Thought Leadership
Türk Telekom on the Role of Telcos in the Mobile Advertising Ecosystem

tugrul-Tasgetiren-turk-telecom

Tuğrul Taşgetiren
Director, Digital Business
Türk Telekom Group

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Turk Telekom is the largest integrated telecommunications provider in Turkey, with over 34,000 employees, servicing all 81 of the country’s provinces. Can you share more on your role as Director of Digital Business at Turk Telecom and what it entails?

As the Digital Businesses department, our most important goal is to build new businesses within the company as intrapreneurs to cut costs and generate new revenue streams. In addition to creating new businesses, we act as internal consultants on the overall digitization of company operations. Türk Telekom established this role in 2014 and since then we have focused on Digital Advertising, Digital Communications and Big Data.

We have launched our programmatic advertising platform in April 2016 along with one of the first data networks in Turkey.

 

What is your take on the state of the digital and mobile advertising market as a whole? 

Let me answer this for Turkey. The digital advertising market is growing at a rapid pace. IAB announced last month that the total ad market increased by 20% in the first 6 months, where mobile and video growing by more than 50%. Programmatic showed an amazing 300% increase and seems to be the topic everyone is talking about. As more and more global platforms enter the market, we believe it will create a very healthy and growing ecosystem.

There is still a substantial room for growth as digital only constitutes about 20-25% of the ad market whereas TV is taking 50%.

As agencies and marketers realize the targeting and measurement capabilities of digital and especially mobile, they are allocating more and more budgets towards this area.

Even though programmatic market is growing at the low end and is seen as a way to buy cheap inventory, we believe that programmatic premium will start taking hold in the market in 2017.

 

Currently, what does the mobile advertising market look like in Turkey? Are a lot of analog budgets from TV, Radio, Print, flowing into digital and mobile?

Even though mobile market size is only about 15% of overall market according to IAB, it is growing at around 60% for the last 5 years. We expect this growth to continue for the foreseeable future. One of the key drivers of the mobile advertising market is smart phone penetration. Türk Telekom leads the market in this regard as 73% of our subscribers are smart phone users, whereas market average is 66%. Another key driver will be online retail. In Turkey, less than 5% of retail sales go through online channels, which makes this a huge opportunity.

 

Why do you think there has been a spiked interest in adtech by Telcos in the last few years? Verizon, Sprint, Singtel, and most recently Telenor have acquired companies in the space. Do you think Telcos can potentially purchase companies and leverage their technology, and internal 1st party user datasets for more efficient targeting?

Telcos have large capital expenditures in order to keep their network healthy and up to speed. Each new technology such as 4G or 5G requires significant investments from telcos, however it is hard to turn this into revenues since it is quite hard to increase ARPU’s. Telcos always invested in new areas such as TV, IoT and smart homes, and for the last few years digital advertising. When telcos make these investments the main driver for them is whether these markets are compatible with their assets. It is very hard for telcos to compete with startups or purely digital companies in terms of speed, but they try to make up for this with some assets that will be hard to replicate for others. In this market, this is data.

Since digital ad market is becoming more and more data and technology driven, I believe that telcos, with their large 1st party datasets and strong technology focus can be as strong players in the market as Google and Facebook.

 

There’s been a lot of talk about programmatic advertising over the last few years, and how this type of automated ad buying will be the main way in which media buyers will purchase ads in the near future. What are your thoughts on this?

We have no doubt that programmatic is the future of advertising. There are a few issues that hinder its growth in Turkey. First, many advertisers perceive programmatic as mostly a way get cheap clicks and impressions. Even though global advertisers in Turkey are pushing for premium programmatic, publishers are demanding additional charges for it, due to all the commissions. This makes advertisers reluctant to use programmatic platforms for their media buys. Second, there needs be an increase in overall knowhow of how data and technology can help ads perform much better. Even though there is a general understanding of this, it takes time to break existing habits. Third, there should be more local ad tech players (such as Türk Telekom), that will educate and support the ecosystem. Fourth, local data sources should be leveraged in a much better way. Even though global DMP’s are available in Turkey, their data prices are quite high compared to CPM levels in Turkey. Local data players will help grow the market.

I have no doubt that programmatic will continue to grow fast in Turkey. If we can solve the problems I just mentioned, it can be much faster.

 

What do you think are some of the biggest challenges the digital / mobile ad industry faces today?

