OSLO: Norway’s Telenor (TEL.OL) will set up a separate business unit to claim a share of the rapidly growing mobile advertising market in Asia, Chief Executive Sigve Brekke told Reuters.
Telecom operators like Telenor are facing challenges to their traditional business as increased data usage has opened the door for digital content providers like Netflix (NFLX.O) and Spotify and messaging companies such as Facebook (FB.O) to capture an increasing share of network revenue. Telenor aims to fight back by staking a claim to a slice of the mobile ad market that is growing fast, especially in emerging and developing markets where a rise in smartphone sales is giving many consumers access to the internet for the first time.
“A lot of digital players are coming in and taking parts of the value chain,” Brekke said in an interview last week. “It’s a very demanding situation for mobile players right now and we are forced to make a decision on what we want to do going forward.” Its advertising strategy builds on technology from Tapad, a U.S.-based startup it acquired earlier this year for $360 million, which is designed to place relevant ads as individual users switch between their devices.
“We will try to use Tapad as an entry into mobile advertising as a separate business unit in our Asian growth markets,” Brekke said, adding that Telenor “needs to be able to do business in a different way going forward.” Telenor has more than 211 million mobile phone subscribers across Asia, Scandinavia and southeastern Europe. More than 90 percent of those subscribers are in its six Asian markets, including Bangladesh, Pakistan and Thailand.
Global mobile advertising is set to top $100 billion in revenue in 2016, representing around 16.5 percent of all media ad spending, according to a forecast last year by eMarketer. More mature markets like the United States, China and Britain now account for two-thirds of all mobile ad spending among the top 20 markets, but mobile ad markets in the rest of Asia such as India and Indonesia are at least doubling in size every year, albeit from a far lower spending base, the media research firm projected.
