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8 Key Reasons Network Operators Should Be Part Of The Value Chain

valuechain.gifSmart phones make it easy for ad networks to bypass the mobile operator. A major bonus for advertisers is that this eliminates the cost of sharing revenue with mobile operators, and a major bonus for technology providers is that it eliminates the effort to integrate with a mobile operator’s infrastructure.

However, there may be some key advertising benefits that only a mobile operator can provide. In this article, Mark Westling, Founder and CTO of Sigma Limited argues that there are several compelling reasons to include the operator as part of the value chain.

As anyone who has worked on mobile telecommunications networks can attest, carrier grade services can be a huge effort to design, test, and deploy. When a banner ad fails to appear quickly on a web page, a consumer seldom blames his ISP, but when an ad slows the presentation of a WAP or mobile web page, the operator is the first to be blamed. This is why operators enforce “carrier grade” requirements on all services associated with their name.

Given all that, why would anyone want to integrate an advertising platform tightly within a mobile operator network? Here are eight good reasons:

  • New ad delivery channels. A mobile operator can open up channels that are otherwise inaccessible. Text ads can be appended to network-generated SMSs, such as missed call notification (MCN), billing top-ups, and welcome messages. Audio ads can be inserted in IVR portals or personalized ring-back tone (PRBT) services, such as Turkcell’s Tone & Win.
  • On-deck applications and portals. Let’s face it: only a small percentage of the world’s mobile subscribers use iPhones and Androids. The rest rely on traditional handsets, often supplied by the operator, with operator-selected applications and portals. Tomi Ahonen makes a convincing argument that the importance of iPhones and Androids — with respect to the world outside the U.S. – is often overestimated.
  • Cross-channel campaigns. Working with the operator makes it much easier to deploy campaigns that span multiple channels. One Asian operator delivers initial text ads with embedded short codes that link to audio response IVR that then sends follow-up information via push SMS. Many other combinations are possible.
  • Ad-sponsored services. By integrating with the billing system, an operator can offer ad-sponsored services — for example, a ring-back tone service that is subsidized by occasional ads, or a rebate for calling minutes if the user opts to listen to an audio ad before the call.
  • Dropping charges for ad delivery. A serious problem with mobile advertising is that a subscriber is often charged for the delivery of the ad and responses to the ad. Any interactive advertising based on SMS ad delivery and interactive SMS responses runs into this problem. The only solution is reversing or dropping the charge and this can only be done with the cooperation of the operator’s billing system.
  • Demographic data. Operators are the trusted keeper’s of their subscribers’ demographic data and if privacy protection is in place, this information can be accessed by an ad platform. Privacy protection is the key.
  • Behavioral data. One of the most interesting and most valuable sources of targeting data is subscriber behavior, and calling behavior is accessible only through the operator. I’ve written previously about the value of calling behavior.
  • CRM. The best customer of a mobile ad platform can be the mobile operator itself. Some operators have realized that their ad platform can also be a CRM platform. If they can perform a data mining analysis to determine the customers most likely to churn, they can target those customers not with ads but with offers and promotions enticing them to stay.

What’s holding up mobile operators from jumping into ad delivery? One problem is sensitivity to brand perception: a mobile operator that associated with unwanted ads loses subscribers quickly, and getting and retaining subscribers is what the mobile industry is all about. The message here is that mobile ad delivery must be designed carefully and thoughtfully.

Another problem is simply mobile operator culture. It’s long been a joke that every mobile operator wants to be a “fast-follower”, in other words the second operator in their market to launch a new service. The success of ad networks might change this mindset.

westling-sigma.gifMark Westling is the Founder and CTO of Sigma Limited, a mobile advertising technology company with offices in Hong Kong and Washington, DC. He has spent over ten years developing systems in mobile advertising, marketing, and operator CRM.

30.01.2010    Tags: , ,
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