Telecom carriers begin battle to win share in $12 billion market

Telecom carriers around the world are turning their attention to advertising as a potential source of revenue, according to research company, Gartner. Gartner forecasts that the worldwide mobile advertising market alone will be worth over $12 billion by 2011, but advised carriers that they will need to rise to some key challenges if they are to realise their advertising ambitions.

Although carriers are not credible players at present, Gartner said, they have inherent strengths that will enable them to fulfil their advertising ambitions. These strengths include their relationships with customers, knowledge of local markets, extensive customer databases, network control and multiple channel access.

King-Yew Foong, research director at Gartner, explained the issues: “First and foremost, telecom carriers need to differentiate their approach to the advertising market. This is particularly important, given the fact that advertising money is being pursued by their immediate telecom competitors, consumer device manufacturers such as Nokia, and internet-related companies like Google, Yahoo, MySpace and Microsoft.”

According to Foong, telecom carriers must take advantage of their access to multiple delivery channels, including SMS, MMS, email, fixed and mobile internet search activities, location based services and IPTV portals. However, he warned that while doing so, they will have to strike a balance between their ambition to increase advertising revenue and the need to control spam and user privacy.

He continued that if telecom carriers are to compete effectively for advertising revenue, they must convince advertisers and marketers of the effectiveness and value of their approach while distinguishing their value proposition from companies such as Google, Yahoo, Microsoft and traditional media such as television broadcasters and newspapers. By developing the skills to enable them to do these things, telecom carriers will also improve their understanding of the advertisers’ perspective and how to meet advertisers’ requirements, such as audience validation.

“If a carrier can execute its advertising strategy well and overcome the key challenges, it could move quickly to reap the benefits,” said Foong. “Carriers can expect to become an integral part of consumers’ lifestyles when they can reliably deliver relevant advertisements to them. This will require closer cooperation and partnerships with other businesses, such as retailers, restaurants and cinemas.”

Gartner advised telecom carriers to be persistent in their efforts and take a long term perspective if they are to seize the opportunities presented by the growing online and mobile advertising sectors.

Carriers need to disrupt the current distribution of advertising money between competing media channels and convince advertisers and marketers that their various channels, customer knowledge, analytics and network control features can reach the intended audience more effectively than traditional channels, Foong summed up.