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That way, richer customers could ring back and foot the bill. But the scheme was costly to run and last year Vodacom dumped millions of prepaid subscribers who never topped up. By October, however, it was tempting back those poorer consumers after persuading third parties to fund the messaging service: since then, advertisers have been selling copy into the texts.

'Please Call Me' is not the only way that Vodacom - a joint venture between UK-based Vodafone and Telkom, the South African incumbent - is trying to extract revenue from advertising. Launched early this year, 'AdMe' is another messaging service that lets companies push more targeted ads to mobile customers. Vodacom is also running ad campaigns over the Vodafone Live! portal and even luring advertisers to a social network called the Grid. Chief operating officer Pieter Uys will be disappointed if Vodacom fails to make at least ZAR100m (US$12.2m) in mobile ad revenue next financial year, which would give it half the sector by his reckoning. And by 2012 he wants Vodacom to control most of what he thinks will then be a ZAR1.5bn (US$184m) market.

These targets are revealing. Vodacom expects the market to grow rapidly - at a compound annual growth rate of 65% over the next four years - but still thinks it will be of marginal interest to advertisers by 2012, claiming just 4% of total ad spend in South Africa. Nor does Vodacom believe advertising will have much impact on its top line.

Even if it took the whole market, ad revenue in 2012 would form less than 4% of Vodacom's entire revenue in 2007. It does not sound compelling, and yet Vodacom obviously feels advertising will become important, having determined to not only invest in the market but dominate it.

It is not hard to understand why some advertisers might be sceptical of 'Please Call Me'. While as many as 20m texts are sent every day, giving the service a big audience, many companies must doubt the effectiveness of attaching a 115-character ad to a message that can be simply ignored. Another problem is that 'Please Call Me' cannot easily discriminate between types of user, because customers are not forced to submit personal profiles. Advertisers would naturally prefer to be seen by the highest-income users, but recipients will often come from the same demographic as the sender. And 67% of texters earn less than ZAR5,000 (US$612) a month.

None of this may upset Vodacom much if all it wants is to break even. After all, at a rudimentary level, it only has to convince advertisers to cover the costs of roughly one message per prepaid customer a day (Vodacom claimed 21m prepaid customers in March, when this article was written).

Even without ad funding, 'Please Call Me' may be cheaper than one alternative - South Africans' use of missed calls to request a ring back, which puts a heavy load on the network. And Vodacom will always generate some incremental revenue from ring backs, even if the service triggers fewer than it would like.

The power of mobile

For all the shortcomings of 'Please Call Me', there is much to recommend the use of mobile to an advertiser in South Africa. With mobile penetration at more than 80%, more South Africans own a phone than a TV or radio, and more use a mobile service than read a daily newspaper or go to the cinema. PC-based internet penetration is just 8%, so the conventional online ad business has never had much buzz.

In fact, only outdoor billboard advertising has comparable reach. As a brand builder, it may always top the list of options available to an advertiser. But mobile has strengths apart from ubiquity. Vodacom can direct ads to specific locations, or make sure they are sent at particular times of the day, and charge advertisers for the privilege. A shop owner in Limpopo might want to advertise only to his local community, while a restaurateur in Johannesburg could insist ads are not sent out before midday. Vodacom has 6,000 base stations across the country - enough to target relatively small audiences and meet the demands of location-sensitive clients.

Mobile's location awareness can also help companies overcome a particular hurdle to mass-market advertising in South Africa: the use of 11 different languages. A drinks company running a TV ad campaign across the country would likely choose one for its broadcast and risk being misunderstood by many viewers. Using mobile, it could run a multilingual campaign, asking the operator to send messages in a less widely spoken language, like isiNdebele, to select areas where it is prevalent.

'AdMe' takes this a step further by exploiting another form of targeting. Users submit details of their hobbies and interests to Vodacom and agree to receive at least one ad message a day. In exchange they are sent coupons, bar codes that can be exchanged for goods, details of special offers or, occasionally, bundles of free texts. Ads can be not only restricted to a particular region or time, but also tailored to suit user profiles. On web-capable handsets, users could even click on links to visit 'microsites' that feature more information about a company or product.

The question is whether customers will embrace this targeting or start to feel push ads are a nuisance. Gigafone, a Russia-based start-up chasing a deal with an undisclosed African operator, has patented a variation of the format that pushes ads only when a call or text is incoming. Alan Harper, the former strategy director of Vodafone who now works at Gigafone, says this has a big advantage: customers are less likely to find ads intrusive and more likely to be interacting with their phones when they arrive. Nevertheless, most early customers of 'AdMe' seem happy. Of the 100,000 who signed up for the service over the first two months, just 100 have since quit. Vodacom is aiming to have 1m 'AdMe' customers by the end of the year, representing 4% of its current subscriber base.

Click-throughs and page views

Measurability is arguably the Achilles heel of 'AdMe'. Customers might enjoy getting their free texts and coupons, but how many actually engage with an advertiser's brand? 'Clickthroughs' on web links can tell a company whether someone has been to its site, but many prepaid customers will not have phones that let them go online. Indeed, only 800,000 Vodacom customers have devices that work on the fastest 3G networks.

