Sponsored data is here to stay

Earlier this month, I attended CTIA’s annual wireless conference, Super Mobility Week. Primarily, the show focused on topics such as 5G, spectrum, and the Internet of Things at an enterprise level, but a number of speakers and exhibitors offered helpful learnings for consumer marketers. I was particularly interested in the discussion of sponsored data, a relatively new option for marketers, which enables them to capture consumers’ attention in exchange for free cellular data.  

I went into the conference with my ear to the ground on any news on the sponsored data front because the practice of zero-rating data for certain services is finally taking hold in the wireless industry.

Zero-rating data means that carriers waive data usage when customers use specific apps or Internet services. For instance, always the trailblazer, T-Mobile started zero-rating music services with Music Freedom back in 2014. The carrier followed Music Freedom with its popular Binge On offering, enabling customers to stream video without using data. Now, you’ll find zero-rating data options from many carriers, including Canada’s Videotron (for music streaming), Verizon (for Go90 and NFL Mobile apps), and AT&T (for DIRECTV services).

I’m not a wireless provider: What does this mean for me?

In addition to carriers’ zero-rating data for certain streaming services, several carriers now offer a variety of opportunities for marketers to sponsor data for consumers.  Verizon offers several types of data sponsorship through FreeBee, its program that enables marketers to offer data credit when consumers complete specific activities, or cover all of the data consumed while browsing a particular site/app. Recently, Mintel Comperemedia captured emails from Verizon offering customers 2GB of free data when they downloaded and used Android Pay three times in stores.

AT&T offers a similar program called Data Perks, in which customers can enroll and earn data for downloading certain games or apps, shopping, and more. According to Mintel Comperemedia research, AT&T has been featuring Data Perks in customer communications, such as statement mailers, encouraging them to download the app and “start earning data for doing things you already do.”

From the looks of it, there will be more sponsored data programs popping up in the US and around the globe. Several data sponsorship platforms participated in the conference, including Aquto, which powers AT&T’s Data Perks, and a new sponsored data service from Billaway – both of which are working with brands around the globe.

With more carriers offering sponsored data programs, visibility of “free data” marketing will grow. As a result, consumers will start to feel comfortable when, say, their airline offers them zero-rated usage of a rewards app, a retailer sponsors the data consumed during a podcast in exchange for listening to a quick ad, or their grocery store provides 400MB of free data for completing a feedback survey.

Will free data appeal?

36% of consumers thinking about switching carriers want to for more or unlimited data

Today’s consumers want data, but they are also cost-conscious. According to Mintel’s Mobile Network Providers US 2016 report, more than a third of consumers thinking about switching carriers want to do so for more or unlimited data. In fact, it was the second-largest reason to switch, behind a cheaper plan. Sponsored data can help consumers squeeze more bang for their buck out of their monthly wireless plan.

Free data can surprise and delight customers. When speaking with Billaway CMO Tom Haley, I was informed that the service aims to seamlessly integrate the sponsored data offerings into the types of activities consumers are already doing on a daily basis. This keeps the service from becoming invasive or feeling like an overt marketing ploy. If a customer is rewarded with free data after completing an activity that they normally do anyway (like shopping at a certain website), then it becomes an unexpected surprise.

Sponsored data could go one step further if programs partnered with services like Vodi (an award winner at this year’s CTIA Startup Lab), which enables prepaid wireless customers to gift data to friends or family on prepaid plans in the US and other countries. After all, maybe I don’t need 500MB of free data this month, but I know somebody who does.

Sponsored data is already helping to provide accessibility to consumers who might not otherwise be able to take advantage of certain services. Aquto CEO Susie Kim Riley gave the example of a bank in Brazil that zero-rates the data for use of its banking app because, she said, over half of mobile phone users in the country don’t have a data subscription.

Not everyone is a fan of sponsored data as many groups have argued that zero-rating data for some services and not others offers unfair prioritization of the sponsored content. So far, however, zero-rated data has been viewed largely as a boon to customers in the US, so the FCC has not interfered with the practice. Ultimately, if marketers avoid attaching too many strings to their data offers and ensure that they are integrating sponsored data into the natural, daily activities of the consumer, the practice can be a successful new marketing method.

Emily Groch is Mintel Comperemedia’s Director of Insights, Telecommunications. She provides omni-channel marketing analysis and competitive insights to wireless, TV, internet, over-the-top, and home security service providers across the US and Canada.