I’ve been talking about Sponsored Data as a business model a lot lately – and I’ve largely focused on zero-rating, or iterations of that model, as an approach because it’s one that US operator, AT&T, has shined a spotlight on in the West.
In the East, things are different. Chinese operators are ahead of the curve – collaborating with high profile digital players to design Sponsored Data services that have been well-received by the local market. It is an established and successful model, but it’s just one approach that operators in the East are taking to data monetization.
The road to O2O
While we in the West grapple with first generation data monetization, Asia is asking: ‘what next?’ Well, Phase Two goes beyond data monetization on the network, and sees operators leverage digital currency to position themselves as a key player in the online to offline (O2O) ecosystem.
AsiaInfo has been tackling this challenge head on. Our China team has developed a managed service whereby the end-user can earn digital currency via the operator’s Sponsored Data platform. The currency can then be redeemed for other services (physical or digital) from participating partners – just like cash (and, like cash, the currency doesn’t expire).
Loyalty programs are nothing new, but Eamon Mikami, Head of Strategy APAC, says that this digital currency model enhances the proposition for operator, partner, as well as for the end customer: “The key to this approach is using the reward of free data to grow the audience base, cultivate customer insight, and establish the operator’s own digital currency to enable the O2O business model.”
In layman’s terms, the customer signs up to the operator’s Sponsored Data program and is presented with a number of activities to complete, from the program’s participating partners. This could be anything from downloading partner apps to doing a quiz, in order to earn data rewards – and ultimately gain digital currency tokens.
After completing the activity, the customer’s account is credited with digital tokens, which can then be redeemed at any participating partner store, whether online or offline. Based on their unique profile, the operator can suggest ways to redeem the tokens e.g. if the customer is searching for nearby places to eat on their phone, the operator can send them a 50% discount voucher for a local restaurant partner, and remind them that their accrued digital tokens are redeemable here.
Eamon says: “In the real world, many verticals, from retail to restaurants, already offer loyalty currencies through their proprietary loyalty programs. However, customers somehow can feel restricted with the limited choices of rewards. They often don’t see any real values in many of the programs – largely because they never gain sufficient points from each scheme to gain much of a reward.”
With the operator’s digital currency model, the user benefits because accessing the program is fun and easy, and they get an immediate currency reward that can be redeemed in a number of different online/offline businesses. They are motivated to engage with the program because it is tailored to their profile, and presents them with opportunities to gain credits that are relevant to them. The business partner benefits from the scale of the operator-led loyalty program, and can reach out immediately to millions of mobile subscribers with their marketing offers (and only pay when the subscriber takes up the offer).
Meanwhile, for the operator, the program stimulates user adoption of mobile payments, which represents additional revenue. In the long term, as the digital currency becomes a credible new payment mode, the operator can expand their business partner network across multiple verticals more quickly. This marks an improvement on current B2B coalition programs for loyalty points, explains Eamon:
“The operator has a large customer base but often finds it extremely challenging to extend its proprietary loyalty program with multiple business collaborations. A new digital currency run by the operator can become a token and ease the effort for establishing such collaborations.”
Going beyond data monetization
This is the approach that China Telecom is already taking. The operator has established a user base for its digital coin currency, and has integrated a number of business partners to its platform to enable the O2O business model. By combining mobile payment capability and digital coins, China Telecom is establishing a coalition program with both online and offline partners to offer a common loyalty currency and monetize collection and redemption transactions.
This isn’t necessarily an approach that could be simply airlifted into other markets, but it is certainly interesting to see where data monetization is heading in regions where the data monetization model
is already fairly advanced.