Telcos in ad tech, haven’t we seen this movie before?

However, what really stands out is deja vu. The bit where hundreds of millions if not billions of dollars exchange hands only to collapse years later? Haven’t we seen this movie yet?

T-Mobile is calling the deal a “huge opportunity” for its ad business, while industry gossip is calling it a potential game changer. The familiar chorus of hype and exaggeration sounds – because in the media, some stories never change.

First, it’s worth delving into the history of the investment thesis, with its countless false dawns, to gain some perspective.

Telecom operators in Western Europe, North America, and especially Singtel in the Asia-Pacific region, have turned to digital advertising to diversify revenue, hoping to use their vast customer data to establish themselves as truly big players on Madison Avenue.

Despite significant investments and acquisitions, they faced challenges such as regulatory hurdles, competition from tech giants, and operational inefficiencies that led to their eventual exit.

The legendary (tragic) story of telecommunications companies and advertising technology

AT&T’s $1.6 billion acquisition of AppNexus in 2018 marked one of the most ambitious moves in digital advertising. AppNexus became the foundation of AT&T’s Xandr, which combined telecommunications and media assets from the $85 billion acquisition of Time Warner.

However, intense competition from tech giants, operational complexity and stricter privacy regulations limited Xandro’s success, leading to internal discord. By 2021, AT&T sold Xandr to Microsoft for around $1 billion, marking its exit and a significant indicator of Facebook and Google’s dominance in adland.

Similarly, Verizon has aggressively pursued digital advertising through its Oath division, which was formed after acquiring AOL in 2015 for $4.4 billion and Yahoo in 2017 for $4.48 billion. Oath aimed to leverage telecom data using digital media assets, but failed to compete effectively with Google and Facebook. After being rebranded as Verizon Media in 2019, the division continued to underperform, leading Verizon to sell it to Apollo Global Management for $5 billion in 2021 — further evidence that the media and telecommunications businesses just don’t mix.

Elsewhere in Europe, Spain’s Telefónica is probably the leader in this regard. In 2012, Telefónica launched Dynamic Insights and later invested in ad tech platform Axonix, before acquiring UK-based Blinkbox in 2015.

Arguably the most watched game was in the UK, where in 2012 three leading telcos, EE, O2 and Vodafone, came together to form an ad technology joint venture known as Weve, with O2 later buying out the first two. telcos in 2015.

After the buyout, Weve focused on programmatic advertising and beacon technology to improve location-based targeting and data analytics. However, by March 2020, Weve decided to move away from mobile advertising entirely, with many attributing the move to the decline in SMS usage, the rise of alternative communication platforms, and the dominance of tech giants like Facebook and Google in mobile advertising.

Elsewhere, leading APAC telco Singtel marked its entry into the global digital advertising market with the US$321 million acquisition of Amobee in 2012. Amobee expanded further with the US$310 million acquisition of Turn, a leading data management platform, in 2017. was thwarted again by increasing competition, operating costs and privacy regulations; so in 2022, Singtel sold Amobee to Tremor International, aka Nexxen, for $239 million, exiting the sector.

Observers cite the introduction of privacy laws such as GDPR in the EU and CCPA in the US making it difficult for these players to scale operations. Simply put, there is too much risk and not enough revenue, meaning their nascent media ambitions have died on the vine.

Sasha Auzins, chief operating officer of technology and data consultancy Elaboration, has previously advised telcos on their advertising plans like this one, and says his approach, ie. with more emphasis on the OOH sector, may prove to be different.

“T-Mobile seems to have significant ambitions with retail screens, with the Octopus acquisition and now with this Vistar acquisition,” he said, adding that approach could have more staying power, especially because it is less entangled in protection issues privacy. which derailed previous efforts.

“Audience-level segmentation and insights-based targeting are things that T-Mobile can provide and deliver. Hopefully we’ll see some innovative execution,” added Auzins.

A new approach?

Meanwhile, Kevin Flood, director of investment firm FirstParty Capital, highlighted how telcos in Europe still maintain an interest in the advertising sector, albeit with a slightly altered approach, saying that “maybe data and identity will be the way in Europe, instead of of actual media sales.”

For example, Deutsche Telekom entered digital advertising with Emetriq in 2015 to collect anonymized data for programmatic advertising during that time frame in what it claimed was a GDPR complaint – Emertiq is still an ongoing issue, but limited to the German market.

In the guise of telco-backed Utiq – which announced the appointment of Pagel Colin as director of global clients and Thomas Bailly as director of global agencies – such an assessment seems accurate given its backers: Deutsche Telekom, France’s Orange Telecom and Telefónica.

According to its promotional material, Utiq, which launched in 2023, offers a Telco-backed first-party identifier that uses authentic consent to facilitate responsible digital marketing to create a “verified consent service” that can help publishers and advertisers overcome their problems with addresses, such as like “dark browsers”.

So as the third largest telco in the US and three of the three largest European telco groups, they are preparing to put the old band back together.