On the surface, AT&T’s $39 billion acquisition of rival T-Mobile would not seem to have huge implications for the fledgling but fast-growing mobile advertising space—unless the two companies decide to leverage all that customer data to run more targeted mobile ad campaigns, say industry experts.
Currently, while AT&T does maintain its own in-house mobile ad network (AT&T Advanced Ad Solutions), neither it nor T-Mobile is a major ad seller. A few years ago, media companies and advertisers embarking on mobile campaigns had little choice but to vie for space on each carriers’ “decks,” i.e., their walled garden-like portals. But the importance of such positioning has waned. “On deck [advertising] is no longer a force,” said Eric Bader, chief strategy officer at Initiative and former president of the mobile marketing firm BrandinHand.
That’s because with the emergence of smartphones like the iPhone, mobile users surf the Web just as they would on PCs and don’t need their hands held by the wireless carriers the way they might on basic “feature” cell phones. And smartphone users surf the Web way more than feature phone users do.
“Mobile advertising wasn’t really taken seriously until the advent of smartphones,” said Sarah Baehr as svp, director of digital publishing solutions at MediaVest. Now, big media companies with popular mobile extensions, such as ESPN.com, as well as a handful of mobile ad networks, have emerged to take a large share of the estimated $1.2 billion mobile ad market (per eMarketer), including Google’s AdMob and Millennial Media.
In addition, there are companies like appssavvy, which help brands advertise in mobile apps. And there is Apple’s iAds initiative. “Some paid media dollars are going to buy mobile ad network display, but more money is starting to flow into mobile social, in-app, branded apps, deals and shopping,” added Bader. “That’s where the center of gravity is moving to.”
That’s not to say that the AT&T and T-Mobile deal doesn’t matter to the digital ad industry. For one, among T-Mobile’s 35 million subscribers, “some will get iPhones,” said eMarketer analyst Noah Elkin. “That gives Apple renewed momentum,” while driving more mobile Web and app consumption.
But an even bigger potential ramification of the deal is data—mobile’s “golden nugget” as Baehr put it. Assuming AT&T wants to go there. “In the past, carriers were dead set against it,” said Phuc Truong, managing director U.S., of the mobile marketing firm Mobext. “Lately they’ve listened more.”
Traditionally, carriers have stayed far away from using their customers’ data to better target advertising for fear of fanning privacy fears among consumers or regulators. But Truong theorized that given AT&T’s now massive data footprint—with T-Mobile, it claims more than 130 million subscribers—the company could launch some sort of ad product that would use its customers’ data to target ads based on geography, household size and spending habits.
Or AT&T could sell that data to another player, such as a mobile ad network or individual publishers. “They’d have to do it in a way that avoids using [consumers’ actual names]. But that’s the really interesting part of this deal. The carriers definitely don’t want to become just dumb pipes like the ISPs,” said Truong.