Free calls and computers but with a stream of ads

What's it worth to you, to invite advertisers into the most intimate corners of your life?

A free personal computer, perhaps? Or free long-distance telephone calls?

Those are the kinds of goodies now on offer, in the United States and in Europe, as advertisers stretch for more personal and direct ways of getting their messages across.

So if you send off a detailed questionnaire about your personal life to the California firm FreePC, you could be eligible for a free personal computer - in return for letting the company frame your screen with constantly changing advertisements (already a familiar sight for Web site visitors).

And if you hand over the same sort of lifestyle information to the Swedish company Gratistel, you can make free telephone calls for 10 minutes a day - in return for listening to advertising spots that interrupt your conversations.

At the intersection between the media and telecommunications, two of the fastest-changing industries in the world, the consumer is in the cross hairs. Novel, and at first sight bizarre, plans have blossomed on both sides of the Atlantic in recent months, taking advertising into uncharted but potentially fertile territory.

That territory, though, might hold new dangers for privacy, some critics contend, if people are not fully aware of just how much information about themselves they are giving away. And the intrusive nature of commercial messages interrupting cozy telephone chats, or flashing alongside the letter you are writing on your computer, may put a lot of people off.

The principle of "sponsored communications," as ad-supported phone calls have become known, is straightforward. A number of variations on the theme have been tested in Europe over the past few years: Phone companies in Italy, Sweden, and Norway operate such plans, and Bouygues Telecom is due to launch a test project in France this summer.

In Sweden, for example, 160,000 customers have signed up with Gratistel over the past five months, registering their names, addresses, personal habits, and tastes. When making a call, a customer first dials a special Gratistel number before dialing the number of the party he or she wants to speak to.

After one minute, the Gratistel computer interrupts the conversation with a 10-second ad designed to appeal to the customer's tastes and interests. The party at the other end also hears a commercial - a personally tailored spot if he or she is also a Gratistel subscriber, otherwise an ad targeted to his or her neighborhood. Spots cut in every three minutes thereafter.

In Italy, where Promotional System Phone has been offering a similar service since 1997, privacy laws restrict ads to the subscriber - protecting the party being called - and last only five seconds.

In the United States, the Maryland-based company Broadpoint launched its FreeWay service nationally in January, offering two minutes of free long distance time for every ad the subscriber listens to before making a call. FreeWay has attracted 150,000 subscribers, according to Broadpoint cofounder Perry Kamel, who says he hopes to sign up 1 million people by the end of the year.

FREEPC'S offer attracted more than 1 million applications, though only 10,000 computers will be distributed initially.

Unlike TV ads or billboards, an advertisement coming over the earpiece of your telephone is hard to ignore, points out Carl Ander, the Swedish founder of Gratistel. Mr. Ander is about to launch his company in the US, and has licensed his software in Australia, the Philippines, New Zealand, and Spain. "You can't go anywhere, you can't walk past it, you have to listen to it."

At the same time, advertisers are able to target their messages to the consumers most likely to be interested in them, since the ads a customer will hear on the phone - or read on his or her FreePC screen - are selected on the basis of the personal profile provided at registration.

"One of the real benefits ... is the ability of advertisers to accurately target the consumers," says Mr. Kamel.

Advertising-supported services that are free to the consumer have proliferated recently in part because the economics are now right, experts say: The prices of computers and of long-distance calls have fallen dramatically in recent years, making it possible to give them away. At the same time, advertisers are ready to pay handsomely for the certainty their message is getting through.

As people are subjected to more and more ads - as many as 3,000 a day in the United States according to one estimate - they simply tune them out says Diane Cook-Tench, director of the Ad Center at Virginia Commonwealth University in Richmond, Va.. The trend away from mass marketing toward more targeted advertising is going to "explode," she predicts.

"We are able to deliver a level of performance that advertisers will pay a premium price for," says FreeWay's Mr. Kamel. "We can tell them precisely who listened to which message and whether there was any response" through interactive functions.

Some privacy activists worry about this level of surveillance. FreePC, for example, will not only load subscribers' hard disks with fresh ads every week and track which ones get clicked; it will also be able to track which Web sites and chat rooms the subscriber visits.

"The newest uses of computer technologies enable [advertisers] to have much more pinpointed information on consumers, a much more widespread and possibly ubiquitous way of monitoring private consumption," says Gene Kimmelman of the Consumers Union in Washington.

Companies involved in sponsored communications pooh-pooh such fears, saying consumers are used to giving up personal information and appreciate ads that they find relevant, rather than the general run of mundane commercials.

"This is all part of a tectonic shift away from interruption-based advertising" on TV, in the streets, or via junk mail "to permission-based advertising, giving people something in return," insists Kamel. "Our members volunteer to hear messages in return for something valuable," such as free long-distance calling time.

Ms. Cook-Tench supports that view. "Advertising is running into a brick wall. We're immune to it, our shells have gotten fairly thick," she says. Advertisers "need to give consumers something in return for paying attention to these sales messages."