The main advantage for telcos is the high quality of data, particularly real-time location data collected through the mobile, a precious data source unavailable to the OTT players.
Having an already established payment connection and related data is also a precious asset, not necessarily available to the likes of Google and Facebook who do not require payment for the use of their services. Conversely, scale is an issue where Google and Facebook are on a different scale; these are global juggernauts.
Trust is also an issue: regulation depends on the point of view taken. Telcos tend to be reluctant toopenly talk about the issue as it is sensitive concerning privacy. Regulation is trying to address it, but approaches differ depending mainly on geographical location and between telcos and OTTs.
Telcos have a wealth of personal data for potential monetisation; various strategies can be seen.
There are various strategies – often under the moniker of Telecom Data as a Service (TDaaS) –which the telcos are deploying to try to capture value from personal data they own, to try to win back some of the data monetisation market from the OTTs. They also have a wealth of personal data for potential use, yet they are valued lower than the GAFAM and the BAT, according to financial KPIs.
There is first either an open or closed approach; an open approach involves partnerships and the concept of achieving a larger scale (i.e. greater volumes of personal data), while a closed approach keeps the data within the control of a given player.
Then there is how the data is used:
First and foremost, the data can be used for internal analysis, to encourage upselling and cross-selling of one’s own telco services.
Then there is the approach to act within the digital advertising value chain, acting as an advertising exchange providing high-level ad inventory for targeted advertising. Here we see an interesting contrast between the US heavyweights; AT&T relies on the delivery of contents (especially following its acquisition of Warner) via the set-top-box to gather insights to be provided to the advertisers, while Verizon relies on the many media websites it handles since its acquisitions of AOL and Yahoo!’, placing importance on scale. More details on the digital advertising market below.
Some telcos (notably Verizon, Telefónica and Singtel) have embarked on the concept of selling anonymised and aggregated data to third parties, particularly to retailers and transport verticals to provide them with insights on how specific user clusters behave at any given time and location.
Finally, a zero-rating approach (where users can use apps without consuming their data allowance) has recently entered the fray, largely due to Veon partnering with players such as Uber and Deezer to provide these services for ‘free’. The business model involves revenue sharing between Veon and its partners, with Veon passing on personal data to its partners to encourage the use of such apps.
The digital advertising market will reach 268 billion EUR by 2021
This digital advertising market is a duopoly between Google and Facebook, who have succeeded in monetising personal data. Within this market, search has now become very much mature, dominated by Google, while display is seeing more competition and innovation, being pushed by Facebook; social, mobile and video are the three main components driving this market.
The importance of programmatic advertising is ever increasing, expected to account for over 50% of display advertising by the end of 2017. The digital advertising ecosystem sees ad exchanges providing automated real-time bidding (RTB) services, connecting the demand (advertiser) side through demand side platforms(DSP) and the supply (inventory) side through supply side platforms (SSP).