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NewsGlobe: Today's News
BBWF: Fight Google with advertising, vendors tell carriers
Operators urged to exploit their advertising credentials
by Iain Morris
Internet advertising is nothing more than a niche concern for
most operators. Yet a small but growing number of large
equipment manufacturers are suggesting it could be an
operator’s best means of defense against the looming threat
of Google.
Speaking at the Broadband World Forum in Berlin this week,
Scott Kriens, the CEO of Juniper Networks, told delegates that
operators had huge advantages over their Internet rivals in
the online advertising space. His remarks were quickly echoed
by fellow panellist Tony Bates, senior vice president and
general manager at Cisco, who said personalized advertising
could unlock a new source of revenue for operators if only
they were prepared to be a “bit more provocative — not just
carriers.”
In his keynote speech earlier today, Stephan Scholz, the CTO
of Nokia Siemens Networks, picked up that theme. Although
he did not specifically mention advertising, it must surely
have been uppermost in his mind when he said operators
could leverage their knowledge of customers to steal a march
on Google.
The suggestion that even a small national operator could
have an edge in the advertising market over a global
behemoth like Google will strike many as odd. Google
generates all of its revenue from this market and has a long
list of established ad partners, many of which are among the
world’s largest companies. Operators, by contrast, make their
money from subscription rates and usage fees. Even the
largest, like Vodafone, are more likely to be on the paying
than the receiving end of an advertising deal, perhaps
sponsoring a major sports event to raise brand profile.
Dig a little deeper, though, and some arguments favoring
the operators begin to stack up. As Kriens pointed out,
customers of Google are usually fleeting visitors to its home
page, who spend little time in its embrace before moving on
elsewhere. Although its search engine cleverly links
advertisements to user-defined search criteria, the customer
remains in the driving seat. And unless he or she has
deliberately chosen to store personal details on a Google
website, Google is unable to build a profile of that customer.
That could turn off an advertiser also looking for a closer
relationship with potential customers.
Operators, on the other hand, know more about their
customers than most other types of organization could even
dream of finding out. Not only do they store personal details
with customers that have signed contracts, but they can use
the full range of communications tools to extract more
information from and about those customers. Perhaps most
importantly, they can know exactly how much a customer uses
the Internet, sends text messages and speaks on the phone
each month, and can pinpoint where in the world that person
might be at a particular moment in time.
It was this last point on which Cisco’s Bates seemed to touch
when he said “some vertical markets are unique to particular
countries.” In the future world of location-based advertising, a
mobile-phone user could be alerted to the sale of a particular
brand of Slovakian beer as he holidays in Bratislava, or told
where to find good tapas on a business trip to Madrid.
Advertisers must find such arguments compelling, and yet
most operators have, for one reason or another, made little
progress in this area so far. There are, however, signs this
could change. A few weeks ago an MVNO called Blyk launched
a mobile service in the UK funded mainly through advertising.
Users, who must be aged between 16 and 24, receive a
bundle of voice minutes and texts in exchange for agreeing
to receive up to six multimedia messages containing adverts
each day. It is early days for Blyk, but it has already struck 40
advertising agreements with companies that include Coca-
Cola, L’Oréal and Buena Vista, attracting a lot of media
interest along the way. As other UK operators take note of the
model, the big question will be how much advertising intrusion
customers will tolerate.
Juniper’s Kriens is optimistic. “In ten years’ time we’ll spend
more time talking about advertising revenues than subscriber
revenues,” he says. As a provider of the “intelligent” networks
that could aid personalized advertising, Juniper has a vested
interest in seeing that happen.
Click here for complete coverage of Broadband World Forum Europe.
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