Mobile internet access in Asia is growing more rapidly than any other communications technology. This trend is augmented by the ramp up of next-generation broadband in Malaysia and Singapore.
Despite this network build-out, industry analysts estimate a $50 billion gap in internet ad spend, showing that companies are currently under-monetizing their assets. Those that can capitalize on the shift towards a digital lifestyle will outpace the competition, especially in Asia, where mobile is dominant.
Delivering an exciting, integrated media offering will be the critical differentiator for operators and content providers. However, the industry must undergo a costly and complex convergence. Furthermore, IPTV and over-the-top television (OTT) are disrupting traditional TV business models, threatening to take market share from telecom operators. Finally, the industry lacks a compelling solution to monetize customer interactions.
Is there an innovative way for telecom operators and content providers to sustain future growth while aligning their services to new monetization opportunities?
Communications and media convergence has historically been driven by large mergers, along with ambitious organic growth programs. Yet, communications operators are facing financial and operational challenges as they attempt traditional content strategies.
The cost of acquiring premium content can also be prohibitive, as we saw with the English Premier League broadcast rights awards in Europe and Asia. IPTV and OTT services are also disrupting the TV landscape by enabling content providers to position themselves closer to viewers, bypassing traditional players to directly offer “a-la-carte” subscription and hybrid options.
New regulation can further disrupt an operator’s plans to differentiate with exclusive content. In Singapore, regulators are seeking to make exclusive premium content available to all operators at a fee through “cross-carriage” and Project NIMS (next-generation interactive multimedia applications and services). Such initiatives benefit customers by permitting access to content without switching providers.
An alternative to the perils of traditional convergence is for media companies and operators to join forces in a “Third Way”. The principle is a new business model based on a collaborative approach that safeguards and ring-fences each party’s respective position in the value chain - content aggregation upstream versus customer relations downstream.
Operators may obtain content at a low cost that will allow them to increase revenues and loyalty. They could freely combine directly sourced content with OTT provider’s offerings and competitor’s content leveraged through cross-carriage or similar regulations.
In return, content providers will be able to access customer data and analytics to build a more intimate customer relationship. Content companies gain an opportunity to align their product closer to their viewers while selling more targeted advertising campaigns.
Although not without its challenges, the Third Way will allow communications and media companies to behave in the market as quad-play operators without having to endure the complexities and risks of traditional transformation.
For Third Way partnerships to deliver value, operators and content providers must merge their unique capabilities to create a genuinely personalized experience. The key dimensions here are the customer’s “digital DNA” and targeted advertising.
Customer digital DNA defines consumers by tracking their content consumption and interactions with providers. For successful companies, the future customer experience will be based on operator’s and content owner’s ability to decrypt this digital DNA and translate it into a meaningful proposition.
By using digital DNA, operators and content owners are able to deliver highly targeted advertising and eventually generate better marketing ROI. Consumers could also benefit – gaining access to free content in return for watching targeted ad campaigns.
Current ad targeting can be augmented with a variety of highly interactive techniques such as non-disruptive ads with advanced targeting through contextual and behavioral profiles. Advertisers can also use the online platform as an experimental space to gauge market reception of new offerings. Finally, targeted advertising enables superior reporting that helps to continuously improve offerings.
Johan Khoo is a senior manager, Quentin Derome a manager and Matt Marolla a consultant at Accenture Management Consulting For more information visit www.accenture.com/