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Chetan Sharma is co-author of upcoming “Mobile Advertising” (John Wiley) and “Mobile Broadband” (IEEE Press). He is an adviser to several operators and media brands around the world.
Over the last three months, there has been significant discussion around the notion of “open access,” with Apple promising to release its developer kit for the iPhone; Sprint Nextel launching its WiMAX business, XOHM; Verizon Wireless saying it will open up its network and platform; Google’s efforts around Android and a possible gPhone; and the 700 MHz auction. The two massive industries of communications and media/online are clearly at loggerheads. How this battle shapes up over the course of the next few months will define how you and I will consume media, entertainment and information.
Media companies and mobile operators think about customers differently. Operators are focused on subscriber acquisitions, while media companies are fanatic about audience acquisitions. Operators think in terms of adding a few hundred thousand subscribers a month — media companies, of millions. In the Telco 2.0 world, where service providers aspire to become media and entertainment brands, shouldn’t operators be thinking like media companies? Shouldn’t they be more focused on audience acquisition strategies — selling their goods beyond the confines of today’s existing barriers?
If we look at the strategic canvas of the mobile data industry, it’s clear that operators currently have a huge advantage over media brands. Mobile operators’ advantage in the current landscape comes from their superior reach, as well as the capability they have to segment and profile users. Their current influence over the ecosystem is a magnitude ahead of media brands. However, in other areas, such as user experience, content, and the ability to be quick to market — media brands have a stronger strategic footing, and they will use it to close the gap in the other areas.
Too much ink has been wasted on the equation of being a dumb pipe. Dumb does not imply little or no value. For operators, nothing is more troubling than the insinuation that they will be reduced to bit pipes, becoming utilitarians tasked with keeping the streets clean while the media companies zoom past them in their Ferraris. Yet operators need to realize their unique value propositions, come to terms with both what they are great at and not, and structure their monetization strategies accordingly. The growth of the nascent mobile advertising industry is largely dependent on it.
While it is conceivable that some operators can become content and mobile advertising powerhouses, the evidence points us elsewhere. Operators and media companies sit at the exact opposite ends of the spectrum in terms of cultural and media savviness. Mobile operators are very engineering focused and extremely conservative in their approach to the critical operational aspects of running a cellular network. Media companies, on the other hand, come up with the most creative ways to express a brand message in a landscape that would burst the brains of the very brightest network operators with all of its consumer nuances and related myriad creative intricacies.
To be successful over the long term, operators need to focus on the unique elements that only they can provide — such as location, presence, user profiles and platforms for applications; as well as device and network APIs — and build business models around abstracting this information so that the ecosystem can utilize them to enhance user experience and usage. Such an approach will enhance their competitiveness in the media ecosystem, keep the usage and ARPU levels up, and get more entrepreneurs and users involved in moving the industry to its next milestone.
Such an ecosystem will also empower entrepreneurs to keep pushing the boundaries of technical and business innovations to make mobile media and advertising a sustainable, vibrant and scalable industry at a much faster pace — and will help deliver on the promise of “open access” better than any rules in the 700 MHz auction.
This shift in mindset (and subsequent execution of the resulting strategy) will have a direct impact on any viable mobile content and advertising strategy. Advertisers look for an audience, precise targeting, and measurement. If operators can help deilver that, then their media strategy will flourish, but if three years down the road, media brands have five times the audience…well you know what happens next.