We are now convinced of two things. The first is that without the players formerly known as Over the Top players – now called Digital Service Providers (DSPs) – operators will become, at best, smart pipes. The second is that the race now beginning in the main arena is to deliver context, properly.
BillingViews (BV) recently caught up with old friend Andy Tiller (AT) of AsiaInfo and decided to ‘pick his brain’ on the subject.
BV: Andy, good to see you here at the IIR pricing event. Is the subject of context something you are discussing here?
BV: What were the conclusions?
AT: I think, as we have discussed before, a major one is the need to maintain trust. And to keep customers engaged. If you bombard them with offers, you will lose them. And if you are too clever you will lose them. I saw your example the other day of the engaged couple changing their status on Facebook. They were then face to face with wedding venue offers, a week before the wedding.
BV: Indeed, irritating. What other examples are you coming across?
AT: Actually, there are some good examples for debate from China right now. For example, if someone uses their mobile phone to search for a new car, then China Mobile will offer an app download to provide used car prices, reviews and other useful information. You might think that is too intrusive, a bit spooky. You might think that is incredibly cool.
BV: So, oddly, context based offers will depend on context too. The magical 18 – 24 segment will probably be of the ‘cool’ school of thought, older people might not think so.
AT: Exactly. And customers will become accustomed to it, if you see what I mean. And we should bear in mind that there is a lot of context based marketing out there that we don’t even pass judgement on, we are so used to it. Supermarkets have been doing it for years and we take it for granted. The next stage is now beginning, for instance, if it starts to rain and you get an offer of a half price umbrella from a nearby shop, you might be pleased. Location and other forms of context, such as weather, or amount of traffic, are already being used. Games is another example, and that industry is very adept at offering customers what they need when they need it. Like guns or ammo. Telcos have a good opportunity because they have an especially good view of a very important aspect of your context: namely what you are doing on your mobile device right now.
BV: We are also seeing operators getting beyond just selling data. Which is good news. It also means that they are realising that it is the Digital Service Providers (DSPs) who hold the key to data consumption through compelling apps.
AT: Absolutely. And we must work out the best partnership models.
BV: You have been working with Northstream on this – what are the recommendations.
AT: We have. We asked them to survey operators in Western Europe to address this area. They came back with the conclusion that there is a €2.2 billion gross profit opportunity for operators in partnership with OTTs, I mean DSPs, over the next 3 years. But the important point is that if operators try to make too much out of a few partnerships, the opportunity is only worth €150 million or so.
BV: Why is that?
AT: Simply because this is a game of scale. Agreeing modest revenue share from many partners is a much more effective business model than the other way round. And to manage that you will need automation in the form of a partnership platform of some kind.
BV: What is interesting though is that the DSP speakers here, and elsewhere, are acknowledging that their meetings with operators are focused on customer retention and loyalty, not about revenue sharing.
AT: That is right and it is clearly early days for these kind of partnerships, but they are here to stay. What is important is to realise that the potential is huge and operators – and DSPs – need to be ready to scale quickly when the time comes. That way they can be ready and maintain trust.
BV: Many thanks Andy.
AT: My pleasure, Alex.