UK mobile carrier O2 is in the 'well advanced' stages of looking at technologies to block mobile ads across its network
O2 executives told Business Insider the company is actively testing using technology that can block mobile ads at a network-level before they even get served. In addition, the company is considering whether to offer customers easy access to ad blocking apps and browser extensions. O2 is also working with advertisers to improve the standard of mobile advertising.
The hope is that the carrier can help customers filter out bad advertising that interrupts mobile browsing, eats up consumers' data allowances, and ultimately puts a strain on its own network infrastructure. One ad blocking company estimates that ads are gobbling up between 10-50% of customer's data plans each month.
O2's strategy towards ad blocking is significant and the company appears to be in a far later stage of exploration than its rivals in the region. If O2, which is owned by Spanish telecoms giant Telefónica and is in the process of being acquired by rival operator Three to create an even bigger merged network, were to introduce ad blocking services for its customers it could be precedent-setting, not only for the region, but globally.
The revelation is yet another sign that the "adblockalypse" is gathering pace and publishers who rely on ad revenue for their very existence will be watching O2's next move closely. Ad blocking has moved from being a niche habit of hardcore internet users, to hundreds of millions of people downloading ad blocker software, and potentially even more following Apple's decision to allow ad blocking apps in the App Store with its iOS 9 update. The latest episode of "South Park was even about ad blocking! Ad blocking is becoming mainstream and now mainstream mobile operators - who have the power to control the volume of ads their customers see on their mobiles - are seriously considering filtering the ads on their networks.
EE, the UK's biggest mobile network with 27 million customers, told The Sunday Telegraph it has launched a review into the best options to help consumers restrict some mobile ads - although the company's CEO Olaf Swantee said the review was "not about ad blocking, but about starting an important debate around customer choice, controls and the level of ads customers receive."
Meanwhile a spokesman for Vodafone, which has 18.4 million customers in the UK, told Business Insider: "Vodafone has made no decisions that ad blocking is a service our business wants to offer. However, we acknowledge downloads of iOS ad blocker apps do show there is some demand from customers to manage their browsing experience, privacy and data usage."
O2 is looking at the strongest form of ad blocking
Speaking to Business Insider, O2's managing director of digital commerce Robert Franks, said: "We are absolutely looking at [network-level ad blocking] technology. We are holding ourselves to the highest standards with our own advertising. We are looking at these technologies to see if they can help our customers with some of the bad practices and disruptive experiences that are happening."
He continued: "It is not in an advertisers' interest to spam customers or do things to create a terrible experience. If the way to raise the bar is to look at these [ad blocking] technologies, whether through a mobile network, or a combination of apps and browser extensions as Apple is doing to address some of the behaviors these [ad tech] intermediaries are executing, I think that's fine. But I don't see it as a polarized debate between 'do you have advertising or don't you have advertising'."
Franks said the company is undergoing "proper testing" of these technologies with customers that has not yet been fully completed.
He added: "When I saw we are looking at these technologies, we are not just paying lip service to them - we are absolutely having conversations which are well-advanced in terms of what that tehcnology would do in in our network and other layers and how we would position this with customers."
Beyond just testing whether the ad blocking technologies actually work, one of the biggest challenges O2 faces in this area is the way consumers use their smartphones - switching from cellular networks to WiFi services O2 doesn't provide. Franks said that is one of the reasons why O2 is looking at a "blended" approach.
He said O2 was not in the position to name the individual companies it is working with. However, the fact that O2 has been exploring blocking ads a network level would strongly suggest it is working with Israel-based ad blocking company Shine, which appears to be the only company in the market that offers this service. Shine declined to comment on whether it has been testing its ad blocking technology with O2.
In September, Jamaica-based carrier Digicel announced it was working with Shine to become the first operator to block all mobile ads - beyond "certain local news sites" and those advertising companies that enter into a paid-for partnership with the carrier to unblock their ads - for its 13.6 million subscribers. However, St Lucia-based regulator the Eastern Caribbean Telecommunications Authority has warned the carrier that strategy breaches the region's net neutrality policy that requires operators treat all data on the internet equally.
Franks said it was unlikely O2 would adopt a Digicel approach: "Having a kind of system where some people pay and some people don't feels very risky. And at a time when I think lots of businesses are struggling to build consumer trust for various reasons I think it's really, really, really important in this space to be whiter than white with your customers."
O2 wants to raise the bar for mobile advertising
Franks says O2 "still predominantly believes in an ad-funded internet" and it is actively working with the industry to increase the quality of mobile advertising. The carrier wants to help stamp out three main issues within mobile advertising: poor targeting, poor creative, and ads that are data heavy.
O2 owns Weve, a mobile marketing company that sells text message and mobile internet advertising that targets an audience of what it describes as "31 million+ consent-based customers" - meaning they have opted in to receive marketing messages. It also a board member of the UK trade body the Internet Advertising Bureau (IAB,) which works to create quality standards for the industry to adhere to.
However, while most brand advertisers, agencies, and ad tech companies upkeep the standards set by the IAB, Weve commercial director Tom Pearman told Business Insider said the challenge is addressing the increasing number of bad actors - often smaller ad tech players - that have entered the advertising ecosystem.
Pearman said a particular concern was around businesses that scrape data about mobile users - such as their location, which can then be shared with other third-parties without user consent.
"There are definitely businesses appearing that are scraping data, utilizing data, and having access to apps that don't necessarily need to use your location that are probably shedding a disproportionately bad light on certain topics that's not necessarily representative [of the industry as a whole,]" he added.
Through its work with the IAB and with Weve O2 is attempting to initiate a "wake-up call" to "key parts" of the industry to address the quality of mobile ads and not ensure marketers and agencies ensure their ad tech intermediaries can fulfill the promises they make around creative, and opt-in permission from consumers, Franks said.
But, if best practices are not adhered to, Franks said: "There's a legitimate debate about whether we should be playing a more direct role in helping [customers] control that kind of advertising that's intrusive, data heavy, and all those other kinds of important things, in my view."
In the meantime, O2 is doing more to educate its customers about online advertising
In August, O2 formed a partnership with UK children's charity the NSPCC to help tackle child safety online. While the scope of the joint education project is wider than online advertising, the initiative will cover topics such as the tracking behavior conducted by some ad tech companies.
Franks believes there is more that can be done to help clean up and demystify the mobile advertising landscape for customers beyond education and introducing ad blocking-like technologies.
He said: "There does seem to be a market from what we see in [companies] getting data [about customers] through apps and other devices and passing that data through the value chain without having the right permissions. As well as customer education, we probably think there needs ot be the right questions asked by brands agencies. But potentially [regulators need to] look at tougher enforcement about what's happening there ... it feels like there's a bit of a murky world further upstream from what consumers see when they interact with their devices and what businesses something get access to. Cleaning that up is in everyone's interest."
Research firm eMarketer predicts marketers in the UK will spend £3.2 billion ($4.8 billion) on mobile advertising in the region this year, up 45% on 2014.
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