Telecoms.com periodically invites expert third parties to share their views on the industry’s most pressing issues. In the content delivery era, telcos need a smarter approach if they want to properly monetise their content and services, says Ted Woodbery, VP of Marketing at Synchronoss.
“What’s my content strategy?”
It’s a question that keeps many telco executives awake at night.
In today’s era of static revenues and static profits, fixed and mobile telecom operators alike are turning to content like TV and media streaming services as a new way to attract new subscribers, retain existing ones, and grow their bottom lines.
Scarcely a week goes by without news (or a rumor) of a major telco acquiring, investing in, or merging with a media publisher or cable provider. The latest is that US telco Verizon is considering a merger with US cable operator Charter Communications, part of the Liberty Media global empire.
Verizon’s US rival AT&T made headlines at the end of last year with its blockbuster USD$84bn bid to acquire media giant Time Warner. This builds on AT&T’s acquisition of digital satellite broadcaster DirecTV in 2015. At the end of November, AT&T launched DirecTV Now, an online TV streaming service that offers AT&T subscribers access to over 100 channels for a flat monthly fee.
Verizon has also been busy in M&A: its acquisition of online media company AOL in June 2015, followed by online search engine Yahoo! in July 2016, gave it significant online and video advertising capabilities.
All of these deals indicate a wider trend among telcos: simply transporting content over their fixed and mobile networks is not enough. They increasingly want to own and monetise this content as well.
People today consume their media on a range of connected devices – whether it’s using their smartphone to catch up on the day’s news headlines on their commute to and from work; downloading their favorite Netflix series on their tablet; or purchasing and watching the latest Hollywood blockbuster at home on their smart TV. And it’s telcos that provide the all-important connectivity that enables all of the above to happen.
However, simply providing connectivity is no longer a lucrative business. The pressure is on telcos to create new business models that support their current revenue streams and deliver future growth as well.
But where do they begin?
Every telco has the potential to become a digital media company. But to do so, they must become significantly more proficient and attractive as a channel for advertisers and brands to work with.
But can telcos every hope to compete with the likes of Google, Facebook and other OTT providers, and pull down the same kind of ad revenues that these web giants earn? Maybe, maybe not. But at a time when their revenues are largely static, telcos can’t ignore advertising as a means to boost their bottom line, even incrementally.
Previous attempts by telcos to claim a share of the online and mobile advertising market have failed to live up to expectations. They’ve tried to use contextual data like customers’ personal details (their age, gender, preferences) plus their location, as the means to deliver tailored and targeted ads and messages to people’s devices, without success.
Telcos are still ideally positioned to deliver this valuable contextual data for advertisers. But what’s changed to make them confident that they can “do” advertising properly this time round?
The three Cs – convergence, content, and customer analytics.
First, convergence. As we’ve seen, increasing numbers of telcos now offer combined fixed and mobile “multi-play”services. This means they have an even broader and more in-depth view of their customers’ behaviours than before. Everything from the usual demographic information such as age, gender and where they live: to what websites they browse or online purchases they make: plus mobile specific data points such as location, what apps they use – even when and how often they use them.
Second, content. When we add in customers’ digital content and media habits – what they read or watch, when they read or watch it, what device or screen they read or watch it on – it’s clear that converged telcos now have a deep and wide-ranging customer dataset. If used correctly, this dataset gives them exceptional insight and visibility into their customers’ daily digital lives.
Armed with this breadth of information, telcos have a unique proposition to present to advertisers and brands. They can be an effective, aggregated channel for reaching and engaging with targeted consumer groups, across multiple devices and screens.
But to do so, telcos must first learn how to harness this broad range of customer data and monetise it in the way that a “conventional” media company does. This requires a cultural shift on their part to embrace new business models, and learn how to work with publishers, brands and advertisers.
Which leads us to our third C – customer analytics.
Analytics is the crucial ingredient with which operators can properly understand their customers’ behavior, preferences and content usage. By combining and analyzing the extended range of customer datasets available to it, a telco can offer brands and advertisers new, more accurate ways to access particular audiences.
In this way, telcos can properly monetize the wealth of customer data available to them. They can create new revenue streams, even as their traditional ones decline. However, telcos must be prepared to take the first step and experiment with new approaches and ideas. The opportunity is large enough that there’s room to grab a slice of the market alongside the established digital players. But they must act now.