Telcos' Role in the Advertising Value Chain

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Summary: A report identifying how to build a valuable new business model and customer base.

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Fixed and mobile voice and data revenues are in free-fall in most European and North American markets. Since the 3G auctions at the turn of the century, content has long been considered the key future growth area for operators in the consumer segment. However excluding SMS, the only material content revenues for Telcos to date have been through movement into adjacent markets - particularly acquisitions in the cable and media sectors.

Through advertising, operators have a potential opportunity to:

  • Reduce the price of content and services to end-users;
  • Increase the volume of available content and services, and
  • Provide value to the advertising community


To achieve this they must contribute to the development of a differentiated new advertising channel in which users are provided with a portfolio of content and services supported by contextually-relevant advertising.

Operators have an opportunity both to provide their own advertising-funded services as well as become an enabler to the advertising community by helping advertisers interact more effectively with their targets (who may or may not be Telco customers). In this report, we examine both of these opportunities in both the fixed and mobile markets. We explore in detail what advertisers and users really want and the opportunities available to operators to carve out a valuable role in meeting those needs.

Key Questions Answered

This report seeks to help operators and vendors maximise future advertising-funded service opportunities by answering the following questions:

  • What is the rationale for advertising-funded services?
  • When will the market take off and how big will it get?
  • How can operators prevent cannabalising existing revenue streams?
  • What are the needs of the advertising community?
  • How should operators work with Internet enablers (e.g. Google), content providers (e.g. Sony) and aggregators (e.g. Motricity)?
  • What implementation issues need to be resolved?
  • What are the options available to operators to add value and what is the best option available?
  • What are they key factors for success?
  • What value is there in opening-up Telco assets (open APIs etc.)?
  • Which can be learned from market-leaders in advertising-funded services?
  • What are the attitudes of operators, internet enablers, content providers and aggregators to the market and how to be successful in it?
  • What needs to be done to develop the market and generate near-term benefits?


  • Executive Summary
  • Background and Key Issues to Date
  • Growing Pressure on the Existing Operator Business Model
  • Content Delivery: Not a Panacea
  • Advertising-Funded Services: Tried and Tested in Adjacent Markets
  • Telcos' Role in Advertising: Market Scope
  • Activity from Operators to Date
  • Advertising-Funded Services - Threat or Opportunity?
  • The risk of cannibalising existing revenues
  • Internet players - partner or competitor?
  • Show me the Money! - How big could the market be?
  • Understanding the Advertising-Funded Value Chain
  • Value Chain players in Internet Advertising
  • What do Advertisers *really* want?
  • Options for the Operator to add Value
  • Key Skills and Assets Required
  • Issues to resolve
  • Operator role: The Devil in the Detail
  • Who to Partner with and How
  • Meeting Advertiser and Customer Needs:
  • Return on Investment
  • Customer attention & interaction
  • Performance measurement
  • Ubiquity
  • Legal and Regulatory Issues
  • Learning from Web 2.0
  • Content and Communications: Two sides of the same coin
  • Social Networking Communities and Advertising
  • Case studies:
  • Learning from the Master: Google and the Art of Ad-Funding
  • Accelerating the need for Advertising Revenues: The X-Series from 3
  • The Whole Hog: Blyk’s Advertising-Funded MVNO
  • Delivering an Open Platform: Amazon
  • Views from the Industry - new primary research by STL Partners
  • Action steps & Conclusions

This report is now available to members of our Telco 2.0 Research Executive Briefing Service. Below is an introductory extract and list of contents from this strategy Report that can be downloaded in full in PDF format by members of the executive Briefing Service here.  To order or find out more please email , call +44 (0) 207 247 5003.