After we co-wrote the ‘Telcos Role in Advertising Value Chain’ report with Chris Barraclough of STL Partners, a
3rd day workshop was held after the Telco 2.0 brainstorm to take people through our work. I couldn't make it as we were at the BBC Innovations Lab, but The Economist Intelligence Unit's Damian Green was the analyst in residence and his thoughts are noted in a thoughtpiece on the Telco 2.0 blog
here.
To summarise, he notes that:
Mobile advertising networks such as Admob, Third Screen Media and Nokia’s recently launched Ad Service are predicated on large-scale media consumption on mobile devices. Whether or not this transpires, I believe media-hosted mobile advertising will prove to be a sideshow to the main event.
(I have snipped some of the text here and there to tell the story)
The rise of the online ad networks has been driven by the explosion of blogs, niche interest sites and other long-tail web content, coupled with a homogenous delivery platform (the web browser) that permits audiences to be tracked and ads served across a diverse range of properties.
However, two conditions make mobile advertising very different to the on-line world:
1. Media ownership is likely to be more concentrated on mobile… Greater resources are needed to produce content that works across a range of devices, creating significant barriers to mobile publishers. In addition, recent research and analysis reveals a strong bias among mobile internet users towards messaging applications, maps and social media - services that have favoured the emergence of a handful of dominant destinations on the fixed web.
2. …but the delivery platform is more fragmented. With mobile internet users focusing their attention on a relatively small number of properties, and accessing these via a proliferating range of devices and networks, mobile advertisers are more likely to be impacted by the fragmented delivery platform than by fragmentation of the media landscape (the issue addressed by advertising networks). At the same time, the bigger mobile media owners have little incentive to cede control of ad sales to third parties (Third Screen Media recently acknowledged it is seeing a trend of mobile media owners choosing to stay outside its ad network and rent its ad serving technology instead, as Fox News has done).
I agree with this analysis totally (well, it was the essence of our thinking in the report as well)...I'd add that the "2 billion mobile users" are broken up into a plethora of different walled garden service stacks, using a huge range types of device and O/S etc. Its like the pre- internet of the early 1990's using PC based standards pre Microsoft. Mobile Web 1.0 isn't really here yet, never mind Mobile Web 2.0.
He goes on to note that:
While displaying ads on mobile websites may initially be an effective brand awareness tactic, this is likely to be largely due to novelty, rather than the limited impact of a 150×20 pixel banner. Mobile marketers point out that the key purpose of mobile ads is to drive interaction with the brand - yet what will mobile users be interacting with? Only a small number of brands currently have a dedicated mobile internet presence; even fewer can justifiably claim to offer a compelling mobile experience.
To this I'd add that previous Internet ad technologies (Banners, popups, 2nd Life plays even ppc classified) all initially had a high novelty takeup and then start to fade in impact.
He then makes the interesting point that
A more fundamental hurdle to the mobile ad networks - and indeed to traditional advertising being transferred successfully to mobile at all - is that advertisers do not know mobile users sufficiently well to understand what they are likely to find interesting, useful or valuable.
Now this is an interesting assertion, not sure I'd agree with it
in theory - they certainly have the potential to do so - but whether they are analysing the data is far from clear (something that seems to be true of all Telcos if comments from the rest of the Telco brainstorm are valid).
To be fair Damian later notes that:
The only entity in a position to achieve this level of understanding of a mobile user is their mobile service provider. Mobile operators are (or soon will be) the gatekeepers to such key enablers of advanced mobile advertising as customers’ identity, presence and location information. Moreover, they are the only companies with a sufficient level of trust to make credible claims about protecting such extremely sensitive data (their customers may complain about high bills and poor customer service, but rarely dispute call charges).
Ah yes....Trust. All the evidence is pointing to Trust being a (if not the) key factor to allowing "personalised" Ad based plays to work, because they need the user to share a lot of personal identity / intimacy data. And part of that tradeoff is making advertising user pull, not advertiser or operator push.
Damian then notes:
This turns the notion of targeting on its head. Traditionally, advertisers are the ones who deem which kinds of consumers should receive their messages; in the coming era of advanced mobile advertising, operators will make the call about which messages to send to their customers.
More than that...as we imply above, users, not operators will make the call about what sort of advertising to receive. It may be a lot (if for e.g. they get free telephony as a result, i.e. the Blyk model) or a little (useful info for a small deduction in price).
Now there is a lot of interesting content in the piece and I recommend you all read it, (and buy our report of course) but I think its worth quoting his end thoughts as well....
If advertisers can no longer dictate who their ads are seen by, what incentive will they have to provide their ads to a third party aggregator with no inventory or eyeballs to their name? In a word, results. This kind of advertising will simply work. Ultimately it comes down to people knowing themselves better than advertisers do, and choosing to share aspects of their identities and lifestyles with one, trusted service provider.
This last point resonates with some work we did a while ago, the idea of the "Customer NPV". We believe people will increasingly start to know their value to advertisers and barter this value for levels of access to their identities. Why? Because they can, using the 'net. At present people don't really know their value (see the tiny amounts paid by storecards) but as they become more digitally literate (digerate?) this will change.
Damian's post is titled "Mobile ad networks are a stop-gap: the real opportunity is elsewhere"
So where is this "elsewhere"
As we noted in the report and on
this blog, the total size of the global Ad industry is an order of magnitude smaller than the total Telecoms industry, the % online is an order of magnitude less than that, and the % of Mobile Advertising is much smaller than that (1 -2 orders of magnitude less).
Damian notes that:
Rather than aggregating inventory or “eyeballs”, the greater opportunity for mobile advertising networks is in aggregating advertising content. The most successful ad networks will be the ones who provide the most contextually rich offers for mobile operators (and eventually web media owners and IPTV service providers) to deliver to their customers. There will also be an opportunity for niche players to specialise in helping advertisers enrich the metadata associated with digital ads.
Now we go into this thought far more in the report, digging down into the specific aspects that Telcos and Advertisers can partner, go it alone etc, but this is broadly correct.
However....
Its not just advertising content in our view - for this sort of play to make sense it has to deal with the relevance of
all the media shipped, not just the relevance of the Ads served.
And the Big Question is how flexible the Operators can be in dealing with this unfamiliar emerging industry, where its not just the technologies that are converging but the business models and cultures. One of the things that hits you in the Convergence is the huge difference in culture between Telcos, CableCo's, MediaCo's, Dot.Co's - even though they are offering essentially teh same services to the same customers. And one of the strong pieces of feedback in the Telco 2.0 sessions (of which more anon) were the concerns about the speed and agility of the Operators.
