Mobile internet ad spending doubled last year, as advertisers spent $8.8 billion to reach consumers on mobile devices. More than half that amount went to Google.
But $8.8 billion is less than 2% of the $557 billion that adverisers spent on all media combined last year. John Sims, President of SAP Mobile Services, spends a lot of time talking to major consumer brands about mobile advertising. “They think they’re in the dark,” he says. “They really don’t feel like they understand the consumer behavior. That’s a need that we’re trying to address with our service.”
SAP is working to help operators connect with advertisers by unlocking the value of subscriber and customer data. Sims said there are a number of valid reasons that operators are hesitant to tap into their data, including cost, complexity, miscommunication, and privacy concerns.
“Operators are smart people and they’ve got all this basic data sitting inside their network, so why have operators not just filled this need, why haven’t they gone forward and done that?” Sims asked his audience recently at CTIA 2013. “Part of it is because we’re talking about a massive scale. For a medium operator in Europe it can be one or two terabytes day … for a large U.S. operator tens of terabytes of data a day. … And then you look at accumulating that over a period of time to get insights … it’s an enormous amount of data. And it’s a huge cost and investment if you want to put in a multi-tens of terabyte support system to get to this answer, it costs a huge amount of investment and that’s a bit of a leap of faith financially that a lot of operators are not willing to take or not able to take.”
Sims said that most operators are also highly sensitive to privacy issues and are wary of doing anything that could be seen as compromising their customers’ privacy. Right now, mobile ads are not always targeted effectively, meaning that when consumers see mobile ads they may be more intrusive and annoying than useful. Being seen as the source of that annoyance could have a very negative impact on brand loyalty for operators.
Miscommunication is another thing that can hold carriers back when it comes to monetizing data. “The operators, in selling to enterprises, generally speaking they are calling on the CIO’s organization and they’re talking about their conventional services – voice, devices and maybe some data services – but not really a lot beyond that. And on the enterprise side, the people that are worried about consumer insights and consumer behavior patterns are not the IT people, they the are the marketing line of business people. So when you put the marketing line of business people and the operator peole in the same room together, they kind of talk past each other.”
