As Telecoms Buy Up Ad-Tech Players, New Levels of Data Targeting Seem to be Afoot

Verizon, Altice and others eye startups—and pending legislation

The ability to target across devices is a huge need for big-brand advertisers.
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If you didn’t understand why telecoms have been buying up ad-tech companies, the past several days have provided plenty of illumination.

When Dutch telecom Altice bought Teads for more than $300 million on March 20, it represented the kind of data-based, mobile-minded marriage that’s become a trend. In short, telecoms are looking to combine their customer insights with the online ad-targeting capabilities provided by the likes of Teads. It’s worth pointing out that Altice is the fourth-largest broadband provider in the U.S., thanks to its $17.7 billion acquisition of Cablevision in 2016. With that in mind, the plot thickens.

On March 23, the U.S. Senate passed a bill, 50-48, to repeal regulations that forbade internet service providers from selling users’ data without their permission. It was a victory for Altice, Verizon, AT&T, Comcast and other broadband services. If the House of Representatives passes the bill—the odds of that happening are unclear—it will be sent to pro-business President Donald Trump, who seems highly unlikely to veto the measure.

Update: The House passed the resolution on Tuesday. It now goes to Trump, who’s expected to sign it, The Verge reported.

Such a repeal of privacy restrictions on ISPs will have “a profound effect on our industry,” said Mike Caprio, gm of programmatic and svp of partnerships at Sizmek, an Austin, Texas-based ad-tech firm. He suggested such legislation could ultimately mesh television and online like never before.

“It’s likely that the ISPs, which combined with the mobile operators now have access to the totality of user internet history, will use this as an opportunity to build ad-technology solutions, most likely through acquisition, that enhance behavioral targeting capabilities for their users,” Caprio explained. “The more interesting use case will be whether these ISPs, which are often the linear TV providers’ MVPDs [multichannel video programming distributors], will seek out acquisitions that will enable them to match users’ linear and digital history, amplifying opportunities for true video convergence, with enhanced targeting and attribution. In that case we could even see new business models stem the tide of cord cutting that may supplement reductions in revenue for MVPDs.”

On a simpler level, consider how people are currently targeted, and often hypertargeted, online already. But then imagine cross-device advertising being powered by almost everything in one’s internet history combined with the intelligence that can also be gleaned from smartphone apps.

"They have been sitting on that data for decades, and they haven't been using it in a very good way. Now, they are starting to monetize the data."
-Robert Lang, CEO of Socialbakers

The wealth of data about a mobile subscriber that a telecom can potentially utilize for ad placements? Evidently, it’s impressive—to say the least.

“You’d be scared shitless,” said Robert Lang, CEO of Socialbakers. “The amount of data available is amazing.”

Lang, an industry veteran, also noted that telecoms’ ad-tech play is “really, really late.”

“They have been sitting on that data for decades, and they haven’t been using it in a very good way,” he said. “Now, they are starting to monetize the data.”

Telecoms like Verizon and Altice can own a share of digital ad spend, said Prabhjot Singh, co-founder and president of Pyze, in a space he noted is forecasted to hit $500 billion this year. “It’s a good move,” Singh said, “even though they are late in the game.”

Whether or not Uncle Sam will let all that ISP data flow freely, something marketing groups have already lauded, remains to be seen. (A digital privacy group, Fight for the Future, early this afternoon announced a billboard campaign to go after congress members who vote in favor of the repeal.) But to Lang’s point, telecom players are already sitting on data gold mines that could be used in an anonymized fashion for ad tech.

“With user identity being one of the hottest topics in marketing today, it’s no surprise telecom giants continue to buy ad-tech capabilities,” said Brian Baumgart, CEO of Conversion Logic.

On Feb. 23, Singapore-based telecom Singtel bought Turn for $310 million. About 13 months ago, ad-tech firm Tapad sold to Telenor, a Norwegian telecom that spent $360 million on its acquisition. And then, of course, there was Verizon’s $4.4 billion purchase of AOL in recent years and its pending agreement to acquire Yahoo for a similar amount.

“We see Verizon-AOL as the best company positioned to challenge Google or Facebook here in the U.S.,” said Guillaume Lelait, evp and U.S. managing director at Fetch.

“They have a competitive advantage understanding where people are, their behavior and what apps they have installed on Android devices specifically.” Lelait added. “From a data-based standpoint, the challenge for telcos is to offer a global ad product, as operators do not exist on a global basis the way Facebook and Google do. Each localized market or region has their own providers which limits their ability to scale globally. They additionally struggle to offer a competitive ad product on [Apple mobile operating system] iOS as this is by default more of a walled-garden environment due to Apple’s restrictions.”

Expect more marketplace consolidation in the coming months, industry players said. Notable companies still on the market such as AdRoll, xAd, DataXu and others, may find suitors in telecoms as well as Chinese investors, who are increasingly buying up ad-tech companies.

Databerries, a mobile advertising platform that raised $16 million in funding last week, could be next. Benoit Grouchko, CEO of the 2-year-old startup that helps retail chains with actionable location data, hinted that the company’s tires have already been kicked a time or two.

“It could happen,” Grouchko said. “The telecoms are extending their services to keep growing, and they eventually could also provide content. Maybe they could buy Netflix.”