2015 has witnessed the turning point at which internet access on mobile devices exceeds desktops and laptops combined for the first time and, worldwide, digital advertising has followed the audience migration from desktop to smartphone and tablet. A new ecosystem has evolved to service the needs of the mobile advertising industry. Ad exchanges and ad networks have adapted to facilitate access by brands to an ever-wider range of content on multiple devices, whilst DMPs (Data Management Platforms), DSPs & SSPs (Demand Side and Supply Side Platforms respectively) are fuelling the growth of ‘programmatic buying’ by enabling the flow of data within the ecosystem.
There is an opportunity for telcos to establish a sustainable and profitable role as an enabler within this rapidly developing market
Advertising should be an important diversification strategy for telcos as income from core communications continues to decline because they can make use of existing assets (e.g. audience reach, inventory, data), whilst maintaining subscriber trust. Telecoms operators’ ability to use their own customers’ data (with consent) to improve their own service offerings is a key advantage that provides a strong basis for developing advertising and marketing solutions for third-parties.
Walking in the footsteps of giants does not kill the opportunity for telcos
Facebook and Google will represent more than half of the $69 billion worldwide mobile-advertising market in 2015. This dominance has led some operators to question whether they can build a viable advertising business. However STL Partners believes that there has never been a better time for many operators to consider ramping-up their efforts to secure a sustainable practice through leveraging the value of their own customer data. In fact, many telcos are actively working with OTT players such as Google and Facebook to assist them in understanding territory-specific mobile behaviour.
Three telcos lead the way in advertising – Sprint, Turkcell and SingTel – and provide important lessons for others
In the main body of this report, STL Partners identifies the role that each telco has chosen to perform within the advertising ecosystem, assesses their strategy and execution, and identifies the core reasons for their success. The three case studies display several common characteristics and point to six Key Success Factors (KSFs) for a telco advertising business. The first is a ‘start-up mindset’ pre-requisite for establishing such a business and the other five are core actions and capabilities which mutually strengthen each other to produce a ‘flywheel’ that drives growth (see Figure 1). As a telco exec, whether your organisation is just embarking on the advertising journey, if it has tried to build an advertising business and withdrawn or, indeed, if you are well on the way to building a successful business, we outline how to deliver the following six KSFs in the downloadable report:
- How to secure senior management support
- How to develop a semi-independent organisation with advertising skills and a start-up culture
- How to build or buy best-in-class technical capability and continuously improve
- Demand-side: How to build value for subscribers
- Supply-side: How to build value for media buyers and sellers
- How to pursue opportunities to scale aggressively
Figure 1: The Telco Advertising Business Flywheel
Why now is the right time for telcos to take a more prominent role within mobile advertising
After years of hype, mobile advertising is now starting to mature in terms of technical solutions, business models, and customer acceptance. The catalyst for this growing awareness of the potential of mobile advertising is the increasing demand for first-party (own customer) data to personalize and contextualize marketing communications both within telcos and more widely among enterprises as a way of improving on coarse-grained segmentation. Telcos hold more and better data than most organisations and have wonderful distribution networks (the network itself) for managing information flows, as well as delivering marketing messages and services.
For those within and outside telcos that are developing marketing and advertising solutions, we would love to hear your stories and facilitate discussions with your peers, so please do get in touch: firstname.lastname@example.org
- Executive Summary
- Why is advertising important for Telcos?
- Walking in the footsteps of Giants?
- Case study 1: Sprint
- Summary: Reasons for Sprint’s success
- A track record in innovation
- Making data matter
- How successful is Sprint’s strategy?
- What does the future hold for Sprint?
- Case study 2: Turkcell
- Summary: Reasons for Turkcell’s success
- A heritage in mobile marketing
- Retaining control, enabling access
- Co-opetition from a position of strength
- How successful is Turkcell’s strategy?
- What does the future hold for Turkcell?
- Case study 3: SingTel
- Summary: Reasons for SingTel’s success
- Assembling a digital marketing capability through acquisition
- Retaining revenue within the value chain
- Providing technology at scale
- How successful is SingTel’s strategy?
- What does the future hold for SingTel?
- Conclusion and recommendations
- Figure 1: The Telco Advertising Business Flywheel
- Figure 2: Time Spent per Adult per Day with Digital Media, USA, 2008-2015
- Figure 3: Mobile Internet Ad Spending, Worldwide, 2013 – 2019
- Figure 4: Mobile Marketing Ecosystem (extract)
- Figure 5: The “Wheel of Commerce”
- Figure 6: The Digital Gameboard – an OTT view of the world
- Figure 6: Sprint’s data asset overview
- Figure 7: Sprint’s role in the mobile advertising ecosystem
- Figure 9: Top App Widget
- Figure 10: Visual voicemail
- Figure 11: Turkcell’s role in the mobile advertising ecosystem
- Figure 12: Turkcell’s mobile marketing solution portfolio
- Figure 13: Turkcell’s permission database overview
- Figure 14: SingTel’s role in the mobile advertising ecosystem
- Figure 15: SingTel’s digital portfolio prioritisation
- Figure 16: The role of first-party data
- Figure 17: The promise of first-party data
- Figure 18: The Telco Advertising Business Flywheel