The wealthier online community, however, is where the real battle for the mobile ad dollar will be fought. Because fixed-line internet penetration is so low, the mobile internet has far greater appeal to an advertiser than in more developed broadband economies.

"South Africa ranks third in the world for the total volume of Google searches on a mobile each day," says Stafford Masie, the country manager for Web giant Google. What's more, Vodacom gets a click-through rate of 2.5% on searches performed on the Vodafone Live! portal - more than eight times the rate on the fixed-line internet.

This high click-through rate could be a product of mobile's immediacy: unlike a desktop PC, it can be used as and when a consumer needs information. Admob, an ad placement specialist that gets similar rates from display ads on its publishers' websites, reckons people are naturally more inclined to use m-commerce if they are not PC owners, which might also bump up the rate. It could, however, simply be that click-throughs are currently buoyed by early adopters and will drop to fixed-line levels as the mobile internet is extended to the mass market.

Regardless of this, operators and internet players make uneasy bedfellows. Right now Vodacom benefits from the deal that includes the Google search engine in the Vodafone Live! portal. Google has since introduced South African advertisers to its mobile system, enabling them to create mobile derivatives of their online ads, and this should help companies with South African interests gain a stronger internet presence. But Google has to split advertising revenue with the operators that use the Vodafone Live! portal, and in greedier spirits might ask if it really needs such partnerships.

At the moment, it does. Because Vodacom is the network gatekeeper, it can direct users to sites of its choosing when they first access the mobile internet. This, no doubt, is largely why Vodafone Live! has become the number one digital property in South Africa, generating 20m page impressions and attracting 1.5m visitors every month (the most popular South African website, by comparison, attracts 1m visitors a month).

Location capabilities

Vodacom also makes an attractive ad partner because it can subsidise customer services as part of a special offer. It recently hosted a microsite for sportswear giant Nike, letting customers download screensavers and videos without even having to pay for data transport (there were 84,000 downloads in three weeks). A company like Admob would not be able to guarantee the same offer.

Moreover, Vodacom can blend its location capabilities with its online services. It has already created a partly ad-funded social network called the Grid. Using a virtual map, customers can track down their friends and post reviews next to restaurants or bars that advertise with Vodacom. Carl Uminski, the chief technology officer of Trutap, which develops software for mobile social networks, complains that other technology companies have to pay operators a triangulation fee of up to US$0.12 per query to run their own location-based services.

None of this, however, is set in stone. Vodacom is more 'open' than most - indeed, Mr Uminski reckons the South African mobile market is one of the most conducive to his business - but it might come under pressure to be even less restrictive, especially if others unlatch the gates. Google wants South African operators to let prepaid customers buy internet usage in bundles of Mbytes, and its much-hyped Android operating system could make it a truly dominant force on the mobile internet.

Paradoxically, the very dynamics that could spur adoption of the mobile internet and give advertisers the mass market they desire - flat rates, better prepaid internet access and a level playing field for web companies - are also the things Vodacom fears could leave it marginalised. "One reason we got into advertising early was to prevent the internet giants from taking over," says Mr Uys. Vodacom is unlikely to get swept aside, but maintaining its market lead will be no mean feat.

Vodafone Egypt trials mobile advertising South Africa is not the only country in Africa where mobile operators have a head start in advertising. Here in Egypt, Vodafone is nearing the end of a four-month ad trial that has involved experimentation with many of the services commercially deployed by Vodacom, including 'Please Call Me', push messaging and banner advertising on Vodafone Live!

Arguably, the prospects for mobile internet advertising are even stronger than in South Africa. Jonathan Bill, the head of internet and content services for Vodafone Egypt, says there are just 400,000 DSL connections in Egypt today, while Vodafone has more than 1.5m mobile internet customers. And unlike in Western economies, where advertisers want better metrics from operators before they commit to an ad programme, companies seem pleased just to have a digital route to market.

Nevertheless, those companies must be delighted with some of the early feedback statistics. During a recent campaign with Pepsi, a soft drinks company, Vodafone Live! customers could visit a microsite and download a sneak preview of a new video from Amr Diab, a popular Arabic musician. The click-through rate was more than 15%.

'Please Call Me' is also proving an effective ad channel. As in South Africa, the service was available to customers before it was sold to advertisers and also generating around 20m messages a day. Vodafone has now integrated an ad server into 'Please Call Me' that allows for relatively sophisticated targeting of customers. "Based on the recipient's profile from our database, we insert an appropriate ad based on who he is, what he does and his behaviour," says Mr Bill.

Even so, Vodafone has not yet launched a service that is entirely funded by advertising, as a new entrant called Blyk has done in the UK. Mr Bill reckons there is a great opportunity for such ad-funded mobile services in emerging markets. But until mobile advertising can match traditional media for revenue generation, an established operator seems unlikely to take that plunge.