Mobile operator Three is getting into the ad business as a vendor of anonymized customer data.
The telecom company has mobile data on around 10 million customers in the U.K. and is prepared to part with it for a price at a time when ad buyers are struggling to target people across multiple devices. It’s a struggle because traditional cookies don’t work in mobile.
The mobile network will sell anonymized data on a customer’s age, gender and their approximate location to ad buyers whenever it has their consent to do so. Those segments are then optimized within any of the ad technologies plugged into data platform Zeotap. Some of those companies include Google’s ad exchange and ad server alongside demand-side platforms such as The Trade Desk and Adform that are used to purchase programmatic ads.
For now, most of the consent to share data with those businesses has come from the million or so customers who use Three’s Wuntu rewards app. Eventually, the mobile network will use alternatives to Wuntu text messages to ask the rest of its customers whether they to want to opt-in to see targeted ads on the mobile sites and apps they browse.
Opt-in rates for test campaigns have hovered around 94 percent over the last five months, albeit from a small base, said Charlie McGee, director of advertising at Three U.K. Those people who have opted in are worth between €2 ($1.75) and €4 ($4.57) in ad revenue to the business “over a period of time,” said McGee. The campaigns served to those customers were between 1 million and 30 million impressions, according to Zeotap.
“Some of the data that’s been historically used by ad buyers has perhaps not been the best quality, but it’s been the best that’s available, and so there’s been a reluctant need from those advertisers to use as much of it as they can to get the best ROI for advertisers,” said McGee. “A lot of those roads led to Facebook and Google, but advertisers are starting to question what are the other opportunities available to them.”
Three isn’t pitching the move as a direct attack on the tech businesses that are using the mobile network to sell ads. McGee explained, “We’ll scale the ad business through partnerships rather than try to own a DSP to rival Google that will cost hundreds of millions of dollars to build and run. We’re not going into battle with Google and Facebook.”
It’s hard to justify that type of investment as a mobile network that hopes to reach 20 million customers in the U.K in the medium-to-long term when Google and Facebook are far bigger. For context, Facebook had 35 million monthly active Facebook users in the U.K. it could monetize in 2015.
While Three has some data that the larger players can’t match, the gap between the two sets is closing, particularly when it comes to location. It’s left a middle ground for the mobile network and its partners to build on, whereby the business can supply those walled gardens with better quality data it monetizes but also helps the likes of Google and Facebook retain market share.
But unless the networks come together it will be hard for companies like Three to sell compelling propositions around identity to ad buyers who want to reduce the number of providers on media plans rather than increase them. The problem is the larger mobile networks don’t want to work together.
Weve was meant to be that unifying effort to sell ads to the customers of three of the four largest mobile networks in the U.K. in O2, Vodafone and EE. But a fear of losing the trust of customers as well as different priorities between all parties meant the joint venture struggled to grow beyond its initial offering of SMS and MMS campaigns. As Weve wound down some of its backers including Vodafone and O2’s owner Telefonica tried to get closer to the ad business on their own.
Three, for example, stayed away from Weve but mulled over an ad blocking proposition that would have filtered ads that it and the industry agreed are acceptable. It didn’t happen, but the business continued to think up different ways into the advertising arena. Three has to find ways to make more money outside of its core business. Telecommunications firms will lose 36 percent of their revenue to over-the-top services over the next decade, per Ovum.
“Mobile advertising isn’t going to create earth-shattering revenues for any of the telcos in the short-to-medium term,” said Ashish Sidhra, a former executive at O2 who now heads up the data science division at digital agency Artefact. “While it’s great that there’s an ad offering independent of the duopoly, the problem is it’s another player in an already fragmented market. Advertisers want a single point of access to as many audiences as they can rather than try to work through different telco providers.”