2017 will herald the time for Operators to change the game. It’s time for them to let go of legacy business models and embrace today’s communications landscape, reaping the benefits of their network investments and stimulating new revenue streams. But how?
The year ahead is ripe for service providers to embrace new business models, in order to claim a share of the expanding digital content and services market. Data analytics will play a pivotal role in this. Below we predict three different ways in which carriers will find ways to stimulate new revenue streams and monetise their investments in 2017.
#1: OPERATOR MONETISATION STRATEGIES – THE US WILL CONTINUE TO UP THE ANTE ON DIGITAL CONTENT
Notable acquisitions in the last twelve months in the US indicates that operators are taking steps into the lucrative digital advertising market. AT&T announced a planned acquisition of media giant Time Warner for USD$85bn, signalling an intention to become a major content powerhouse. This strategic deal fits nicely with AT&T’s recently launched internet TV streaming service DirecTV Now.
Meanwhile, with Verizon’s two high-profile acquisitions over the last 12 months of AOL (June 2015) and Yahoo! (July 2016) , it aims to future-proof its growth strategy by monetising the content that it transports over its fixed and mobile networks, and which its customers consume on a variety of screens – smart TVs, desktop PCs, laptops, tablets and smartphones.
These acquisitions come at a time when revenues from traditional services including fixed line, voice and messaging are in decline. ARPU will continue to decline as MNOs lose out to new apps created by fast-moving OTT providers. In 2017 operators must therefore create new business models to protect their current revenue streams and to deliver future growth as well.
For operators to cash in on the growing digital content market as ARPU continues to flatten, they must find something to sell - whether that means selling services directly to the consumer or to other companies trying to reach its customer base. Yahoo and AOL offers Verizon a chance to use its network to enter into new marketplaces and seek out new opportunities, in the same way that Time Warner and DirecTV offer this chance to AT&T.
Operators like Verizon and AT&T must focus on other longer-term opportunities to boost profits and ensure revenue growth in 2017 and beyond. This means that they will almost certainly need to embrace change and evolve their business models. We predict that the US will continue to take the lead on this, with service providers in EMEA evolving on a smaller scale.
#2: DELIVERING THE MOST VALUABLE DATA: BETTER DATA, BETTER CONTEXT
There is ever increasing competition from OTTs, search and content companies that are making profit from selling customer analytics data to brands. Operators can and should go after a share of this revenue in the next 12 months.
Service providers are uniquely positioned to deliver three of the most powerful forms of contextual data for advertisers that play to service players’ strengths - content, location and behavior. Operators are in the best position to generate revenue from their content assets and the vast 4.8 billion consumers (source: GSMA Intelligence) they serve as they can capture location and presence across operating systems (although Google is doing that with Maps and Facebook is experimenting with location based information services e.g. Nearby Friends). Operators know the location of consumers better than anyone as they have to collaborate and share networks.
They also own the billing relationship so are first point of contact with makes them more trusted, and have unique insight and visibility into consumers’ app, web, digital content and voice usage.
Another thing that puts operators in a strong position is the fact that they have a holistic view of their customers’ daily lives across a number of platforms - where they go; what websites they browse; what media they download, watch and listen to; what online purchases they make; plus their personal demographic data – age, gender, home address. This therefore puts them in an ideal position to cross sell and upsell new content features and services that they can derive revenue from at the point of sale and also through ongoing analytics into consumption habits.
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This is surely enough ammunition to arm operators with as they determine strategies for future revenue growth through digital content. But in 2017 operators must go further, and start to understand this opportunity and capitalize on it by launching their own digital platforms that incorporate customer analytics.
#3: BECOMING MEDIA COMPANIES: NEW CONTENT PARTNERSHIPS
Every operator has the potential to be a digital media company. But to do so, operators must become significantly more proficient as a channel to promote other brands in 2017. Brands must be able to work with operators in the same way that they work with Google, Facebook – that is, as a channel to reach and engage with specifically targeted consumer groups and audience segments.
To achieve this, operators need to update their existing platforms and pursue new content partnerships, in order to expand and develop their unique relationship with their customers. They must learn how to harness the customer data they already possess and monetise it in the way that a “conventional” media company does.
Operators must negotiate the issue of privacy as well. On the one hand, Government regulation of operators protects consumers’ privacy: in contrast, OTTs like Google and Facebook don’t have to deal with this type of Government scrutiny. That said, as the market for digital services expands and becomes more content-led, consumers are increasingly willing to “sell” their privacy in exchange for benefits such as a free service. Privacy is not a roadblock either if operators implement opt out policies for subscribers and anonymise datasets aggregated from across their entire customer base.
However, let’s not overlook the so-called “soft” issue of consumer trust. The close relationship between operators and their subscribers is built on trust - consumers trust their operators with a range of personal data (such as billing information). The challenge for operators is to understand and chart what level of privacy their customers are prepared to give up. What types of personal information are subscribers comfortable to disclose, and in return for what?
By examining and analyzing individual customers’ behaviors - their browsing habits, travel, location, even what device or screen they’re using at any one time - in an aggregated form, operators can develop precise segmentation and targeting strategies for brands and advertisers. The more granular this segmentation is, the more revenue the operator can generate. For operators, it’s not about beating Facebook, Google and other established digital brands. Instead, it’s about “playing the same game” – that is, emulating their OTT competitors’ business models and learning how to work better with publishers, brands and advertisers. In this way, they can create new and incremental market opportunities for themselves and participate more successfully in the OTT channel.
#4: A SHIFT IN 2017 – CULTURE, MODELS AND MONETISATION
2017 will require a cultural shift by operators to embrace new business models; and to become disruptive, experimental and inquisitive. Operators can’t afford to miss the opportunity that the rise in digital content delivery presents to monetize their network assets. The opportunity is large enough that there’s room for operators to grab a slice of the market alongside the likes of Google, Facebook and others.
Analytics is the crucial ingredient with which operators can properly understand their customers’ behavior, preferences and content usage. Using this data, operators can offer brands and advertisers critical information and access to different audiences - and across multiple screens.
In this way, operators can properly exploit their assets and monetize the wealth of customer data available to them. They can create new revenue streams even as their traditional ones decline. 2017 will be the time to take the first step and experiment with new ideas.
About The Author:
Ted Woodbery is Vice President, Corporate Marketing and Product Management at Synchronoss. Ted joined Synchronoss in 2014 and is responsible for leading the direction and execution of Synchronoss’ White Label Product Management Team, Consumer product strategy, product planning and product marketing supporting global clients. Additionally, Ted leads the direction and oversees the execution of Synchronoss corporate marketing including branding, messaging and communications. Prior to joining Synchronoss, Ted was Vice President Consumer Wireless Product and Cloud Product at AT&T (Mobile division). Ted held multiple executive positions at AT&T including Converged Product and Mobile web product planning and Web marketing. Ted has also held creative and strategy leadership and positions at mobile startups and creative agencies including MarchFIRST. Ted holds a bachelor’s degree in Communications and Advertising from the University of Washington and a Visual Design degree from the Art Institute.