Orange Launches Ad Exchange in Europe

The CTIA show in Las Vegas was primarily a showcase for carriers, handset OEMs and "infrastructure" providers. It made me think a great deal about the future of the carriers. Obviously they will continue to collect voice revenue and growing data revenue for some time. (Although as VoIP gains voice revenues will decline.) They will also subsidize handsets and try and offer exclusive deals of one sort or another. But the era of the operator is largely over.

Handsets, apps and the mobile Internet have replaced voice and carrier centrality. Now the carriers are scrambling to figure out a) how to maintain relationships with their subscribers as other than commodity providers of network access ("dump pipes") as smartphone adoption grows and b) how to develop new revenue streams. 

I believe that the US carrier app stores and efforts will largely fail, except potentially when it comes to feature phones. There's still a fairly significant opportunity there and that's where there's likely to be the greatest return on their app store efforts. 

However mobile advertising is an area where the carriers can potentially play to varying degrees, and most are in one form or another. But as the "deck" increasingly becomes obsolete (absent some radical changes), they need to figure out viable "off deck" strategies. At one end of the spectrum is Orange with its announcement about a partnership with OpenX to create a digital advertising exchange in Europe: 

Orange and OpenX Technologies, Inc. (OpenX) today announced a partnership to launch Orange Ad Market, a new online advertising exchange model designed to lead the evolution of online exchanges in Europe. Orange Ad Market will increase the value of display advertising by helping publishers maximize revenue and helping advertisers much more easily reach their target audiences across large numbers of publishers.

The Orange and OpenX exclusive multi-year, multi-country partnership will see Orange bring the benefits of OpenX's proven global marketplace to European users at a local level. The initial launch will take place in the second quarter of 2010 in the UK and France with planned launches following elsewhere in Orange's European footprint.

This relationship is focused on the PC market but could extend into mobile potentially. Regardless, this move represents an operator/ISP's aggressive effort to build a marketplace for advertising. In mobile, carriers can do a version of this too. More modestly, operators can provide their subscriber data (with privacy controls) to existing ad networks or exchanges to improve targeting capabilities.

Operators could also buy ad networks. Why wouldn't Verizon or AT&T, for example, look to buy Millennial or JumpTap? Sprint at one point tried to create its own ad network unsuccessfully. However an acquisition would be a quick way to do so.

A time is also coming with there will be viable alternatives to traditional carrier calling and data plans: WiFi/MiFi white spaces, 4G networks that blanket entire municipalities. As those networks become accessible and trustworthy, people may abadon traditional mobile phone plans for data + VoIP alternatives. But that's still a few years away at least. Regardless, the disruption has begun and carriers will need to reinvent themselves to some degree if they hope to continue to grow revenues over time and remain "relevant."