What new opportunities and business models lie ahead for carriers, content providers and advertisers?
What changes are coming, especially with the carriers that built the mobile networks?
Will carriers take a more active approach beyond mobile data to participate in the “app economy”?
At Mobile World Congress 2019 in Barcelona, Syntonic CEO Gary Greenbaum joined an expert panel that dove into these and other challenges facing the global mobile industry. Gary was joined by:
- Tim Green, Features Editor, MEF (Mobile Ecosystem Forum)
- Amir Kabbara, Head of Digital Marketing & Consumer Innovation, Amazon
- Jack Rabah, Head of Strategic Partnerships, Wikimedia Foundation
- Pierre Francois Dubois, Vice President, Orange Technocentre
- Damien Byrne, Business Development Director, Boku
What’s Wrong with the Current Mobile Business Models?
“The world is changing,” said Gary Greenbaum. “We’re starting to see the emergence of some sustainable new business models – mobile advertising, content monetization, and mobile commerce – what we call the app economy. Up until now, carriers have not participated in this space in a meaningful way.”
The “app economy” is currently about a $2.5 trillion dollar space, with the OTT providers (Google, Facebook, Amazon, et al..) taking the lion’s share of these revenues that are built on the carrier’s network investments.
Boku’s Damien Byrne believes the carriers missed out largely because of their inability to cooperate in the past. Now, he thinks they are far more likely to collaborate and work together.
“In 2008… they didn’t want to share information,” says Byrne. “That’s changed. They’re working together better now, because of what’s happening with the OTTs. Hopefully we’ll see more of this. Carriers have been too scared, and missed out.”
Amazon’s Approach to Monetizing Content
Amazon has an app store that supports Amazon devices including Fire Tablets and FireTV. Amir Kabbara discussed the 2 major routes for app store monetization:
- Revenue Share:
This is the traditional app store model, where the app store gets 30% and app developers receive 70% of any transaction revenue. This has typically been in the form of a one-time transaction to download the app and/or in-app purchases.
More recently, Amazon is seeing many of the new apps coming in with a subscription model instead of a one-time fee.
Furthermore, according to Kabbara, Amazon is always asking, “How do we tie the monetary value that the customer is paying [for apps or content] and in turn give some of it back to delight the customer?” Kabbara described how Amazon is encouraging app and game developers to use rewards for achieving certain goals and engagement milestones.
For example, if a customer subscribes and watches 10 episodes of a show, they may get $10 to spend on Amazon, or a free T-shirt related to the show, game or content.
Amazon Moments enables this fulfillment aspect. It is s a cross-platform marketing tool that allows developers to deliver physical and digital items to customers in over 100 countries. This is a service where any developer can easily instrument rewards for high-value actions.
Engagement as a New Mobile Advertising Metric
The current norm for digital advertising has been built around impressions, clicks, and customer acquisition. Syntonic’s Gary Greenbaum and Amazon’s Amir Kabbara believe rewarding ‘engagement’ is an important additional metric on campaign efficacy. Often, this metric can be more compelling and cost effective for advertisers, and they expect engagement tracking to continue to grow.
Kabbara explained: “Content providers know the value they can derive when a user reaches a certain level of engagement. For example, a games company might know that when a player reaches level 12 they are likely to spend $30 inside a game. If you have an ad system that pays when a user get these specific high-value actions, it really changes the model.”
“Moving forward, the real compelling model around mobile advertising is about engagement and demographic targeting,” added Greenbaum. “We’ve worked with many games companies around the world, where they’re ‘paying’ people to play [with rewards] and we have metrics that show huge improvements in cost efficiencies for customer monetization, especially compared with traditional CPI (cost per install) and CPA (cost per acquisition) approaches.”
How Can Carriers Leverage Digital Identity?
A transactional digital sphere can only succeed when vendors and consumers trust each other. Pierre Francois Dubois of Orange believes telcos can facilitate that trust. Historically, he notes, carriers have not sold their customer data to advertisers or other third parties like some of the big tech companies.
“Carriers are not in the business of selling data like the OTT players,” he said. “We are in the business of simplifying and securing transactions, and helping people avoid fraud – with things like one time passwords by SMS. We can also help to simplify online processes such as auto-filling forms or do location checks.”
Damien Byrne of Boku suggests that the arrival of 5G could greatly expand this opportunity. “There are 7 billion SIMs now, but there could be 30 billion when 5G gets out there. Those M2M (machine-to-machine) connections will need to be verified and authenticated. That could be a huge opportunity for carriers to stake a claim.”
Can Carriers Get Into the Content Space?
Carriers and other network providers – cable, satellite, ISPs – have been experimenting with content provision and creation for years. “It’s very expensive to get into the content space, but content has proven to be a successful model,” says Greenbaum. “In the US, AT&T has made some big bets and consider themselves a content company first. Verizon has also experimented with both ownership and licensing of high-value content, including NFL games.”
In the developing world, content also can be very compelling to drive additional usage and revenue streams for both providers and carriers. “For Wikipedia, we find the lack of relevant content can be a problem,” said Wikimedia’s Jack Rabah. “So we are working with mobile operators to create toolkits that people can use to create and search for content in their local language. And we can even share content via SMS and USSD on feature phones.”
What Do Future Mobile Business Models Look Like?
The panelists generally agree that mobile business models will look different in the future than in the past. There will be more diversified revenue streams for each partner in the value chain. The winners likely will be those who can experiment, learn, and then be agile enough to roll out services quickly to deliver value to customers and capture the opportunity.
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