Consumer Electronics Show

Advertising could pay for 5G-enabled cities

Ad Age Remotely: An estimated $34 billion will be spent on so-called smart cities by 2020

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When it comes to the fifth generation of mobile technology, the sales pitch is relatively simple: Everything will be faster and everything will be connected.

Time will tell whether that will indeed be true. Still, companies are placing their bets with so-called smart cities, and trying to sell the idea that they'll alleviate traffic congestion, reduce pollution, and improve public safety and city infrastructure. At CES in Las Vegas this week, AT&T, for example, said it will connect street lights to its network so it can track energy usage and outages.

This also presents an opportunity for better targeted ads. Some $34 billion will be spent on smart cities by 2020, a portion of which will be offset through companies offering to build out bus shelters, lamp posts that monitor foot traffic and interactive digital screens in exchange for ad space, according to the Consumer Technology Assocation.

"Every city wants to be smart, but the challenge is it's very expensive to deploy the infrastructure, the fiber and the IoT devices to make it all happen," says Ari Buchalter, CEO at Intersection. "Marketing becomes a way to create a virtuous cycle around that because rather than using taxpayer dollars, you can tie it to an advertising concession."

If that concept holds true, and 5G tech provides data for sophisticated targeting, then cities can capture a sizable amount of revenue from advertising, says Buchalter.

"Consumers spend 70 percent of their time outside their home where they work, play and shop, and those journeys are where consumers are forming opinions, making decisions and buying products," he says. "A smart city can funnel data to points of interaction to screens for marketers to use data to make marketing more relevant."

Which may, in turn, trigger privacy concerns.

"We have to think about what privacy means in a public space," Buchalter says. "A common misconception is the Big Brother sense that smart cities will be always watching and always gathering data. Companies in this arena need to be thoughtful."

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