Verizon Wireless, the nation's largest telecom operator, is moving into the mobile ad business.
On Wednesday, Precision Market Insights, Verizon's data marketing arm, is expected to announce partnerships with BlueKai, the data management provider; Brightroll, a video ad platform; and the programmatic ad tech providers RUN and Turn.
The four will now sell its tool to advertisers for mobile ad campaigns that target Verizon's massive subscriber base based on demographics, interests and geography.
In recent years, U.S. wireless operators have attempted to build mobile ad businesses but held back largely by privacy concerns and the growing dominance of technology competitors Google and Facebook.
With today's partnership, Verizon is taking the biggest step yet of any telecom into the mobile ad world, one that will surely have reverberations across the industry.
"The problems that we have heard from advertisers that have limited spend on mobile are really tied to addressability," said Colson Hillier, VP-Precision Market Insights. "There isn't a pervasive identity that tracks users from mobile applications and your mobile browser."
Verizon's solution is called the PrecisionID. When consumers visit certain websites or mobile apps, a request is sent through a Verizon network. Precision packages the request, as a hashed, aggregated and anonymous unique identifier, and turns it into a lucrative chunk of data for advertisers.
Verizon said it is not using or selling its first-party subscriber data, but rather deploying partnerships with third-party data providers to target Verizon's massive consumer base.
It's a cookie alternative for a marketing space vexed by the absence of cookies.
For ad tech companies, Verizon's entrance may address the growing difficulty of tracking consumers as they move between devices, particularly as mobile usage surges. With cookies largely defective on mobile, campaigns trying to reach consumers with ads on both their desktops and phones are difficult to execute.
It only gets more tricky for marketers trying to figure out which ads on which devices get credit for driving sales or hitting other goals. As consumers might conduct research about a product on a phone or tablet, perhaps while in bed, and then purchase the product on a desktop while sitting at their desk the next day.
$137.8B U.S. ad spend for top 200 advertisers
Advertisers partnering with Verizon can reach specific demographic segments on mobile, identify and serve ads to loyal customers, and re-target particular users based on Precision's CRM and list-match data and cross-device capabilities.
"Today, I might look for sporting goods at a specific retailer, and the next time I visit a site with space for advertising (let's say a news site) I may see an ad for that retailer," Verizon wrote in a post detailing the new tool. "Now, using Precision's solutions, advertisers may deliver that ad for the same retailer when I visit a mobile website that has space for advertising."
PrecisionID was quietly tested with two brands during a trial run. For a branding campaign, Kraft, working with its agency Starcom MediaVest Group, aimed to target mother's with children between the ages six and eleven. 1-800-Flowers used Precision for Valentine's Day with an even more specified target: male Android users between 25 and 44, with household incomes over $75,000.
Mr. Hillier said Precision is working with additional marketers, although he would not name them. "Anyone who is sophisticated enough to think of their customer base in terms of segments is a great partner," he said. Verizon, he said, plans to tack on additional ad tech partners as well.
Like its wireless operator peers, Verizon is moving into the ad tech field with caution.
A spokeswoman for the company stressed that the new PrecisionID offering was "privacy-safe" and that the company was forthright to its customers. "We've done everything and more in terms of making sure that we're communicating often and clearly," she said. "So there are never any surprises."
Verizon has 103.3 million retail subscribers in the U.S. Corporate and government subscribers are excluded from the new marketing solution, the company said. Subscribers can remove themselves from the program by adjusting their privacy settings with Verizon.
Verizon Communications was the fifth-largest U.S. advertiser in 2012, spending $2.38 billion on U.S., according to the Ad Age DataCenter.
For several people familiar with U.S. telecom companies, the operator's committment to the ad world is far from stable: the profits to be gained from this business, even if it scales quickly, could be dwarfed by litigious or regulatory backlashes to data-tracking efforts. And they likely pale in comparison to the core businesses of Verizon, which posted $30.8 billion in operating revenues last quarter.
In the fall, Precision unfurled a data-tracking offering for sponsors inside of basketball stadiums, a program the company has now put on pause.
Mr. Hillier explained that the arena initiative, a measurement program, was a small portion of Precision's business; Precision is now focused, he said, "on supporting digital activation on mobile."
He noted that Precision might tap its vast subscriber base directly for first-party targeting in the future. "There's a lot you can do there," he said, before adding a disclaimer: "We haven't commercially deployed any product."