Two very different industry approaches to capturing the mobile marketing and advertising space were demonstrated this week as Telefónica signed a deal with a specialist software vendor and OTT app Quack launched promising to pay users for messaging.

Spain-based Telefónica announced it has signed up Brainstorm Mobile Solutions to deliver personalised location-based marketing campaigns.

The three-year deal sees the UK-based vendor deploy its mobile marketing platform across the operator’s operating business in Europe and Latin America.

Brainstorm’s Dragon platform, which delivers tailored campaigns for global and local brands, has been road-tested in seven Telefónica markets, including Germany and Ireland in Europe.

It features patented business rules technology that can be activated automatically by a range of triggers as well as optimisation features that automatically send, review and change campaigns while they are still live.

Jason Tunstall, Director of Mobile Advertising at Telefónica commented: “We’ve seen tremendous change across the advertising landscape in recent years, with personalisation and data coming into play.

“Technology is fueling this change giving marketing the opportunity to deliver absolute personalisation and ultimately delivering better engagement and accountability. 

“The technology platforms we utilise… provide innovative ways for brands to engage with our customers through a range of channels.”

Telefónica will also use the platform to advertise its own brand and services.

However, Brainstorm CEO Donald Stuart told European Communications that the industry has a number of challenges to overcome to succeed in this area.

A long value chain and uncertainty over who does what – he cited conflicts between those who execute strategies and the creatives who design campaigns – as well as problems about how to measure them.

In addition, although Stuart said he views operators as innovators in the marketing and advertising space and believes they can generate “the lion's share” of revenues on offer, he warned that they are not joined up internally to take advantage of the opportunities.

The stakes are high. According to research firm eMarketer, mobile ad spend in Western Europe is set to grow from €5 billion this year to €14.5 billion in 2017.

That’s a 190 percent increase, and more than half that amount does not include revenues from SMS, MMS and P2P messaging-based advertising as only UK figures for this are counted.

“It’s an open race and telcos have a great chance if they can get their act together,” said Stuart, despite the fact that Google and Facebook attract the majority of ad spend. 

In particular, he thinks they need to focus on providing location-based services and messaging where they have “a unique opportunity” to compete with OTTs.

One such OTT is a new player called Quack.

The Spain-based company has built up a 500,000 strong following in its home market and Italy since launching 18 months ago. It is launching in the UK this week. 

Quack is a messaging app available on Android and iOS that has been built like WhatsApp with one key difference – users get paid the more they use the service.

Quack’s founders have developed a business model that sees users share revenues from advertisers who pay to have their adverts shown within the app. 

The top-third of the messaging screen is given over to a video or banner that agencies of brands including VW, Lidl and Amazon have already bought into, according to Founder and Deputy CEO Fernando Vilá.

Users must input the date of birth, sex, whether they have children and a postcode to sign up to the service.

The company ranks users in bands according to usage on a monthly basis, at which point users can choose to cash out what they have earned via PayPal.

Alternatively, they can defer payment to a future month or choose to give their proceeds to a charity. To do any of these three options users must answer one additional advertisers’ question.

Vilá told European Communications that “at least” 30 percent of the revenues the company gets from advertisers go to users, of which “heavy users” get around half of that 30 percent.

He said a heavy user could expect to earn around €20 a month.

The company uses “four to five parameters” to measure usage, but it is principally based around the number of messages sent/received and time spent on the app.

According to Vilá, Quack is a “little bit more intensive” than rivals such as WhatsApp given it contains video, but said the company had looked to mitigate the impact on a users data package by not streaming content.

Messages are encrypted and not saved by Quack, while only aggregated data is shared with advertisers. “Privacy is a must,” said Vilá.

The Founder said he had had discussions with operators including Telefónica but there was no deal on the table about integration or partnership.

Crucially, he said he would choose to work with Google over an operator.

Although he admitted that anyone else could simply replicate what Quack has done, he said existing rivals such as WhatsApp that have many millions of users could not afford to use their business model.

As such, Quack looks destined to be a relatively small player in this evolving area.

But with Vilá claiming that of the 80 percent of viewers who watched a two-minute TicTac video on Quack, 60 percent watched it to the end, the app could yet prove to be a disruptive influence on more established models.

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