Telecom providers plans to strike at mobile ads

Recent news reveals that global telecom providers may “bomb” the mobile ad space by blocking ads on phone networks, in order to get a share of the Internet advertising cookie. The telecom providers believe that since they have paid for the infrastructure they are entitled to some of the profits reaped from mobile ads.

Never mind the CPM

Mobile ads are on the rise, no doubt. Across all channels we are seeing 50%+ mobile market share. The problem with mobile users is that they are generally a lot worse customers. E-commerce sites generally experience a significantly lower conversion rate from mobile users than desktop users and mobile ads are more often than not worth a fraction of desktop ads.

If telecom providers are going to demand a share of the smaller pie, well, we are going to see some very unhappy shareholders at Google and Facebook. Though I would argue that Facebook would suffer less than Google as most of Facebook ads are on or their app, on an https connection. Unless the telcos plan to issue MITM prone certs, I don’t see how they will easily be able to extort ad money from Facebook.

Google has a significant portion of ads from off-site ads via their Adsense programme. These are the likely target for the bomb. I don’t doubt that Google with their technological prowess could work around this block but they may not want to play cat and mouse with global telcos who could, in a fit of anger, throttle mobile visitors to bandwidth heavy Google properties like YouTube.

What will happen?

If the big telecom providers decide to launch the bomb I suspect that we will see a string of lawsuits, probably anti-trust and net neutrality related. Even if the advertisers don’t bend to the demands for revenue sharing, the lawsuits will cost time and money for all parties.
With text messages decreasing rapidly and mobile data becoming ever cheaper, at least in Sweden, the telcos are feeling the pressure. It used to be the case that buying a phone off a telco was more expensive in the long run but these days it tends to be cheaper than buying the phones straight off, say Apple. Data is also way more expensive than texts for the telcos and this means that their margins are shrinking quite rapidly. We should expect more schemes like this in the future as margins and stable revenue shrinks.

It is unlikely that this scheme will succeed in the long run as the technical prowess of the big advertisers are like to be enough to work around the majority of blocking attempts like this but telecoms providers double-dipping may well be the future as shareholders demand growth in a soon to be saturated market.


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Peer-2-Peer lenders’ dishonest tactics

Peer-to-peer lending has emerged as one of the big Fintech trends in the recent years. It aims to get banks out of the lending and borrowing equation. It is, however, not without it’s problems.

The big issue with peer to peer lending is that it relies on consumers to provide the credit. Which is fine when the economy is in recovery, or something akin to it, but what happens when the economy takes a downturn?

Companies like Lendify and FundedByMe offer the lenders a rate the banks would not offer during a hyperinflation. That’s is good and it gives companies and individuals the possibility to borrow cheaper than at banks who may not lends them anything at all.  The problem with these companies is that their advertisement make it sound like lending is risk free, which of course, it isn’t.

One clear example is the recent Lendify advertising I saw on Twitter their services,  tagged with the Swedish hashtag #sparpodden. This was their tweet:

It translates into: today’s questions: Pay to have money at the bank or get good return at @LendifySE with #p2ploans?

When I questioned the tweet, as it compares alternatives with vastly different risk,  they just laughed it off.

The fact that an apparently serious financial provider would dismiss the risks of lending is sad and does not bode well for the alternative finance companies.  There is a, not insubstantial, probability that the company or individual that borrows money from these P2P lenders will default. Especially considering the relative high interest rates charged. If a loan has an interest rate over 10 percent you can be sure that it has that rate for a good reason.

I welcome any reforms or companies that make it easier for SME to borrow but it should not do so while being coy about the risks involved in these types of loans. Consumers are notoriously bad at accounting for risk and these types of schemes market themselves as safe while being exceedingly risky in some cases.

If you want to invest in lending products, invest in baskets of many loans rather than those that are loans to specific individuals and companies as these are riskier propositions.


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