By John Giere, CEO at Openwave Mobility.
Last year, AT&T announced its bold new Sponsored Data Plan, in which corporations could pay for the data to provide their content so that it wouldn’t count against subscribers’ personal allowances.
The scheme was met with mixed reviews. Some argued that it would be the end of net neutrality and the free internet.
Others applauded sponsored data as an innovative way for mobile operators to reclaim profits siphoned by OTT services.
While the net neutrality debate rages on, sponsored data has far from contributed to net neutrality’s demise.
Unfortunately, a year since its announcement, sponsored data has failed to take-off. Only a handful of companies have signed up and subscribers’ dreams of free Netflix content and other exciting opportunities are disappearing.
The fact is free content does work. Facebook and Twitter have both successfully launched “zero-rated” deals with operators in developing markets.
These strategic partnerships provide subscribers free access to the popular social networking sites, in turn the social networks receive more sign-ups and the operators have an edge over their competitors.
So why have zero-rated deals succeeded where sponsored data has failed? One of the key elements here is the content on offer.
How much value does sponsored data really bring to the user? Would you click to watch a video simply because it’s free to watch?
Most of the content supplied through sponsored data is advertisements, something that subscribers are keen to avoid on their devices. Google Chrome’s Adblocker is the browser’s most downloaded extension.
The second issue with sponsored data is that OTT content providers are still yet to be convinced by the ROI. Data is expensive to deliver, and content providers are clearly wary of paying for its cost.
However, what if there was an intermediary who could identify the OTT content to be streamed for free and then reduce the amount of data needed to provide the content?
This could significantly improve the ROI and make sponsored data a much more attractive proposition for providers.
Intuitive network optimisation technology could be the ideal solution in this scenario. Selectively optimising only the data that is supplied by OTT sponsors, without impacting the final quality of the content, would be a huge incentive for larger content suppliers to sign up.
The data sent would be reduced, and therefore the cost to the sponsor would be reduced, but the optimisation would go undetected by the end user.
This in turn would drive more content providers to use the service, creating a greater variety of content on offer, which again would drive more subscribers to sign up.
Finally, the focus also needs to shift to making subscribers feel like they are not being overtly advertised to.
It is generally accepted that a free service will have some degree of advertising involved, but the idea of clicking on a link simply because it is free has not worked so far.
Therefore, operators and content providers need to find less intrusive ways of pushing advertised content to their subscribers – so it does not impact user experience.
AT&T announced the launch of a new service called “Freeway”. The app allows subscribers to access sites like “StubHub” and “Expedia.com” for free.
This approach makes it easier for the end user to find and access the sponsored content. It is also an opportunity for operators to launch “freemium” models or up-sell - which in turn increases ROI.
The major benefit of this approach is that the sponsoring party has a more focused “walled garden” environment for their content – ensuring it reaches the right audience.
Ultimately, while free data has proven to be a powerful incentive to subscribers – the free content needs to have some value to the user for the strategy to work.
Mobile operators need to look externally at data handlers in order to make sponsored data the success it could be.
Using “middle men” solutions to ensure the discovery of the content is as effective as possible and reducing the cost of the data deliver through optimisation are just two ways that could make a huge difference.
And until content providers are convinced by the ROI benefits – it will be a while until sponsored data takes off.
But for the parties who do get it right, the returns could be impressive.