Mobile Carriers Must Avoid the 'Dumb-Pipe' Syndrome
The recent net neutrality ruling by the FCC is a win for consumers, as carriers must follow rules about collection and use of consumer data. But this is also increasing the pressure on carriers to open up new sources of revenue as they cannot throttle bandwidth hogs and face the high cost of spectrum. They are entering the big data and advertising game, sparking controversy as they go -- as the Verizon "perma-cookie" showed.
With Google and Facebook on track to make over $25 billion in 2016 on mobile advertising that runs across the carriers' networks, carriers must avoid the "dumb-pipe syndrome." Done the right way, they can emerge as the "data white knights" of the privacy battle, where consumers and advertisers all win.
1. Embrace the walled garden. Carriers can launch advertising services that combine their proprietary data like location and device usage with the purchase of media, but without ever sharing or exposing subscriber data to the ad ecosystem. Carriers have the "canonical" deterministic dataset, unlike everyone else in the mobile ad industry using best-guess methods.
2. Enable carrier custom audiences. Facebook and Twitter have already educated advertisers on the value of bringing brand user data to their platforms. Brands could match their audience data with carrier data and deliver more effective and relevant campaigns, including look-alike audiences to achieve sufficient reach and scale, while consumers receive more contextually relevant ads. Brand data would be matched inside carriers' "walled gardens" -- never exposed and within the parameters of everyone's privacy policies.
3. Give consumers control over their own data. Mobile carriers, like financial institutions, are subject to regulation that requires both secure systems and high levels of care for their clients' data. As a result, they are better equipped to proceed with advertising while preserving their clients' trust.
If carriers are transparent about how data is used and enable consumers to control its exposure, or even let consumers configure what they would like to see, it could actually change consumer perceptions of advertising. This is the definition of marketing as a service, not an intrusion. Consumers already know that their data is being used for advertising, so why not be upfront about it and involve them in the process?
4. Offer an exchange of value. Key to this approach is offering an exchange of value to the consumer. Imagine being able to configure the things you are interested in and have your carrier help you find them?
Of course, the backdrop for this debate is that carriers charge for their service, and therefore users expect to be treated differently than by Google and Facebook. But people often forget that we are the product from Google, Facebook and most mobile apps. So if carriers use their data, are they really doing anything all that different than companies that have personal data on our browsing, socializing and spending patterns?
The argument that carriers need to choose between being a "utility" or actors in the ad ecosystem is obsolete. Mobile is a medium that provides access for a fee, much like cable or magazines. Carriers should take advantage of that opportunity, do it right and become the data white knights -- the guardians of sensitive subscriber data, while enhancing ad relevance for consumers and providing the scale advertisers want. If carriers make that bold move, they will become a pillar of the emerging mobile ad ecosystem.