I believe privacy concerns and ad blockers are two challenges digital ad industry needs to fix. Even though most people are not aware of the implications of the privacy policies, it will become more and more important with consumer interest groups criticizing large digital players for privacy. As you know, recently Facebook had to pause data sharing with WhatsApp in the UK. I think this will occur in more countries, especially in Europe. More people will become aware of the value of their data and start asking more questions about how ad tech providers are using them. Second, ad blockers keep growing in all markets in the world. In Turkey, we believe it is less than 15% currently, but more and more customers become aware of it. Some publishers even started blocking entry to their website if the user has an ad blocker installed. Since ads are what keeps content free, publishers need to fight more on this.

 

It was announced earlier this year that ad blocker Shine partnered with UK’s Three, on a carrier-level ad blocking deal. Do you forsee other Telcos partnering with ad blocking companies to reduce data usage on their networks by adtech companies?

Even though they can be annoying at times, ads are what keeps the content free all over the world. This has accomplished tremendous growth in content generation and helped information flow freely. Hurting the publishers by blocking ads kills a lot more value than it might potentially generate.

I believe that telcos should enter the digital advertising market instead of fighting against it. They are much more trustworthy compared to pure digital players in terms of keeping and utilizing customer data as they are bound by very strict regulations. Also in developing countries such as Turkey, telcos are the driving force in new technology development with their access to best engineers and their strong investment power. This is the perfect mix for creating better ad tech businesses than the competitors.

I don’t foresee many telcos adopting network level ad blockers, but I believe more telcos will enter the market as ad tech players.

 

There has been an explosion in the number of adtech companies in the last few years, causing a lot of confusion in the marketplace. Do you think that this is sustainable, and how do you see the market evolving over time?

In the beginning stage of any technology, it is quite normal to have a very fragmented market with hundreds of players. Low entry barriers and high potential upside attract many entrepreneurs and investors. However, as the competition intensifies and the margins shrink, many of these players find it very hard to compete. The important thing is to anticipate the shakeout and prepare for it through operational excellence, a loyal customer base, and foreseeing the evolution of the market.

Regarding ad tech, or any other industry that is machine learning and artificial intelligence based, another major issue is that winners usually take all. The companies with the best data that is protected from others to access will have much greater chance to survive. The smaller companies are only left with niche parts of the business.

 

What are your thoughts on mobile video ads, and data usage by these ads if the consumer is not connected to a Wi-Fi source?

Mobile video ads are great mediums for many advertisers, but I think we will see how consumers react to this. Yes, the consumers have larger data packages than ever before, but they are also very protective of their quota. Consumers should give their feedback to ad tech companies through skip buttons. Eventually ad tech players will listen to them.

 

Lastly, what is your take on what the future of the mobile advertising industry will look like?

There are four times as many smartphones in the world as there are PC’s. Yet, there is still significant room for growth, especially in developing markets. There is no doubt mobile advertising will become much bigger.

I am especially excited about our AI future. With smart assistants, bots, messengers there will be more ways to advertise on mobile as well. These ads can also be as targeted as search, since there is lots of ways users interact with these products to show user intent.

In addition, mobile’s promise of combining sensors, location, data, social in a secure environment will bring offline and online worlds together and enable real time context in the ads to bring much higher quality ads than what we see today.

 


 

Türk Telekom is the largest integrated telecommunications company in Turkey. In 2015, the company adopted a “customer-oriented” integrated structure in order to respond to the rapidly changing communication and technological needs of customers in the most powerful and accurate way, merging the products and services of Türk Telekom, Avea and TTNET under a single roof. In January 2016, it began providing services under the Türk Telekom brand. Türk Telekom offers mobile, fixed voice, broadband and TV services as a “Quadruple Player of Turkey” at one-stop shop. The company has restructured its products and services in “Consumer” and “Corporate” business units with a customer-oriented approach. Besides reaching out to the most distant corners of Turkey with its widespread service network, Türk Telekom has a rich product range within the scope of its mobile, fixed voice, broadband and TV service. With the vision of introducing new technologies to Turkey and accelerating the transformation of Turkey into an information society, Türk Telekom provides services in all 81 of the country’s provinces with its team of more than 32,769 employees. 55% of Türk Telekom shares belongs to Oger Telecommunications Inc., while 30% belongs to the Turkish Republic Prime Ministry Undersecretariat of the Treasury. The remaining 15% share is public. Türk Telekom shares have been traded on Borsa İstanbul since May 2008.

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