How telcos can monetize data through digital marketplaces

Telcos are exploring revenue opportunities beyond connectivity by harnessing their prized asset—extensive data reservoirs. Many of them have found success by driving their efforts through digital marketplaces.

Telcos have large datasets with a broad range of customer data. The advantage is growing as data volumes continue to increase exponentially. With 5G adoption, the average mobile data usage per smartphone is projected to increase from 21 GB in 2023 to 56 GB in 2029 globally. The expansion of the connected devices market, with 55.7 billion IoT devices estimated by 2025, is further enriching telco data. As data volume and variety grow, new revenue streams open up for telcos by harnessing data intelligently.

The Case for Digital Marketplaces

Digital marketplaces present new avenues for value creation. Data-driven insights enable telcos to offer the right promotion or product recommendation to the right customer, thus improving marketing effectiveness and lowering acquisition costs.

A McKinsey survey of European telco customers shows that 56 percent were keen on buying a service other than connectivity from their telco provider.

Innovative Ways to Co-create New Value

A telco may partner with a landscaping service provider in spring to deliver a targeted campaign within a specific geographical boundary. Micro-segmentation allows the company to select the right customers who will then be targeted for products on a digital marketplace.

• India’s leading telecom operator, Airtel, has a platform, Airtel IQ Hyperlocal, that helps marketers improve audience targeting and deliver personalized messages at scale through channels such as WhatsApp, SMS, and voice.
• T-Mobile in the US uses web tracking data from its network to see how users interact with different websites. The telco uses its T-Mobile Mobility Data, along with “billions of daily behavioral, environmental, and contextual data signals”, to create an understanding of the audience journey, including behaviors and purchases, and buyer personas.
• Verizon Enterprises Solutions in the US is partnering with insurance companies to offer usage-based car insurance solutions. Verizon monitors data from IoT devices to customize insurance covers and premiums, enabling its insurance partners to improve underwriting and reward car owners for good driving. A telematics device in the car collects and transmits data on driving patterns, which is used to give the driver a score. The score forms the basis for the insurance premium—a good score brings the premium down.
• Telenor in Norway has collaborated with DyreID, a company owned by the Norwegian Veterinary Association, to spin off its successful pet tracking business into an independent venture. Telenor Tracking Solutions will use data from a chip inserted under the skin of a pet, along with motion tracking technology and network data, to help Norwegians locate their pets for a fee.
• NTT DOCOMO is a great example of a B2B2C marketplace that offers customers a range of offerings including media content, healthcare and telemedicine, and investment advisory. Customers can earn points through the d Point Club rewards program by buying products and services from DOCOMO ecosystem partners. McKinsey reports that the digital marketplace contributed to 23 percent of the operator’s revenue in 2021.

Robust Platform is the Key to Success

Data monetization through a digital marketplace requires a platform that offers scale, flexibility, data security, high user engagement, operational efficiency, analytics, and reporting.

• Technology capabilities: Telcos must pay utmost attention to data privacy and security, and enforce policies and procedures that adhere to emerging regulations on data security and privacy. Data encryption to protect data in motion, data anonymization to prevent misuse of sensitive data, and consent management on how data will be used are critical components of data security. Additionally, for predictive analytics, recommendation engines, and real-time data streaming, the platform requires strong data processing capabilities.
• Ecosystem readiness: The success of a marketplace is in its ability to scale effortlessly and offer partners flexibility in creating new products and services. The platform must support subscription-based products and physical goods, digital products and services from partners, besides core telco services. The secret is in creating a harmonious mix of products that fulfils the unique needs of different partner industries and niche markets.
• User experience: Customers come to a digital marketplace for ease and convenience, besides meet and match capabilities. Besides core e-commerce capabilities of order fulfilment and distribution, the platform must offer personalization and efficient customer support. Tailored promotions, a smooth checkout process, and a variety of payment methods are some important criteria for a platform to achieve high user engagement.

With data monetization through digital marketplaces becoming a top priority for telcos, ready-to-onboard platforms address the growing demand for speed-to-market, and new customer segments to serve.