Opportunities Abound for Telcos to Jump Into AdTech

The days of making easy money on traditional telecommunications have faded quickly. Digital disruption — driven largely by Google, Apple, and the platforms they've enabled — has pushed telcos to rethink their business models and hunt for new revenue streams.

Key Points

• Telecom revenues are being eroded by over-the-top (OTT) communication services like WhatsApp.
• Advertising is emerging as one of the most promising new revenue streams for telcos to pursue.
• AdTech is a natural fit given the rich customer datasets telcos hold and the communication infrastructure they already sit on top of.
• The biggest AdTech opportunities for telcos include building a walled garden and AdTech stack, developing universal ID solutions, launching data clean rooms, and entering the CTV/OTT advertising space.
• The deprecation of third-party cookies and mobile IDs creates challenges for the entire programmatic ecosystem — but also positions telcos as credible solution providers.
• Many telcos have entered AdTech with mixed results: some have succeeded; others spent billions only to exit.
• Those that struggled typically acquired existing AdTech companies and ran into integration problems and a lack of domain knowledge.
• Building AdTech platforms from scratch — rather than acquiring them — significantly reduces cost and risk while ensuring tighter alignment with core business objectives.

The State of Telecommunications Today

Despite years of pressure from digital disruptors, there are clear signs of renewed momentum across the telecom sector.

Investment in Europe's telecom sector grew to 52.5 billion euros (USD $59.4 billion) in 2020 — a six-year high — driven by spending on 5G, fibre, and cable infrastructure to handle surging demand from streaming services like Netflix and YouTube, as well as cloud platforms operated by Google and Facebook.

The rollout of 5G has also opened up new use cases in content streaming, live events, gaming, and immersive experiences, all of which are pulling advertising dollars into the telco ecosystem. 2021 was something of a breakout year for telco-adjacent advertising spending as 5G began scaling globally.

Telecommunications companies increasingly recognize that competing with major AdTech players requires leveraging their existing assets — and that building advertising and data businesses is one of the clearest paths to doing that.

Where the Opportunity Lies

The core advantage telcos bring to AdTech is data. Their consumer datasets are arguably the richest available outside of what Google, Facebook, and Amazon hold. These datasets span consumer location (derived from base transceiver stations, or BTSs), online behaviour gathered through network traffic analysis, and demographic and socio-economic profile information collected through contracts and family plans.

That data, properly structured and consented, can power highly accurate audience segments — which is exactly what advertisers are looking for.

Beyond data, telcos control meaningful advertising inventory across display, audio, and TV formats, all of which can be opened up to programmatic buyers.

The following are the most compelling areas where telcos can build real AdTech businesses.

A Walled Garden and AdTech Stack

Telcos have the data assets to build credible walled gardens — closed advertising ecosystems that rival, at least regionally, what Google, Facebook, and Amazon have built at scale.

Those three platforms generated ad revenues exceeding $200 billion in 2021, up 38.3% from 2020, representing 74% of all digital ad spending. The concentration of that revenue is exactly the problem that telco-built alternatives could help address.

By developing their own AdTech stacks — spanning data platforms, DSPs, SSPs, and measurement tools — telcos can offer advertisers and agencies a complete alternative that competes on data quality and audience reach. Competition in this space will remain intense, but telcos hold genuine assets that can underpin differentiated offerings.

A Scalable Universal ID Provider

Universal IDs have emerged as one of the primary alternatives to third-party cookies, and telcos are well-positioned to offer them at scale for several reasons.

Scale: Many telcos cover approximately 40% of a single geography, giving them reach that most identity solution providers cannot match. That footprint translates directly into audience coverage for advertisers.

Trust and security: Telecoms are among the most heavily regulated industries, which means they already operate with privacy compliance as a baseline. That credibility matters when brands are evaluating identity partners.

Connectivity: Telcos operate across mobile, fixed-line, and broadband networks — a layer that sits above OTT providers and spans the user's entire digital journey.

Vodafone has already moved in this direction, launching TrustPid — a persistent ID at the mobile Internet Service Provider (ISP) level designed to be immune from cookie blocking and IP address masking. The ID is generated from multiple parameters and allows advertisers to serve targeted ads to mobile users without exposing identifying details.

