Boingo Wireless Scoops Up Cloud Nine Media as It Seeks to Offer More Ad-Supported Wi-Fi

Boingo Wireless said on Wednesday that it had purchased Cloud Nine Media, a small start-up focused on selling advertisements to pay for the cost of Wi-Fi in public places such as airports and restaurants.

Boingo isn’t saying how much it is paying for the eight-person firm, which today helps power advertising-supported Wi-Fi at airports in Seattle, Charlotte, N.C., and San Jose, Calif., as well as at a number of hotels. Boingo offers similar sponsored access at a number of its Wi-Fi locations, and plans to use the Cloud Nine team to expand those efforts.

“We’re already using similar technology in many of our managed hotspots — from the Google Offers sponsorship of the N.Y. subway stations, to the Microsoft sponsorship in shopping malls, to the American Express sponsorship in select airports,” Boingo CEO David Hagan said in an email interview. “This acquisition allows us to bring that capability in-house to better serve our growing need to deliver sponsored Wi-Fi.”

Hagan notes that there really isn’t any such thing as free Wi-Fi. When the consumer isn’t paying, either the venue or a sponsor is footing the bill. Many locations want to offer a mix of ad-supported and paid models. The biggest growth area, Hagan said, is in the sponsor-paid category. Unlike relatively low-priced banner ads, Hagan said, full sponsorships connect more deeply with consumers, and also command higher prices.

Down the road, there’s another emerging option. Cellular carriers may themselves want to cover the cost of Wi-Fi because it helps divert traffic off overloaded cellular networks in congested areas. A push to allow for carrier authentication and billing, known as Hotspot 2.0 or Passpoint, should help boost this market next year and beyond.

“This segment will pick up steam in 2013,” Hagan said. “Over the next couple of years, the carrier-paid segment will grow, and since the Wi-Fi connection/authentication happens in the background, most users won’t even realize they’ve been offloaded to Wi-Fi.”

Many venues will choose to go with a mix of options, offering a limited amount of free access paid by a sponsor or user, with longer-duration or higher-speed access offered on a paid basis.

“This is increasingly popular with airports, who don’t have the budgets to support venue-paid, but feel that they need to respond to consumer demand for free Wi-Fi,” Hagan said.