Tag: Insight

Fast-Tracking Operator Plans to Win in the $5bn Location Insights Market

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Preface

Subscriber location information is a much-heralded asset of the telecoms operator. Operators have generally understood the importance of this asset but have typically struggled to monetize their position. Some operators have used location information to enable third party services whilst others have attempted to address the opportunity more holistically, with mixed success.

This report updates and expands on a previous STL Partners study: “Making Money from Location Insights” (2013). It outlines how to address the potential opportunity around Location Services. It draws on interviews conducted amongst key stakeholders within the emerging ecosystem, supplemented by STL Partners’ research and analysis, with the objective of determining how operators can release the value from their unique position in the location value chain.

This report focuses on what we have defined as Location Insight Services. The report argues that operators should first seek to offer Location Insight Services before evolving to cover Location Based Services. This strategic approach allows operators to better understand their data and to build location services for enterprise customers rather than starting with consumer-orientated location services that require additional capabilities. This approach provides the most upside with the least associated risk, offering the potential for incremental learning.

This report was commissioned and supported by Viavi Solutions (formerly JDSU). The research, analysis and the writing of the report itself were carried out independently by STL Partners. The views and conclusions contained herein are those of STL Partners.

Location Based Services vs. Location Insight Services

In the 2013 report, STL made a clear distinction between different types of location services.

  • Location Based Services (LBS) are geared towards supporting business processes (typically marketing-oriented) that are dependent on the instant availability of real-time or near real-time data about an individually identifiable subscriber. These are provided on the reasonable assumption that knowing an individual’s location enables a company to deliver a service or make an offer that is more relevant, there and then. Typically these services require explicit consent and an interaction with the customer (e.g. push marketing) and therefore require compelling user interfaces and permissions.
  • Additionally there is an opportunity to derive and deliver Location Insight Services (LIS) from connected consumers’ mobile location data. This opportunity does not necessarily require real-time data and where insights are aggregated and anonymized, can safeguard individuals’ privacy. The underlying premise is that identification of repetitive patterns in location activity over time not only enables a much deeper understanding of the consumer in terms of behavior and motivation, but also builds a clearer picture of the visitor profile of the location. Additionally LIS has the potential to provide data that is not available via other routes (e.g. understanding the footfall within a competitor’s store).

Figure 7:  Mapping the Telco Opportunity Landscape

Source: STL Partners

The framework in Figure 7 has been developed by STL Partners specifically with the mobile operator’s perspective in mind. We have split out operator location opportunities along two dimensions:

  • Real-time vs. Non-real-time data acquisition
  • Individual vs. Aggregated data analysis and action

Choosing the Right Strategy

Where are we now?

Most operators understand the potential value of their location asset and have attempted to monetize their data. Some operators have used location to enable 3rd party services whilst others have attempted to address the opportunity more holistically. Both have achieved mixed success for a number of reasons.

Most operators who are attempting to monetize location data have been drawn towards Location Based Services, namely push-marketing and advertising. Whilst some operators have achieved moderate success here (e.g. O2 Priority Moments), most are acting as enablers for other services. They are therefore addressing a limited part of the value chain and subsequently are not realizing significant value from their data. We do not consider those that pursue this strategy to be Location Based Services Providers, rather they are simply enablers.

Similarly a number of operators are addressing Location Insights, albeit with different approaches. Some are partnering with analytics and insight companies (e.g. Telefonica and GfK), others are developing services mostly on their own (e.g. SingTel’s DataSpark), whilst others are simply launching pilots.

In order to maximize the value that operators can secure through Location Services, we believe that operators need to address the whole Location ‘Stack’, not simply enabling new services or providing raw data. STL believe that the best way to do this is to start with Location Insight Services.

Start with Location Insight Services

When considering how to develop and monetize their location assets we recommend that operator’s select to start with LIS. Whilst many operators are already engaged in LBS (e.g. enabling push-marketing) the majority are not actually providing the service but are simply sharing data and enabling a 3rd party service provider.
Starting with LIS has a number of strategic advantages:

  • It’s a big opportunity in its own right
  • Telcos (should) have a data capture/technology advantage for LIS over OTT players
  • LIS provides an opportunity to build & learn incrementally, proving value
  • Privacy risks are reduced (particularly with aggregated data)
  • LIS does not require 100% coverage of the population, unlike a number of LBS use cases
  • LIS can provide internal benefits and can bolster the Go-to-Market strategy for vertical specific offerings

These advantages are explored in more detail further in this report.

