Advertisers in the mobile space face a major pain point: most data plans are capped, so users are less likely to view entire video ads on their mobile devices when connected to 3G/4G networks due to the high volume of data that video consumes. This makes it harder for advertisers to keep customers engaged with rich content. Digital and communications service providers have a unique opportunity to provide advertisers with a solution to this dilemma, while also creating new revenue opportunities for themselves. Through sponsored data arrangements, advertisers and content providers can pay operators directly to zero-rate specific ads and content, in order to increase advertisers’ click-through rates. Digital and communications service providers, in turn, benefit from an additional revenue stream to offset some of the costs of delivering the video content.
AT&T was the first operator to have conceptualised this idea into a product, launched in 2014, with zero-rated ads that carry a sponsored data logo – signaling that the specific ad (or content) is free for users to watch or download. The content can range from a film trailer, a whitepaper, a new app or a software update. SK Telecom in Korea has since launched a similar program.
To support sponsored data, an operator’s systems must support content categorisation and keep track of data volume and other parameters in order to invoice the content owners. Data analytics play a key role in helping digital and communications service providers promote sponsored data programs, as well as provide advertisers with end-user insight and usage patterns. Ultimately, sponsored data is a potential revenue add for operators but not necessarily a differentiator – it won’t influence end-user buying decisions, but it is another way to offset OTT and other streaming media costs.