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Telefonica Creates Axonix for $42.4 Billion Mobile Advertising Play

by Nitesh Patel | 4月 17, 2014

For most operators mobile advertising has been about selling advertising space in its own branded mobile and online media. Some operators, such as Orange and SingTel, have extended beyond mobile advertising linked to their own media properties. For example, Orange acquired premium digital ad network Unanmis in August 2009, selling digital media on behalf of customers Weight Watchers, Trainline.com, Kello, among others. SingTel acquired Amobee, the mobile ad serving platform for $321 million in March 2012. By and large, the mobile advertising opportunity is highly fragmented and has been dominated by Google (AdMob), Millennial Media, and Facebook.

Telefonica (in partnership with Blackstone’s GSO Capital) joined the list of operators expanding beyond media selling on 16th April 2014, announcing the creation of mobile ad-exchange Axonix. Axonix provides a programmatic mobile ad-exchange platform based on ad-exchange technology acquired from the now defunct MobClix. MobClix was acquired by mobile advertising company, Velti, in September 2010. However, Velti filed for bankruptcy in November 2013. Despite Velti’s collapse, Telefonica claims MobClix remains a sound business, with over 100 demand side customers already plugged into the exchange and capable of buying impressions once the functionality is switched on. On the supply side (e.g. publishers) Telefonica claims over tens of thousands app publishing partners. Telefonica aims to get Axonix up and running in mid-May.

From the demand side, Axonix is dependent on growing advertiser demand for mobile inventory on a large scale, combined with advertiser demand for targeted campaigns in order to maximize ad-budget efficiency. However, Telefonica claims that is not an issue as there is sufficient demand in the market. In detail: On the first point Strategy Analytics projects strong advertiser demand for mobile inventory across games, apps , browser and other forms of mobile media, with mobile ad expenditure reaching $ 42.4 Billion by 2017. On the second area, as impressions are fragmented across multiple device types, and at least in theory, programmatic buying enables advertisers to bid specifically for relevant impressions in real time. The growth in programmatic buying is well documented:

Hence Axonix’s  priority is to grow their supply side by attracting more app partners and mobile web publishers to offer their ad inventory for sale through the Axonix marketplace.

So, what makes Axonix different from competing mobile ad exchanges, such as Smaato, Nexage, and Millennial Media's Media Exchange? 

  • Verifiable data: Axonix claims that through its owner, Telefonica, it is able to bring “verifiable data” to ad impressions, such as demographics, user location and behavior.  Thus, in the absence of standardized and reliable cookies on smartphones, which tracks users mobile browsing or app behavior, Telefonica believes operator verified data provides a valuable alternative which advertisers can trust more than other data sources.
  • Price: Axonix believes all the players in the mobile advertising value-chain (including ad-networks) take too much share of advertiser’s ad spend, thus providing low value to mobile publishers.  Therefore, to some extent Axonix is setting out to compete on price.
  • Demand partners: Axonix has an extensive list of demand partners already integrated, which in theory, will guarantee a competitive auction for publishers’ inventory that in turn should generate higher prices for their publishers.
  • Latam reach: mobile advertising is still in its infancy in Latam, but where Axonix sees huge growth occurring over the next few years. Strategy Analytics estimates the Central & Latin region will account for just under 4% of global mobile advertising revenue by 2017. By leveraging Telefonica's significant customer base in that region and existing advertising local businesses Axonix hopes to be a key advertising player in that market from the get go.

As I’ve noted before, with respect to Telefonica’s ambitions with big data and Smart Steps, operators working in isolation to provide data products is certainly interesting and I applaud Telefonica’s efforts here. However, working together to offer aggregated data sets domestically would be truly compelling and give operators a huge leg up in staking a claim to a share of the larger mobile advertising pie. For operators to achieve this level of cooperation demands a huge amount of will and effort, but is only likely to happen once more global carriers get involved and champion the cause as Telefonica is doing.

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