Vodafone taking digital media buying in-house and AT&T acquiring AppNexus show that telecoms companies want to get closer to the ad industry.
They have spent too long being "dumb pipes" and missed out on the online ad boom. But they scent new opportunities – as both buyers and sellers.
Vittorio Colao, Vodafone’s chief executive, who is stepping down after a decade in charge, has always understood the importance of advertising.
The Italian ex-newspaper boss told me four or five years ago how he liked to watch every Vodafone TV ad before it aired and, whenever he was travelling, he would visit the local Vodafone shop and its rivals to see how they were faring. If he spotted some litter or a sign askew in a competitor’s store, he would text a cheeky photo to his rival chief executive.
But that was then. As Colao explained at Vodafone’s latest results, digital technology has transformed the consumer experience. A customer who used to visit a Vodafone store three times a year will now have 10 interactions a month through its app.
It means Vodafone has "a tremendous opportunity to do much more marketing" directly with customers – "much more than the old above-the-line [advertising] and below-the-line [mailshots]", as Colao puts it.
And that is why Colao is in-sourcing a lot of digital capability, including two-thirds of Vodafone’s digital media buying globally, "because we believe that this is a critical skill for the future" and too important to leave to its media agency.
There has been lots of chat about brands such as Unilever bringing creative work in-house but Vodafone’s decision is proof that a FTSE-100 advertiser is serious about in-sourcing media, which is where the real money is.
Time will tell whether Vodafone can find and hold on to the talent and technology needed to run an in-house media shop.
Many agency leaders and some chief marketing officers warn about in-house teams being stale and lacking innovation.
But the logic of Vodafone’s thinking – taking more control of its media and data – is undeniable.
As ecommerce giants such as Amazon and Uber have shown, businesses with direct-to-consumer relationships and first-party data are winning in the digital economy.
Telecoms companies are well-placed because they already have trusted D2C relationships, particularly in a new world where privacy regulation such as GDPR has made data more scarce.
It’s notable that Deutsche Telekom in Europe and T-Mobile and Sprint in the US have been among the "legacy" brands that have pushed hardest to change their media agency arrangements in the past 12 months as they take more control.
That brings us to AT&T’s dramatic moves to transform its business – first by buying TV and film giant Time Warner and then ad-buying platform AppNexus.
AT&T is betting that the fusion of distribution, premium content and addressable video advertising can create an integrated telecom-media business with scale and quality to challenge Google, Facebook, Netflix et al.
Comcast (which owns NBCUniversal and has been bidding for Fox and Sky) and Verizon (which has Oath) have similar ambitions.
Even Vodafone, which has done little in the TV content space, is talking about a "potential advertising opportunity", particularly around data.
Colao says "identity and security" are two areas that "all telcos have been good at". Being a better buyer of advertising just might make Vodafone a better seller of advertising too.
In an era where trust in online ad platforms remains alarmingly low and regulators look ready to intervene, there could be a gap in the market for integrated telecom-media companies. It might even be good for consumers.
Gideon Spanier is the global head of media at 北京赛车pk10.