There is a school of thought that telecommunications companies, which have been sitting on vast swathes of data for decades, have been rather late to the party in terms of making a play for ad technology.
However, in recent months, there has been a surge of activity in the sector, particularly through M&A activity, with telcos now looking conspicuously at ways of monetising data that is getting more extensive, accurate and accessible all the time.
Telcos have been involved in a spate of deals designed to unlock the potential of their advertising-targeting capabilities.
In 2016, ad technology company Tapad was snapped up by Norwegian telco Telenor for $360M. Last year, Netherlands-based Altice acquired Teads while Singapore-based Singtel – which has spent more than $1bn on ad technology takeovers since 2012 – purchased Turn. Both of the deals were valued at more than $300m.
It is easy to see why there has been such a shift. This month, Oath, which serves as the umbrella company of Verizon’s digital-content divisions, was credited with boosting the telco’s consolidated revenue by 6.6% year-on-year. Oath, which has attracted advertisers through its data analytics tools and programmatic capabilities, reported a 166.7% rise in revenue to $1.9bn.
According to Warren Zenna, a digital strategist and marketing expert who is the founder and principal of Zenna Consulting Group, it “makes sense” for telcos to be broadening their horizons by exploring location-based data and related ad technology opportunities.
“The telcos are the guardians of your phone, so it makes sense that the likes of Verizon are building up this part of their business and are moving more into marketing and intelligence,” he said. “I have no doubt that all of the big carriers will get more into this area as well.”
At last year’s World Mobile Congress, Ericsson underlined such plans when the company confirmed it was exploring ways to help telcos scale their first-party data in order to break into ad technology.
In going beyond traditional network services and exploiting data though, companies in the telco sector will face challenges as well as opportunities.
“What is the carrier going to do with that data? There are going to be a lot of issues around compliance and privacy, and it will be interesting to see how these companies tackle those,” Zenna added.
Another challenge is improving the accuracy of the data to make it more useful to marketers in the context of their business operations.
“For sure, there are apps that are very useful and others that overpromise,” Zenna said.
“If I’m a retailer with a store, spending money on various forms of marketing, it can be difficult to figure out which campaigns have been responsible for getting people to buy certain products.
“However, with location data, dwell times and footfall analysis can show whether certain customers have been exposed to a type of message and can therefore show whether a particular campaign has worked. In that respect, location data can be extremely valuable, because it can make distinctions that other data cannot.”
Speed and scale
With the backing of proactive and visionary telcos keen to discover the benefits of exploiting location data at speed and scale, the sector is certainly not going to stand still.
“All these technologies are improving,” Zenna said. “There is a great deal of interest in the ad technology community to make it better and really smart engineers are working right now on ways to refine location-based data. They will make it better and better.
“There will also be more efficiency in extracting the data and with more IoT connecting people and devices around the world in the future, it will be easier to plot exactly where people are.”