 

  • Location, Location, Location
  • The Importance of Information
  • Location Based Services vs. Location Insight Services
  • Choosing the Right Strategy
  • Where are we now?
  • Start with Location Insight Services
  • Improve your LIS offering, transition towards LBS & position yourself as a Trusted Data Provider
  • Location Insights – Marketplace Overview
  • Where is the Opportunity for Location Insight Services?
  • Which Sectors are most addressable?
  • Sizing the Opportunity
  • Why haven’t forecasts developed as quickly as expected?
  • Location Insights potentially worth $5bn globally by 2020
  • Benchmarks
  • Where does the value come from – the Location Insights ‘Stack’
  • Understanding the Technology Options
  • The Technology Options for Location Data Acquisition
  • Technology Advantages for Telcos
  • The Right Degree of Location Precision
  • Other Advantages of Starting with LIS
  • Incremental Learning
  • Addressing the Privacy Question
  • Market Coverage
  • LIS can provide internal benefits and can bolster the Go-to-Market strategy for vertical specific offerings
  • Expanding Beyond Insights
  • Addressing Location Based Services
  • Becoming a Trusted Data Provider
  • Practical Guidance to Launch Location Services
  • Market Strategy
  • Data Management
  • An agile approach, partnering, orchestration and governance
  • Conclusions
  • Appendices
  • Appendix 1: Location Acquisition Technologies in Detail
  • Appendix 2: Opportunity Sizing Methodology
  • Appendix 3: About STL Partners and Telco 2.0: Change the Game

 

  • Figure 1: Location Insight vs. Location Based Services
  • Figure 2: STL Partners’ Analysis of the value of Global Location Insight Services (by 2020)
  • Figure 3: Analysis of location data acquisition technologies suitability for Location Insight Services
  • Figure 4: The Strategy Beyond Location Insights
  • Figure 5: The Explosion of Smartphones (2007-2014)
  • Figure 6: ‘Non-Smart’ Data Insights Become More Important as More ‘Things’ are Connected
  • Figure 7: Mapping the Telco Opportunity Landscape
  • Figure 8: Four opportunity domains for operators
  • Figure 9: Turkcell’s Smart Map Tool
  • Figure 10: TomTom’s Fusion Engine to Analyze Real-Time Traffic Information
  • Figure 11: Tado’s Proximity Based Thermostat
  • Figure 12: Expanding Beyond LIS
  • Figure 13: Location Insights – Market Taxonomy
  • Figure 14: Telefónica Smart Steps Location Analytics Tool
  • Figure 15: Motionlogic’s Location Analytics Tool
  • Figure 16: The value of Global Location Insight Services by industry and sector (by 2020)
  • Figure 17: The Location Insights ‘Stack’
  • Figure 18: How well do different location data acquisition technologies support Location Insight Services needs?
  • Figure 19: Real-Time vs. Near Real-Time Location Information
  • Figure 20: Deveryware’s Dynamic Permissions Tool
  • Figure 21: Become a Trusted Data Provider
  • Figure 22: Analysis of App/OS based real-time location Technology
  • Figure 23: Analysis of App/OS based data stored on device Technology
  • Figure 24: Analysis of Emergency Services Location Technology
  • Figure 25: Analysis of Granular (building level) network based Technology
  • Figure 26: Analysis of Coarse (cell-level) network based Technology
  • Figure 27: Analysis of Indoor Technologies

Telco 2.0: Making Money from Location Insights

Preface

The provision of Location Insight Services (LIS) represents a significant opportunity for Telcos to monetise subscriber data assets. This report examines the findings of a survey conducted amongst representatives of key stakeholders within the emerging ecosystem, supplemented by STL Partners’ research and analysis with the objective of determining how operators can release the value from their unique position in the location value chain.

The report concentrates on the Location Insight Services (LIS), which leverage the aggregated and anonymised data asset derived from connected consumers’ mobile location data, as distinct from Location Based Services (LBS), which are dependent on the availability of individual real time data.

The report draws the distinction between Location Insight Services that are Person-centric and those that are Place-centric and assesses the different uses for each data set.

In order to service the demand from specific use cases as diverse as Benchmarking, Transport & Infrastructure Planning, Site Selection and Advertising Evaluation, operators face a choice between fulfilling the role of Data Supplier, providing the market with Raw Big Data or offering Professional Services, adding value through a combination of location insight reports and interpretation consultancy.

The report concludes with a comparative evaluation of options for operators in the provision of LIS services and a series of recommendations for operators to enable them to release the value in Location Insight Services.

Location data – untapped oil

The ubiquity of mobile devices has led to an explosion in the amount of location-specific data available and the market has been quick to capitalise on the opportunity by developing a range of Location-Based Services offering consumers content (in the form of information, promotional offers and advertising). Industry analysts predict that this market sector is already worth nearly $10 billion.

