OTT Data Monetization: Yes, we can

Through discussions with operators, partners and stakeholders, one million dollar question surfaces all the time: “how telecom operators can monetize OTT generated data”.

Well, before exploring OTT data dynamics, telecom operators need to understand that they play in a multisided platform ecosystem and economy. Pure transactional businesses are vanishing rapidly, whether operators like it or not, they play more and more in an interaction business.

We are not in the business of building software, we are in the business of enabling interactions (Platform Scale by Sangeet P. Choudary)

What it means is the fact that Telecom operators entering the OTT platforms must create valued interactions/exchanges by intermediating providers of digital content (music, video…) and audiences. It is only by enabling interactions that unlock valuable exchanges with positive externalities that users will adopt, stick and nurture in OTT platforms. I will discuss the what platform economics mean for OTT in a later post.

Then, once the OTT platform interaction design is set, it is important for operators to understand the underlying data flows. The figure below is an illustration of a typical OTT Platform programmatic monetization data flow

figure 1: OTT platform monetization — data flow

Operators collect large amount of first party data (declared data like CRM, usage, behavioural, browsing, search, purchase, geo…) and can leverage second party (other firms first party data) and third party data (mainly inferred data indicating contexts, moods, emotional footprints using AdID, semantic and other techniques) to picture audience customer journeys, interests and many other parameters.

These audience insights will be key to make the OTT platform valuable to media buyers and brands.

Secondly, the audience monetization is composed basically of 3 actors:

• The demand side: you got Media buyers, Agencies and DSP
• The supply side: you got publishers like OTT platforms providers and SSPs.
• Platform intermediators side: Ad Exchange platforms providers, DMP and other related data providers

As illustrated in Figure 2 below, for €100 Ad budget (according to IAB), roughly:

• 30% goes for the demand side: 20% for Agencies + 10% for DSPs
• 40% goes for the supply side: 40% for the publishers
• 30% left for Platform intermediators: 25% for Data providers and 5% for the Ad Exchange platform

It is worth to note that OTT Platforms providers collect funds from audience directly for access and services through 3 methods:

• Indirectly: the audience is the currency (AVOD, freemium and other ad sponsored services)
• Directly: the audience pays for platform access & services (Transactional or subscription for example)
• Hybrid: mixing indirect and direct

figure 2: OTT Platform monetization — money flow

Telecom operators’ OTT platforms have an advantage compared to pure internet players (Amazon fire TV, Apple TV…) and content distributors/aggregators (i.e. HBO, Netflix…) because they have already an audience and collect much more data through devices (Phones, STB…), network signal processing (OSS…), support (help desks, retail…) and first party data (CRM, BSS…). This explains partly why pure internet and content players want to own the billing relationship with the users (i.e. Netflix) and/or the platform monetization ecosystem (i.e. Roku, Apple TV),

Let’s take Roku as an example. The firm proposes a complete end to end video OTT experience platform to users (demand side) and tools/services (sdk, framework with brightscript, design guidelines, billing/settlement system, ad exchange) to content producers/channels /developers (supply). Roku then enjoys an enviable situation where it acts as the gatekeeper between all data flows between users and producers. For every billing transaction, Roku takes 20%. the firm may monetize as well its audience data by selling it (i.e. first party data) to advertisers (i.e. Viacom, WPP…), brands (i.e. P&G, Unilever, L’Oréal), broadcasters, content producers/studios, audience measurement (i.e. AC Nielsen, Kantar Media…) and 3rd data providers (i.e. Acxiom, Krux, Oracle Blukai…). The true value of Roku is in the platform ecosystem and interactions it generates rather than the set top box or retail presence. Those access point are just ways to reach users. It would be interesting to analyse Roku’s D/MAU, CVR, CTR, adoption, download rates, impression, GRP, CPC/M, Ad inventory fulfilment and other KPIs and compare it to Amazon Fire TV or Apple TV.

To successfully monetize OTT platforms, telecom operators have to shift gear from transactional to platform economy, then design a well-taught interaction system and data flows, capture data and finally monetize it. As a multisided platform, it is crucial to propose high interaction value that attract (i.e. pricing, content offer…), facilitate exchanges (i.e. frictionless cross device UX…) and match users (demand side) with advertisers (supply side).

Some useful reading for anyone to dig programmatic Ad

• IAB Europe — Road to Programmatic, White Paper, July 2015 — http://www.iabuk.net/resources/white-papers/iab-europe-road-to-programmatic

Useful Definitions

• DSP: Demand Side Platform: Technology used to purchase advertising in an automated way. It allows advertisers and agencies to manage online media campaigns by facilitating the buying of auction-based media, including; display, mobile, video, social, and native as well as audience data across multiple inventory and data suppliers in a centralized management platform. (source: IAB)
• SSP: Selling Side Platforms: Programmatic advertising technology platform for publishers, which enables them to optimize the monetization of their inventory and maximize yield, whilst protecting their reader experience and consumer data. (source: IAB)
• DMP: Data Management Platforms: Combine online behavioral data, socio-demographic data with offline data to create a single, centralized hub of consumer intelligence. With all offline and online data in one place, questions such as the following can be asked: who are the company’s most valuable consumers, and how do they behave in both the digital and physical worlds? With a DMP, instant access to actionable feedback provides a solid basis for testing new strategies and new tactics. The data may paint a picture that confirms intuition; empowering marketers to make further refinements. Or the data may be surprising, leading marketers to take a different course of action. Either way, they know that their insights are based on facts, resulting in new marketing confidence and more decisive action. (Source: IAB)
• First party data: CRM data, whether online or offline, from people who have made purchases at physical stores or via an e-commerce site; from sales leads; and from people who have interacted with their call center. Advertisers also have data regarding user behavior on their website and campaign performance data from email, display, video, mobile, direct mail, TV, print, and other media. First party data is often gathered through tag management where small data files are put on each web page or email as a pixel. This pixel tracks user interaction and when synchronized in real-time with the DMP provides a new level of visibility of activity on the site. (source: IAB)
• Second party data: Second party data is making use of someone else’s first party data, for example a publisher’s audience data. Second party data enables a marketer to augment their first party data with a new data set, enabling the advertisers to enrich the knowledge about their audience at scale. (source: IAB)
• Third Party data: In-house information is important, but its value increases dramatically when blended with audience data from third party providers. With a data management platform, first party data helps to highlight valuable audiences, then third party data can be overlaid to develop an understanding of attributes, behaviours, and content consumption. For example, a DMP can show, from second party data, where visitors engaged or converted, and from third party data helps to illustrate factors such as economics, family position and stage of life (Source: IAB). Main actors in data brokerage space: Acxiom, OpenX, Oracle Bluekai, DataXu.

disclaimer: the article was firstly publish on Linkedin from the author (https://www.linkedin.com/pulse/ott-data-monetization-yes-we-can-zishan-mohammad)

Any additional comment or observation about platforms, OTT, UX, disruptive business model, please let me know. Reach me on Zishan Mohammad.