The buoyant mobile advertising sector has been dealt a hammer blow with the news that Hutchison Whompoa-owned Three has struck a deal with ad blocking company Shine Technologies with a view to rolling it out across the mobile operator’s European operations.
The deal announced today (19 February) will see Three’s UK and Italian operations implement the technology which differs from other ad blocking technologies by preventing ads from being served to mobile users by blocking ads across cellular networks, with a view to implementing the technology further.
The implementation of the technology means that Three will be able rapidly roll-out of the technology to all other Three Group operators in Europe, which also includes Austria, Denmark, Ireland and Sweden (Hong Kong-based Hutchison has 87 million subscribers globally).
In a statement announcing the deal, Three claimed it did not want to eliminate mobile advertising, rather it wanted to “give customers more control, choice and greater transparency over what they receive.”
Tom Malleschitz, Three UK, CMO, added: “Irrelevant and excessive mobile ads annoy customers and affect their overall network experience. We don’t believe customers should have to pay for data usage driven by mobile ads. The industry has to work together to give customers mobile ads they want and benefit from.
Three claims that in the next few months it will work with Shine to “deliver a better, more targeted and more transparent mobile ad experience to customers”, but operations are not yet clear.
With 8.8 million subscribers Three ranks as the smallest UK operator brand to hold a telecoms licence, but its parent company Hutchison is in agreement to by O2's operations there from Telefonica, although this deal is subject to regulatory approval, in a deal that would be worth in excesss of £10.25bn.
One potential business model for Three to explore includes a potential revenue share deal with the mobile advertising sector’s major names, such as Google and Facebook. A key point raised by the mobile operator in the announcement reads: “customers should not pay data charges to receive adverts. These should be costs borne by the advertiser.”
The deal between Shine and Three also reflects the resurging influence of mobile operators in the digital advertising game – a marked trend in 2015, after many had written them off as serious contenders in adland.
One business case for telcos to pair with ad blockers is to use the prospect of a full implementation as a means of encouraging Google et al to volunteer some degree of revenue-share in exchange for ferrying this traffic.
Ciaran O’Kane, a thought leader in the digital advertising space, and CEO of research and analysis firm ExchangeWire, said: "This is a great result for 3 and Shine, as they both have now found a way to monetise 3's mobile domain outside of its rapidly declining voice and data business. They finally have their mobile toll business, where users are used as proxy for profit."
It does, however, raise issues around net neutrality (a protocol where telcos have to treat all traffic on their network equally) and is likely to be a key area of debate at this year’s Mobile World Congress.