The vast majority of these Location Based Services (LBS) are dependent on the availability of real time data, on the reasonable assumption that knowing an individual’s location enables a company to make an offer that is more relevant, there and then.  But within the mobile operator community, there is a growing conviction that a wider opportunity exists in deriving Location Insight Services (LIS) from connected consumers’ mobile location data. This opportunity does not necessarily require real time data (see Figure 9). The underlying premise is that identification of repetitive patterns in location activity over time not only enables a much deeper understanding of the consumer in terms of behaviour and motivation, but also builds a clearer picture of the visitor profile of the location itself.

Figure 1:  Focus of this study is on Location Insight Services
Focus of this Study on Location Insight Services

  • As part of our Telco 2.0 Initiative, we have surveyed a number of companies from within the evolving location ecosystem to assess the potential value of operator subscriber data assets in the provision of Location Insight Services. This report examines the findings and illustrates how operators can release the value from their unique position in the location value chain.

Location Insight Services is a fast growing, high value opportunity

The demand is “Where”?

For operators to invest in the technology and resources required to enter this market, a compelling business case is required. Firstly, various analysts have confirmed that there is a massive latent demand for location-centric information within the business community to enable the delivery of location-specific products and services that are context-relevant to the consumer. According to the Economist Business Unit, there is a consensus amongst marketers that location information is an important element in developing marketing strategy, even for those companies where data on customer and prospect location is not currently collected.3

Figure 2: Location is seen as the most valuable information for developing marketing strategy
Location is seen as the most valuable information for developing marketing strategy

Source: Mind the marketing gap – A report from Economist Business Intelligence Unit

Scoping the LIS opportunity by industry and function

In order to understand the market potential for Location Insight Services, we have considered both industry sectors and job functions where insights derived from location data at scale improve business efficiencies. Our research has suggested that Location Insight Services have an application to many organisations that are seeking to address the broader issue of how to extract the benefits concealed within Big Data.

A recent report from Cisco concentrating on how to unlock the value of digital analytics suggested that Big Data has an almost universal application and

“Big Data could help almost any organization run better and more efficiently. A service provider could improve the day-to-day operations of its network. A retailer could create more efficient and lucrative point-of-sale interactions. And virtually any supply chain would run more smoothly. Overall, a common information fabric would improve process efficiency and provide a complete asset view.” 

Our research suggests that the following framework facilitates understanding of the different elements that together comprise the market for non-real time Location Insight Services.

The matrix considers the addressable market by reference to vertical industry sectors and horizontal function or disciplines.

We have rated the opportunities High, Medium and Low based on a high level assessment of the potential for uptake within each defined segment. In order to produce an estimate of the potential market size for non-real time Location Insight Services, STL Partners have taken into account the current revenue estimates for both industry sectors and functions.

Figure 3:  Location Insight Market Overview (telecoms excluded)
Location Insight Services Market Taxonomy

Report Contents

  • Preface
  • Executive Summary
  • Location data – untapped oil
  • Location Insight Services is a fast growing, high value opportunity
  • Scoping the LIS opportunity by industry and function
  • Location Insight Services could be worth $11bn globally by 2016
  • Which use cases will drive uptake of LIS?
  • Use cases – industry-specific illustrations
  • How should Telcos “productise” location insights services?
  • Operators are uniquely placed to deliver location insights and secure a significant share of this opportunity
  • What is the operator LIS value proposition?
  • Location insight represents a Big Data challenge for Telcos.
  • There is a demand for more granular location data
  • Increasing precision commands a premium
  • Meeting LIS requirements – options for operators
  • What steps should operators take?
  • Methodology and reference sources
  • References
  • Appendix 1 – Opportunity Sizing
  • Definition
  • Methodology

 

  • Figure 1: Focus of this study is on Location Insight Services
  • Figure 2: Location is seen as the most valuable information for developing marketing strategy
  • Figure 3: Location Insight Market Overview (telecoms excluded)
  • Figure 4: The value of Global Location Insight Services by industry and sector (by 2016)
  • Figure 5: How UK retail businesses use location based insights
  • Figure 6: Illustrative use cases within the Location Insights taxonomy
  • Figure 7: How can Telcos create value from customer data?
  • Figure 8: Key considerations for Telco LIS service strategy formulation
  • Figure 9: Real time service vs. Insight
  • Figure 10: The local link in global digital markets
  • Figure 11: Customer Data generated by Telcos
  • Figure 12: Power of insight from combining three key domains
  • Figure 13: Meeting LIS Requirements – Options for Operators