Digital advertising is booming, with 17% growth across APAC expected to take spend to $70 billion this year. But these top-line stats mask the fact that two companies – namely Google and Facebook – are rapidly strengthening their hold over digital advertising while publishers and providers across the rest of the industry see revenues decline.
The duopoly now receives 65% of digital ad revenue in the region, admittedly less than the worldwide figure of 84%, but still excessive and growing fast considering it was just over 50% last year. The dominance of Google and Facebook must be challenged before their position becomes permanent, and Mobile Network Operators (MNOs) are uniquely placed to do just that.
The promise of MNOs
Mobile advertising is the driving force behind the growth of digital and is set to generate a third of total ad spend this year. There are already over 1.3 billion smartphone users in APAC and, with 80% accessing their device at least once an hour, mobile advertising provides an exceptional opportunity for brands to reach vast audiences any time and in any location with engaging and relevant messaging.
But mobile advertising does have some limitations. First, the complexities of tracking users across mobile devices, combined with a lack of good quality data, makes it difficult for advertisers to take full advantage of the targeting and personalisation opportunities the channel affords. Secondly, a lack of available inventory is already making mobile advertising monotonous and ineffective, with consumers seeing the same types of ads on the same apps over and over again, resulting in a type of ad blindness. Finally, quality issues such as mobile ad fraud are significant – after all, where the money is the fraudsters will quickly follow.
MNOs provide a solution to all of these mobile advertising difficulties. They have access to high quality, verified, first-party data gained from their vast customer bases, making it far easier to join up the user journey and deliver meaningful messaging. They also offer a fresh supply of mobile inventory; an array of new consumer touch points that can rejuvenate the mobile advertising experience by providing advertisers with choice and consumers with variety. Finally, the closed environments in which MNOs operate reduce the quality risks associated with digital, delivering a premium source of clean traffic. In an industry where advertisers typically have to choose between scale, targeting and transparency, MNOs can offer all three.
Challenges to overcome
Some prominent MNOs have already seen the potential in mobile advertising and have invested heavily in ad tech. For instance, Singtel bought Amobee in 2012 and has subsequently added Turn, Adconion, Kontera, and most recently Videology, to the marketing platform. But these investments are taking time to pay off, with Singtel's digital advertising business only recently delivering positive earnings, while some mobile operators have yet to explore the possibilities of ad tech.
The biggest challenge for MNOs to overcome before they can mount a real challenge to the duopoly is one of trust. While it is true they have access to large volumes of first-party data, this is gained through strong customer relationships and MNOs are reluctant to risk those relationships by using the data in a way that might damage the trust customers place in them. To use customer information for targeted advertising, MNOs need a way to activate their first-party data without compromising customer privacy or breaching ever stricter data regulations.
The second challenge is one of knowledge and experience. While MNOs in APAC are often nimbler and more entrepreneurial than their slower-moving counterparts in other global regions, there is still a lack of understanding and experience of the digital advertising industry that is preventing them making full use of the mobile opportunity.
With Google and Facebook claiming two thirds of ad revenues, action needs to be taken now to halt their ascendency. With a wealth of first party data, new sources of mobile inventory, and premium fraud-free environments, MNOs pose the biggest threat yet. If they can increase their understanding of digital advertising and find a way to activate data while respecting user privacy, MNOs can deliver engaging, relevant messaging to the billions of smartphone users across the region, drawing mobile ad spend away from the duopoly.
Itamar Benedy is CEO of mobile ad tech firm Glispa