The days of making money on traditional telecommunications have quickly faded. Digital disruption and companies like Google and Apple have set telcos back on their heels, seeking ways to increase revenues through a wider range of services and business models.
One big opportunity lies in ad technology, because of the unique consumer data sets telcos have—probably the richest data sets outside of those owned by Facebook and Google.
This data ranges from consumer location via base transceiver station (BTS) and online behavior via network traffic analysis, to demographic/socioeconomic status (for example, information from contracts/family plans).
Telcos also have various ad inventories available to monetize. Besides data, they can offer ad space for both display and audio advertising, and open it up to programmatic media buying.
All of this data can be used to build interesting audience segments and is very valuable to potential advertisers. Yes, as with all data, it comes with privacy issues, and telcos must face the challenge of using data in a responsible and legal way, but that’s an issue that can be covered separately.
Focusing just on the market opportunity, here are several potential ways that telcos can forge into the ad-tech market.
Data Provider / Inventory Seller
Telcos can connect their anonymized data sets and sell them through existing data management platforms/demand-side platforms (data) and supply-side platforms (ad inventory). This is relatively low-risk, easy approach with no need to build or acquire technology, or hire and train staff. The upside is immediate and comparable to selling raw material versus producing something from it and offering it to end customers. The margin will be much higher on the end product, but it’s easier to sell.
Middleware / Ad-tech Service Provider
Another option for telcos is to offer services and full solutions to a-tech companies based on their data that will be valuable and unique to the market. Given that consumers use multiple services from a single telco (such as home Internet and mobile phone plans), telcos can use the data to build technology that enables cross-device matching. Similar things could be done for data onboarding and online/offline sales attribution. This path requires significant investment, but it can be very specific. Thus a minimum viable product (MVP) could be rolled out in a matter of months and start generating higher revenue than just selling data.
Ad-tech Stack Provider
A third option for telcos is to offer a full ad-tech stack solution to advertisers, agencies and trading desks, such as Neustar PlatformOne, Adobe Marketing Cloud or Google Suite 360. Rather than focusing on the solution for ad-tech companies, telcos can build a full solution used by the demand side to buy media and attribute the sales to various digital advertising campaigns.
Competition and consolidation will likely remain fierce both in telecoms and ad tech, but data provides many paths for telcos to jump into ad tech with valuable solutions that will help them create new revenue streams and competitive advantages with new technologies.
This post was originally published on MediaPost on May 4, 2016.