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Ad Decisioning as a Service: In this mode, the service provider manages the metadata for the ads and also recommends the right ad to the right customer at the right time on the right channel. Advertiser relationships are managed by the eco-system but the Telco has a deeper footprint in the ad value chain and manages the entire process of translating data to insight to an “ad decision” for any specific customer context. Business model is based on performance – i.e. increased uplift through better targeting – and /or transaction volumes related to number of ad decisions.
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Ad Placement as a Service: In this model, the provider directly contracts with advertisers with the promise of delivering more targeted audiences. The provider primes the entire advertising value chain from managing contracts, making advertising decisions in real time and in actual ad placement. In channels where it has full control (Like IPTV), the Telco may place the ads directly (assuming addressability as a technology is full baked in IPTV and has buy-in from broadcasters) and in channels where they are dependent on third parties (like off portal mobile web pages), they may serve the ad as a service that will be consumed by the publisher. The business model can be based on impressions served, audiences delivered and specific audience engagement metrics.
Service providers have a unique opportunity to change the game and offer a new channel for advertisers who are increasingly looking for higher and measurable ROI, more “bang for the buck” and reaching specific and targeted audiences. They are also well positioned to exploit several adjacent business opportunities around third party coupons and promotions. A whole range of industries including retail, CPG, financial services and Insurance are looking for ways to better reach end consumers and the telecom provider can
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CSPs have a unique opportunity to offer a new channel for advertisers looking for more “bang for the buck”. |
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evolve to be that channel of choice. However, to fulfill this promise, providers need to focus on a number of strategic initiatives.
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Today, most service providers are in the very early stages of experimenting with advertising business models. This line of business needs fresh perspectives on the intricacies and dynamics of new media, advertising and content partner relationships. Telcos may want to consider external hires from the media /advertising industry to ramp up the domain expertise required to navigate these unchartered waters.
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Most existing BSS / OSS systems do not support the capabilities required for large scale subscriber profiling and real time decisioning. Telcos need to invest in new competencies (some of this can be outsourced to strategic IT providers) to manage this effectively.
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New subscription models and incentives may have to be offered to increase opt-in and subscriber engagement. The advertising business model cannot be a stand-alone initiative and will require close collaboration with the mainstream lines of business. Management incentives need to be re-aligned with this strategy to maximize the probability of success and ramping up this nascent but high potential business model.
Advertising can be the next multi-hundred billion dollar opportunity for telecoms to compensate for the increasing commoditization of connectivity. Providers of mobile, IPTV, and broadband can become the preferred channels for advertisers to enable contextual personalization. If telcos play their cards right, they can be at the epicenter of this transformation. Will they?
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