Digital Advertisement Frauds: A Telco Story (Part 1/3)
Look around you and you see posters, hoardings & stand-ins. Look at whatever screen you carry or face and you will see videos, popups & banners. These are “Advertisements” and they are everywhere!
I will not be going overboard when I say advertisements are the fulcrum of relationship between every business and its consumers. Organizations put significant investments into their marketing functions which in turn enables advertisements.
While earlier advertisements were statics in nature – channel run time, physical hoardings etc., they were easy to track to ensure the investments are protected. But, with the advertisements becoming digital, increasingly dynamic & internet driven – There has been an increasing need for measuring & protecting the advertiser’s or brand’s money and even the publisher’s real estate which is used for ad delivery & consumption.
Like it or not – In Telecom space, Digital Advertisements are coming to steal sleep off every fraud manager’s eyes.
From the risk perspective, the domain is complex and different from the traditional Telecom frauds, but the most important point is that advertisements from the internet space bring fraud exposure levels which are much higher than what Telco’s are used to. And containing that, will be a real challenge!
This 3 part blog will put a light on relevance of Digital Advertisements in telecom space along with providing a high level understanding of it’s ecosystem and fraud risks it injects. Idea is to give readers a basic knowledge of the digital advertisement space and the inherent risks.
This is the 1st part of the 3 part blog and covers why telecom industry is looking at Digital Advertisements as their next enabler.
Part 1 : Digital Advertisement and Telcos: A match made in heaven
When we think about internet or technology, there are 4 names which cross mind – Google, Apple, Facebook & Amazon.
What the 2 of these 4 giants, Google & Facebook, have taught us that AD revenues are a big deal when it comes to the digital world. With Apple & Amazon also planning to jump the advertisement bandwagon, the belief only gets stronger.
No surprise that Google & Facebook earn 90% of their revenues from advertisements. Also, most of the Apps, specially communication apps also have advertisements at the centre of their revenue model.
Considering this, it was just a matter of time our own Telecom industry shifts its focus on exploring the digital advertisements as one of their primary source of revenue.
The likes of Verizons, Axiatas & Singtels have already invested big in the area of advertisements.
Also, some other leading operators like Vodafone, Telefonica, Etisalat and France Telecom have also openly agreed for a bright future of advertisements in telecom industry.
Digital advertisements: Attracting attention within Telcos
If you look at telecom industry as an advertiser, you will find telcos spending 10-15% of their total yearly revenues as marketing budget, out of which 46% is only on digital advertising like website banner ads, video ads etc.
That is quite higher than any other comparable industry sector.
And if we believe certain studies conducted by industry experts like Adobe, spend on advertisements is only set to grow:
It only shows that telco industry agrees that this spending will only increase with mobile advertisements leading the pack.
What will drive this spending on Advertisements further ?
Now lets look at what are the factors which are going to drive the investments in the area of advertisements further.
If you look at the areas marked in yellow in the chart below, you will find that digital Advertisements are among the fastest growing revenue streams for Telecom Industry.
And, if you look at the elements which are marked with red circles, you will see a list of services on which telcos are currently betting big on.
These services, which include M2M, Gaming, Music, Video etc., interestingly are set to become the “enabler platforms” to drive advertising revenues further.
And not only that, these services also ensure that Telcos have sufficient advertisement inventory for them to upgrade from just an advertiser to become a big ticket publisher or a small AD Network.
This is the reason why you will find that these services have “Ad Delivery” inbuilt as a core functionality within their framework.
Digital Advertisements are key to make upcoming & exiting product & services more affordable to a Telco’s subscriber base and in turn boost adoption
Apart from this, we all are aware that content services are set to become a big ticket to monetize the large investments Telcos have been making towards infrastructure & quality of data services.
There are researches from the likes of eMarketer which indicate that content is set to make up 66% of the total traffic in Telco data pipes by the year 2017.
Driving on content services, advertisements are set to attract 100 billion dollars in next 1 year and an increase of 233% increase mobile ad spending in next couple of years.
Now, there is little doubt that advertisements are set to become one of the major source of revenues for Telcos or power that next big idea which will be a star of their upcoming annual report!
In the next part of the blog, we will understand how the digital advertisement ecosystem works along with understanding how big is the problem of fraud in that ecosystem. You will not have to wait far too long, that I promise!
Abhijeet is currently working as Principal Consultant with Subex.
He specializes in Telecom Fraud Management and his 360 degree experience in this field includes extensive exposure in Fraud Operations Management, Consulting & Advisory, Risk & Health Assessments, Business Development – Product & Managed Services and Analytics.
Out of professional life, he is a blogger, tech enthusiast and a traveler.