Skype to Display Advertisements

Dennis Faas's picture

Internet phone and video chat service Skype is to begin carrying limited advertising. It comes as figures show the company is failing to convert enough free Skype accounts to paid Skype accounts.

In short, Skype allows users to digitally telephone another Skype user's computer using a microphone or webcam, and is completely free to do so. Other premium Skype services are available (but cost a fee), including: using the PC to call a landline or cellphone long distance, or using group video calling and various business services.

As of early 2009, more than 40 million different people used Skype on an average day, a figure that's likely considerably higher today.

Skype Advertisements To Appear as Banner Ads

The advertising will be carried at the top of the home page as a banner, rather than a pop-up, and the company insists it won't distract users during a call. It says it may later experiment with putting advertisements elsewhere on the page.

The service will initially launch in the United States, United Kingdom and Germany. It will be a very limited campaign: in each country, only one ad will appear per day. This may be based on data the company has about a user, such as age, gender and location, though users can opt out of this targeting in the privacy settings on the site. (Source:

Skype Ads to Bring Big Name Brands

Skype says the ads will be from major brands such as Universal Pictures and Visa. Given the limited scope of the advertising, it looks as if the company is selling ad space directly to companies rather than using a third-party service that would limit its control over exactly who advertised on the site.

It will be interesting to see how the service appeals to advertisers. It's certainly a quick route to a mass audience, but it won't offer the type of precisely targeted audience that's available through search-related Internet ads, or even placing an ad on a specific website.

Fingers On Keyboards, Not In Pockets

It certainly appears as if the company needs to find ways to expand its revenue.

Skype is currently in the process of preparing to float on the stock market and its latest registration documents for that process reveal that although it has 663 million registered users, just 8.8 million are actually paying for the service. (Source:

To make things worse, the number of free users is increasing at a pace approximately 50 per cent faster than the growth in paid users, which may mean many or most of those who are likely to use the premium services are already on board.

It is worth remembering that although Skype's paid-to-free user ratio of around 1 per cent is very low by commercial Internet standards, the cost implications aren't quite as bad as they might appear. That's because much of the data handling and transfer is carried out by the computers belonging to users, rather than being left entirely to Skype's own web servers to process and manage.

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