Telecoms is locked in battle with tech over media spoils
A view from Gideon Spanier

Telecoms is locked in battle with tech over media spoils

The mobile industry has been good for the advertising business, but has advertising been good for mobile?

The mobile industry has been good for the advertising business. Whether advertising has been good for mobile is debatable.

Telecoms companies have been among the biggest spenders on marketing. First, they invested in advertising to drive mobile and broadband adoption in the 1990s and 2000s. Then they needed to encourage the consumption of more services from social and music to video and ecommerce.

And, as the industry prepares for Mobile World Congress in Barcelona, where Campaign will have a major presence next week, there are still huge opportunities: in connected cars, in smart energy, in artificial intelligence and, of course, in mobile advertising – of which more later.

However, in developed markets, there are big challenges. The mobile sector is saturated with smartphone adoption rates pushing 90% and phone networks have had to shift from customer acquisition to customer retention and upgrades.

O2’s decision this week to renew its partnership with AEG for The O2 in Greenwich for another ten years needs to be seen in this context. Giving O2 customers the chance to book in advance at the venue, the world’s most successful entertainment arena by ticket sales, has been one of the smartest customer retention strategies of the past decade. But the question hanging over O2’s future (owner Telefónica’s plan to sell it was blocked by regulators and a stock-market float could be on the cards) points to a bigger issue.

Running a mobile-only network looks an increasingly lonely business when rivals can offer mobile, broadband and premium TV in one package.Now the best way to persuade consumers to pay more is bigger data allowances, exclusive content and other perks. Differentiation and value come from what travels over the network, rather than the physical network of masts and cables.

In an ecosystem where data and content rule, mobile advertising ought to have been a boon for telecoms companies. But they have missed out on the gold rush.

Google and Facebook have taken most of the revenue while consumers complain about how ad overload is eating into their data allowances.

Ad-blocking, a red-hot topic last year, seems to be easing, but the Google/Facebook duopoly has grown stronger. As Rob Norman, chief digital officer at Group M, puts it in a Campaign preview of MWC, the tech giants "may be approaching the point where the distribution of the spoils is inequitable".

That’s not just a big deal at MWC. It’s the biggest issue in global media.

Gideon Spanier is head of media at Campaign.