Analysys Mason: Sprint, Telefónica aim to increase their presence in the worldwide advertising value chain

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Ronan de renesse

Ronan de Renesse

Sprint (NYSE:S) and Telefónica Digital announced Feb. 20 that they will collaborate to establish an advertising alliance, which reportedly will reach the two operators' 370 million customers in Brazil, Germany, the U.K. and the U.S. Both operators have stated that the collaboration will span across messaging, display and location-based advertising.

Sprint has operated the PinSight Media+ advertising service with mobile advertising service provider Amobee since October 2012. PinSight Media+ connects marketers, publishers and mobile advertising networks and pushes targeted online and mobile advertising to Sprint customers who agree to share their location and device usage data. Similarly, Telefónica Digital offers mobile and online advertising services that build on user location information and include opt-in messaging services, display advertisements and advertising-funded consumer services.

In October 2012, Telefónica established the Weve joint venture with Everything Everywhere and Vodafone in the UK, which uses a customer opt-in database across the three operators for mobile marketing. Joint ventures between operators are an effective way to provide the scale required to attract third parties to operators' assets such as consumer data and analytics and communication channels. However, according to a recent Analysys Mason report, "Mobile advertising: market trends, business models and operator case studies," operator-led advertising joint ventures will not be able to compete directly with Apple (NASDAQ:AAPL) or Google (NASDAQ:GOOG) to generate a lot of revenue. In most cases, such as Weve, operator-led advertising joint ventures will offer a direct and secure channel that is ideal for brands looking to deploy efficient local marketing campaigns.

However, the partnership between Telefónica and Sprint combines both operators' efforts to increase their role in the mobile advertising value chain. The operators aim to increase their foothold by establishing an advertising network that offers access to a customer base at a scale that is attractive to global brands and agencies while capitalising upon both operators' publisher assets (in the form of their websites and mobile apps). Worldwide mobile marketing campaigns generally occur in the in-app or mobile Internet display advertising space via advertising networks powered by Apple or Google. Sprint and Telefónica will expand the reach of these campaigns to non-smartphone users, but it will be limited to their particular customer base in each country. 

Ronan de Renesse is the lead analyst for Analysys Mason's Mobile Content and Applications and Mobile Broadband and Devices programmes. His primary areas of specialisation include rich media applications and services on mobile, application store forecasting, mobile broadband, tablets and smartphone adoption. Ronan holds a PhD in Telecommunications from King's College London.

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