Data is the New Oil!

Most people and businesses have long realized the value of information, but not every business is able to use it productively. Only a few companies have been able to monetize it well. First of all, IT companies do this. They historically build their business around user data; they accumulate, buy, segment, and utilize it. Sometimes they invest enormous resources into services that, upon first look, don't bring any significant profit: YouTube for Google or Whatsapp for Facebook.

In fact, these services earn their parent companies not only monetary rewards but also something with a much more significant value. It is information, in the form of user data, behavior, interests, preferences and so on. Using this information, you can segment users correctly and sell those segments to advertising platforms. As a result, the largest IT companies that know the value of user data, put every effort in collecting more and more data, making users use their services and getting them to download apps, so that these apps and services have access to various information on their smartphones: geo-position, contacts, photos, and so on. The larger the audience for your mobile app's service, the more user data you can get and you have a greater ability to monetize them.

It's worth noting the value of geodata. When you know where a user goes you can analyze the places they visit (POI), how often they visit them, and what type of places they are (expensive restaurants or fast food chains) to discover the preferences and income level of the user. By analyzing how they move (by car or public transport) you can understand where they live, in which neighborhood, how much properties cost there, what is located nearby, and what time they go to work and return home… Travel to other countries shows how the user travels, how they relax, spend their vacation time, how much they spend, and so on.

Let's dig deeper. Is it true that only the companies with huge penetration of their mobile app can collect user information and geodata? To be more precise, any IT company needs to achieve really deep penetration of their service and for its use to be regular in order to collect such information. All this data must be delivered from the user's device to the IT company's server.

All this data is sent through a telecom provider: mobile data, Wi-Fi, or other forms. At the same time, the telecom provider knows the precise location of the user by knowing location of the cell phone towers a user connects to (in a large city it's accurate to within 10 meters). A Wi-Fi operator can even identify a user's location inside a building or underground (for example, in Japan, Wi-Fi operators can determine a users' location to the point of which floor they are on, or even in which room, which is what mobile application can't do).

As a result, telecom providers have access to all the geodata, even without installing special software on users' smartphones. And this data can be used to categorize users with high level of precision (see above).

The problem is that they often don't use it at all. It means that the most providers don't use their own advertising technology to commercialize personal information and only some analyze and structure the data (they create Big Data departments for this). The anonymized client data is, at best, sent to IT giants (Google, Yandex, Facebook, Mail, etc). This data doesn't cost very much and in fact, only enriches the data of the aforementioned third-party IT giants.

De facto, telecom providers hand client data over to IT companies, meaning this data works for the IT company, not the provider!

If a telecom operator wants to use client data in a really productive way, they must think in earnest about their own advertising technology. This technology allows fully using data to increase the performance of marketing campaigns and to use advertising budgets efficiently.

This is a real growth area for businesses.

There's one important point: developing such technology from scratch is a very expensive and long process. For example, Tinkoff bank has developed their own successful programmatic platform, and here are some facts:

If you don't have resources for such an expensive project then you will not understand how many issues will stand in your way. And above all, while you implementing it, your competitors will be far ahead and will have a significant advantage when working with their marketing budgets.

The thing is, the current advertising ecosystem includes a lot of intermediaries between the advertiser and the customer with each one adding to the price of making contact. As a result, the real price of a contact is unpredictable and inflated.

Russian telecom providers spend about € 2−3M every year to buy commercials using programmatic technologies. Case studies show how budgets are spent when using proprietary programmatic technologies compared with the current advertising ecosystem.

In fact, a sophisticated telecom provider can use the same amount of money to get 2.5 billion contacts instead of 400 million.

As shown above, even by simply excluding intermediaries from the chain can help you to be much more efficient than your competitors and to being many more digital services to your customers, increasing your ARPU.

If you add the additional benefits of using all the data, automated marketing communications, and the use of Machine Learning predictors, which can save 15-20% of the contact price, it's obvious that proprietary programmatic platforms are a giant growth area for the telecom provider business!

While others waste their time thinking about it, it's important to not miss the opportunity to start integrating your own programmatic platform into your infrastructure right now.