The potential around mobile advertising spend is simply too big to ignore and so are the potential pitfalls for privacy in mobile advertising. That seems to be the consensus among executives of some of the world’s largest telcos, including Dan Rosen, global director of advertising at Spanish telco Telefónica when he spoke at the Mobile World Congress in Barcelona.
His enthusiasm for the potential of mobile advertising is understandable given that Telefónica is one of the telcos that are leading the charge to mine the rich seams of customer data. That data includes location data (where people go and what they do when they get there) – which can be used by media buyers to segment markets based on transparent and verifiable data on consumer behaviour.
Telefónica is hardly alone in its quest to improve revenue streams by mining data. Singtel, Verizon, Sprint and Telstra have also committed to spend enormous sums of money on advertising technology in an effort to grab their slice of the estimated $100 billion mobile advertising market.
Privacy in mobile advertising
However, as the Marvel Cinematic Universe often tells us ‘With Great Power (in this case the ability to mine rich data sets) Comes Great Responsibility’. And the responsibility of the telcos is largely based on the necessity to conform to increasingly strict regulations around mobile privacy and security of data.
Privacy in mobile advertising is increasingly a hot area of concern. The telcos need to ensure that the approach they take will not fall foul of regulations such as the European Union General Data Protection Regulation (GDPR) which will become enforceable in Europe in 2018 – and also has far reaching consequences for countries that handle data sourced in Europe or that do business with European companies.
However, according to Dan Rosen this should not prove an insurmountable challenge when it comes to the digital advertising arena. By now most telcos have made peace with the fact that they will have to cope with an increasingly rigid regulatory framework.
According to Mark Connon, AOL’s chief mobile officer, GDPR is actually helpful because it “creates clarity,” He has claimed that telcos are extremely careful to preserve consumer privacy in mobile advertising since “their relationship with customers takes precedence over everything.”
Both Rosen and Connon may have a valid point, but neither is right about every telco. The question needs to be asked whether operators can actually be trusted to police themselves?
Critics of the approach are quick to point out that Verizon, which now owns AOL, received a $1.35 million fine from the Federal Communications Commission in March 2015 (roughly four months before the AOL acquisition) for using ‘unkillable’ tracking cookies without proper user consent. In another instance, demand-side platform Turn, now owned by Singtel, got its own wrist slap from the Federal Trade Commission for using Verizon’s supercookies – even if a user had opted out. Does this give the consumer a sense that telco’s are taking privacy seriously?
It appears that regulation strengthening the powers of regulatory bodies cannot be set in place quickly enough in order to give telco’s pause when they are evaluating profit vs consumer privacy.
Not everyone is on board
Even though some of the globe’s most prominent Telcos are committed to the path of making mobile advertising core to their business model, there are still other operators who have deep wells of verified subscriber data that they have yet to exploit.
In fact, a recent report from Strategy Analytics concluded that the majority of operators are failing to take advantage of ‘strong demand for audience data that has been verified. This despite the fact that media buyers view data from these suppliers as representing the ‘Gold Standard’ of audience data – at least by global marketers that is. The ability to use the data for personalization, to serve personalized mobile advertisements, and to reach mobile users targeted based on locations, is highly sought after by advertisers.
These operators will need to get into the game quickly as global mobile data operator revenue is anticipated to start declining from 2019 onwards. If the model of Google and Facebook is any guide (they’re cashing in enormously on the data they gather), there is ample room for operators to take advantage of the masses of data they gather on a daily basis. However, neither Google nor Facebook have enjoyed great press when it comes to being transparent about how they use consumer data. The question remains – can telcos avoid being tarred with the same brush as far as mobile advertising is concerned?
Lessons for privacy in mobile advertising
If there are three takeaways from both the trends in mobile advertising and the competitive advantage that telcos will enjoy as a result of leveraging the data from customers they could be characterised as follows:
- Early adopters of the approach are set to increase revenue substantially – but privacy needs to be given the same attention as profit.
- There are challenges to the approach within the privacy and data protection regulatory environment across the globe – especially in the EU with GDPR coming into force in 2018.
- There is still time for those operators who are not harnessing the power of their data to get in on the action – but that window of opportunity is soon going to slam shut as more and more telcos get on the bandwagon. Logic dictates that even the most eager marketing company will have an appetite for only so much data.
The temptation for big telcos to throw caution to the wind in service of shareholder’s returns will remain for as long as shareholders demand ever increasing profits. But making a mistake in overlooking concerns of privacy in mobile advertising can cause enormous harm to a brand. And in a highly competitive environment that can cause irreparable damage to an organisation.