Industry responds to Three’s plan to deploy ad blocking across its mobile network

Tom Malleschitz, chief marketing officer at Three U.K., said that the goal is to give customers more control, choice and transparency over the ads they see. Here’s what members of the industry have to say.

The Internet’s knee-jerk reaction is probably overblown.
The IAB released a statement saying Three’s plans will threaten the ad-funded Internet and the free services consumers expect. There have been dark headlines, too, like “Three casts advertisers in dark with Shine ad-blocking deal.”

But David McDiarmid, head of paid search at agency DigitasLBi, sees the move as a wake-up call for the ad industry to be more creative. “We need to accept that ad blocking is part of the evolution of an ad-funded Internet,” he said. “Three has recognized that consumers are fed up with non-relevant ad content, and it wants to open up a dialogue with advertisers.”

Operators are trying to regain control.
Operators have struggled to make headway in mobile advertising, despite having the pipes for it: Last year, a joint telco venture called Weve dissolved. Turned out pooling customer data with the intention of turbocharging mobile targeting was too much for three fiercely competitive companies to play nice over. Meanwhile major players like Facebook and Google have profited.

Three said it would work with advertisers to deliver more relevant content and targeted ads across its network and in the process, learn how people interact with ads.

“This is the first move of mobile operators to take back some control of mobile advertising,” said Eleni Marouli, senior analyst at analyst firm IHS Technology. “Because Three will have more control over this ecosystem, rather than just being the pipes, it is sending out a message to Google and Facebook to say, ‘You aren’t going to rule this industry.'”

Revenue shares would not be a surprise.
How Three will deploy the ad blocker is still unclear. With its emphasis on improving the user experience, one option is to charge a higher rate for an ad-free service.

Another option is to let Facebook and Google pay to let their ads be shown, similar to what Caribbean operator Digicel proposed at the end of last year. Digicel has also deployed Shine’s ad-blocking technology in a blanket ban, which sparked warnings from regulator Ectel that the software is in breach of net neutrality. It’s an issue analysts and agency representatives are questioning.

“I’d be very much surprised if they didn’t go into a revenue share, as it will be too much money to turn their back on,” said Thomas Laranjo, managing director of media agency Total Media. In the Caribbean, Digicel argued that the revenue it received from Google and Facebook was reinvested for the consumer’s benefit, which Laranjo called a “very loose claim.”

But how it explains revenue shares to consumers will matter at a time when companies face pressure to be transparent. By making its announcement about improving the user experience, it wouldn’t look good for Three to appear to be profiting too much.

Three’s announcement was timed well.
Three made its announcement just before Mobile World Congress, and its news will soon be diluted by a slew of industry announcements. There’s also Three’s first-mover advantage, but according to Marouli, “unless all the other mobile operators follow the same model, it’s not going to make much of an impact.”