Wednesday, May 22, 2024

    EDITORIAL Are super bundling and commerce media the future of MNO and VAS marketing revenues?

    MNOs need new ways to make money. While super bundling is one option, perhaps retail media – selling advertising on their devices, apps and more – is really where telcos and telemedia should be heading?

    MNOs are in crisis. They need to create new revenue streams and generate income in new ways as their market becomes ever-more competitive and their core products ever-more commoditised.

    The merger between Three UK and Vodafone UK is a case in point: to survive, these two once mighty players are having to become one to have a chance of competing in this market.

    But does it need to be like this? Aren’t there new ways in which MNOs can look to generate revenue by pivoting their businesses to better serve their customers while leveraging the intimate – in a data sense rather than dating – relationship they have with almost everyone on Earth?

    The super bundling solution

    Bango has spent more than a year pushing the idea that telcos can generate increased revenues if they allow users to aggregate streaming services and then pay via the telco for them.

    This idea of super bundling isn’t new, but the latest push towards sportsVOD is timely. This summer sees the European football championships take place in Germany across June and July, followed swiftly by the Olympics in Paris in July and August. These are crammed in around the host of other on-going sporting events taking place worldwide this summer and cements just how important sports are commercially to anyone in the content business.

    Sports fans are the biggest adopters of streaming package, with the average US sports fan having seven and spending some $1440 a year. However, many of them – 73% according to Bango – want more but can’t afford it and are also put off by the complexity and scale of just how many sports services there are out there.

    Given this fragmentation, 87% of those paying for SportsVOD subscriptions are calling for a single ‘content hub’ to centralise all of their sports subscriptions (and more) into one place. Without this sort of all-in-one solution, 55% of sports streamers admit to using pirate streaming services to access all of their favourite content in one place.

    The piracy aside – which indicated a market in crisis, rather than unwilling consumers – this shows, believes Bango, that sports fans are more than ready for super bundling. Further, they say that they want their MNO to provide it.

    Running the numbers, Bango believes that telco customers would pay around 38% more on their monthly phone bill for this – a substantial increase in revenues.

    What is intriguing is that there still seems to be some degree of reticence among MNOs to do this. They need to create new revenue streams to counter commoditisation of messaging and voice, an aggregating content and billing for it – potentially with DCB – is one option for them.

    There are challenges with super bundling for telcos. Securing rights to bundle popular content from different providers can be expensive. Telcos need to negotiate favourable deals while offering a diverse and attractive range of content. Telcos would also be entering a crowded market already occupied by established streaming giants. They would need to differentiate their offerings by providing unique value propositions or competitive pricing. Likewise, negotiating revenue sharing agreements with content providers can be complex. Telcos need to ensure they get a fair share of the profits while keeping their bundles affordable for customers.

    Then there are the tech integration and data issues – telcos need to invest in robust infrastructure to ensure a smooth user experience and super bundles often include unlimited or generous data allowances to accommodate streaming – both of which are costly.

    Is commerce media the real money spinner for MNOs?

    Perhaps a better – or additional – revenue stream for MNOs lies in retail media. With third-party cookies being phased out, brands need new ways to target consumers and create personalisation marketing. That now relies of consumer-facing businesses allowing these brands to advertise on their digital real-estate. Many top tier retailers are doing this already: Amazon Advertising turns over billions each year charging brands to appear on its site preferentially, while the likes of Wal-mart, Tesco and Carrefour are all doing it too. MNOs also have an opportunity here.

    While many MNOs have been doing offers and deals to consumers, this ‘retail media’ play – technically now defined as commerce media as it broadens out to non-retail, consumer facing businesses – for them is one that can’t be overlooked. MNOs have a unique position in the commerce media landscape due to the wealth of data they possess about their subscribers. This data offers a powerful opportunity for them to create a commerce media network.

    For starters, they have access to a vast amount of subscriber data, including demographics, app usage, location information and browsing habits. This data provides advertisers with valuable insights into consumer behaviour, allowing for highly targeted advertising campaigns.

    MNOs have a captive audience within their subscriber base. This presents an opportunity to reach a large number of potential customers directly through their network channels. By leveraging subscriber data and network activity, MNOs can deliver contextually relevant ads. Imagine a subscriber searching for recipes receiving targeted grocery store promotions, or someone looking at travel apps getting hotel deals.

    MNOs can capitalise on this commerce media opportunity in various lucrative ways. In-app advertising to serve targeted ads within the MNO’s own apps, like billing apps or data management tools. This can work alongside SMS marketing that offers targeted SMS marketing opportunities to brands, allowing for permission-based promotions. There is even the opportunity for on-device advertising, with display targeted ads on the lock screen or within the user interface of the MNO’s network.

    But there are challenges. MNOs need to ensure they are transparent with subscribers about data collection and ad targeting practices to build trust. They also have to build an ad-platform or work with third-parties to help do so. It is also a very competitive market that they are entering.

    But it is an opportunity. While super bundling could be one new revenue stream, advertising could well be the real killer app for MNOs. They have the data, they have the connections and they have multiple ways to engage and deliver messages, which all gives MNOs an advantage in the new world of retail media.

    Imagine ads around sports super bundling

    Now bring these two things together. The advertising and marketing potential around super bundled services is enormous. Captive audiences, focussed on specific genres of content – in this case sports, but it could be anything – are not only prepared to pay more for these aggregated content stream packages, but are right there for the right kind of targeted and sponsored promotions.

    The think about commerce media is that it isn’t really about adverts in the conventional sense, it is about dropping the right message with the right offer from the right brand at the right moment. MNOs are ideally placed to do this – and have the messaging channels and apps to do this. Super bundled products combined with messaging make this a compelling offering.

    It is early days and the market is likely to take some persuading, but retail media has swept through the ecommerce market rapidly in the past two years and is now attracting a lot of attention in the retail community. Smaller retailers want to join in, but lack the reach. MNOs could be where they can also get a slice of the action. Stay tuned, there will be more on this – a whole lot more – as 2024 unfolds as this writer for one believes that this is potentially a game changer for MNOs, marketers, content businesses and VAS when it takes off.

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