SVP of product at TextNow, is looking for more ways to make the company's mobile services cheaper for its estimated 10 million monthly active users. For the past three years, he's been doing that using revenue from advertising to lower TextNow's service prices.
"We are the market leaders in the free business model," he said, noting that TextNow today generates more than $100 million in revenue annually in the US. The company counts around 220 employees across the US and Canada.
Many companies have tested the concept of ad-supported mobile services. Most recently Dish Network offered its Boost Mobile customers credits for watching ads that they could then apply to their monthly service plans. Other similar offerings in the past have included Surge, Blyk, Amazon Prime phones, Xero Mobile, Virgin Mobile's SugarMama, Sliide, Opera and Aquto, to name a few, though none has moved into the mainstream.
But Huntington said TextNow's entry into the ad-supported space in 2020 has been successful, and the company is now working to expand and refine its approach to the market.
"There definitely is a challenge in making this model work," he said. "You have to have ads that don't get in the way too much... That takes a lot of skill and time."
Huntington said TextNow has served ads from a variety of brands such as McDonald's, and for events like movie releases. "Those are the typical type of advertisers" that target the company's customer base, he said.
"Deliver your message in a unique and compelling way and get meaningful results in our brand-safe app environment," TextNow touts on its website.
Further, Huntington said the company has tested a variety of ad units, ranging from typical display and banner ads to more "native" experiences. For example, the company has tested ads that act like push notifications or text messages. Other TextNow ad models include "perks" that customers can earn if they view videos or fill out forms.
"The combination of all these strategies is what makes this model work," Huntington explained.
From an app to MVNO
TextNow started life in 2009 as an app for free calling and texting, similar to other offerings like WhatsApp. It grew quickly, from 1 million users in 2010 to 15 million a year later and now counts 10 million monthly active users. The company launched an MVNO through Sprint in 2013 for users who strayed from Wi-Fi, and then transitioned that MVNO to T-Mobile after T-Mobile purchased Sprint in 2020.
"Our mission is to democratize phone service," said Huntington, who has worked at TextNow for more than a decade. The company offers free and inexpensive wireless service, without contracts, to Americans who can't afford standard unlimited plans that often cost $40 or more per month, he explained.
"We are definitely testing a lot of new things," Huntington added, pointing to the company's weekly pricing plans. For example, TextNow offers 500MB of data for around $3 per week. That pricing sits alongside more standard monthly plans, which start at 2GB of data for $11 per month. Users can bring their own phone to the service or they can purchase a phone through TextNow's partner, Swappa.
Next up, Huntington said, may be day passes, wherein customers can purchase data only on the individual days they need it. "That's kind of the direction we're heading in," he said.
TextNow is competing in an increasingly tumultuous market. For example, cable companies like Cox Communications, Comcast and Charter Communications have entered the mobile market in a big way through MVNO agreements with companies like Verizon. Meanwhile, major MVNOs like TracFone, Consumer Cellular and Mint Mobile have been acquisition targets. What that kind of upheaval might mean for smaller players like TextNow remains to be seen.