As the advertising industry's need for durable identity solutions intensifies, more telcos are likely to test similar carrier-level ID products.

Data Clean Rooms

Data clean rooms offer telcos another way to monetize their customer data while staying on the right side of privacy regulation.

Clean rooms allow brands and publishers to securely match first-party datasets with each other — building segments, identifying lookalike audiences, measuring campaign performance, and running analytics — without any raw data leaving the secure environment, and without relying on third-party cookies.

For a telco, a clean room creates a structured mechanism to partner with advertisers: the telco's customer data gets matched against an advertiser's CRM data, producing enriched targeting opportunities that neither party could build alone.

As identity solutions continue to evolve in a post-cookie world, clean rooms represent a practical, privacy-compliant infrastructure that telcos are genuinely well-suited to operate.

CTV and OTT Advertising

The connected TV and OTT advertising space presents a compelling opportunity for telcos to bridge the gap between linear TV, streaming, and mobile — and to monetize premium inventory across all three.

The Verizon Media and Vizio partnership, announced in 2021, illustrates what's possible. Under that deal, Verizon Media gained access to Vizio's Inspace viewership data from more than 18 million opted-in Smart TVs globally. Verizon's DSP received exclusive access to that data, with Verizon serving as the preferred SSP for Vizio's programmatic inventory.

That kind of arrangement — connecting device-level viewership data with programmatic buying infrastructure — is exactly the kind of play that telcos are structurally equipped to pursue. With access to both the network and the content pipeline, telcos can offer advertisers more coherent cross-screen targeting than many pure-play AdTech vendors can provide.

What Cookie Deprecation Means for Telcos

Google has announced it will stop supporting third-party cookies in Chrome by the end of 2023. Apple and Mozilla have already implemented anti-tracking features in Safari and Firefox that block third-party cookies and related mechanisms by default.

Apple has also overhauled access to its mobile identifier — the IDFA — requiring explicit user opt-in before apps and AdTech vendors can collect it. Depending on the survey and app category, opt-in rates are estimated at between 4% and 40%.

These changes reflect a broader shift: consumers, privacy advocates, and regulators are pushing hard to reduce invisible tracking across digital advertising. For telcos, this creates a meaningful opportunity. Their first-party data, identity infrastructure, and regulatory track record position them as credible partners for advertisers trying to navigate a world where the old tracking mechanisms no longer work.

That said, telcos need to ensure their data practices fully comply with frameworks like the GDPR — which requires proper consent collection — before bringing these capabilities to market. The opportunity is real, but so is the compliance obligation.

Which Telcos Have Entered AdTech — and What Happened

Telcos generally enter AdTech one of two ways: through acquisition or by building from scratch.

Acquisitions have a mixed track record. Altice, Ericsson, and T-Mobile are among the telcos that have successfully managed AdTech acquisitions and driven revenue from them. AT&T, Verizon Media, and Telenor, by contrast, acquired AdTech companies and eventually exited. SingTel is in the process of selling Amobee to Tremor International for more than $207 million.

The pattern in the failed acquisitions is consistent: a lack of AdTech domain knowledge, an inability to integrate two companies operating on fundamentally different business models, and an overambitious goal of going toe-to-toe with Google and Facebook on ad revenue. That last objective has proven particularly elusive.

Across the past decade, telcos have spent anywhere from $300 million to $4 billion to acquire AdTech companies. The returns on those investments have often been disappointing.

Building from scratch offers a different risk-and-reward profile. Airtel, Reliance Jio, and Vodafone Idea are examples of telcos that have built their own AdTech platforms and operate effectively in the space.

Custom-built platforms give telcos full control over the feature roadmap, tighter integration with their existing systems, and clear ownership of data. They also allow for an incremental development approach — building core capabilities first, validating them against real business needs, and expanding from there.

The cost difference is stark. An MVP of an AdTech platform can be built and developed over five years for under $10 million — a fraction of what a major acquisition would cost.

The one genuine drawback of building rather than buying is that an organic build starts without an existing customer base. That gap can be bridged by integrating with established DSPs and SSPs, which provides immediate access to advertiser and publisher demand without the overhead of a large-scale acquisition.

For telcos that choose this path carefully — and find development partners with genuine AdTech expertise — building their own platforms is a credible route to sustainable revenue in one of digital media's most dynamic sectors.