The data cost of online advertising

Sep 20, 2018 | Blog

Most mobile consumers aren’t aware that advertising forms a big part of their data costs, and the concern is that the current high cost is a barrier to entry for many wanting to experience the benefits of the Internet and mobile technology.

Mobile is the number one screen

In emerging and developing markets mobile accounts for 70% to 90% of internet consumption and by far is the majority of “screen time” for most people.

Not surprisingly therefore digital content publishers, advertisers and digital service providers of all kinds are focussed on ways to reach and engage people on their mobile screens.

The data cost barrier

You would think understanding that Data Affordability is Key to Online Engagement in Emerging Markets means data efficiency is a top priority when designing digital experiences.

Using less data means lower data cost for price sensitive mobile consumers leading to higher engagement.

In South Africa public campaigns like #DataMust Fall draw government and industry attention to the high cost of data with the objective of somehow forcing a reduction in the average price of a MB.

In the meantime digital publishers and advertisers have a role to play by focussing the data efficiency of their websites and apps and giving their mobile audiences more bang for their data buck.

The data cost of online advertising

Recently we undertook a careful study to measure how much data is taken up by advertising on SA’s top 20 websites.

The results were pretty startling highlighting that on many websites advertising accounts for over 60% of mobile data cost.

For instance, on the Daily Sun and SuperSport websites adverts eat up as much as 81% of data. On IOL it is 76%, and on News24 the most popular local website it’s 64%.

What can be done?

Of course designers can and should take greater care to optimise the data efficiency of their websites and apps. In many cases data the primary focus is on user experience, functionality, ‘cool design’ etc. with data efficiency a 3rd or 4th priority or even after thought.

We think it should be a first order priority.

Toll free data

And then there’s the recent launch of telco Reverse Billed Data or sponsored data.

Brands are continually exhorted to embrace a larger online advertising strategy and are generally unaware of the potentially negative sentiment they are creating by making consumers pay a high price for the data used in viewing their ads.

There is little or no economic incentive for advertisers or publishers to think about ad-related data costs because the technology processes behind online advertising delivery are far from data efficient, and most online advertising is designed to maximise the display size, with end users paying the data costs in order to increase click-through volumes.

If publishers and/or advertisers had to absorb some or all ad delivery data costs, more attention would be paid to better and more efficient ads, which might even result in better conversion rates.

What can the regulators do?

Given that Google and Facebook have their fingers in 85% or more of online advertising in a market like South Africa and their dominance is forecast to rise, perhaps government regulators considering what to do about high data costs should invite them in for a discussion about how they might contribute to the 60% plus of consumer data cost being incurred by the ads they deliver, with no concern for consumer data costs being incurred.

For decades people have freely consumed broadcast media in its many forms and happily paid the price of exposure to advertising as the quid pro quo for free entertainment.

It’s ironic therefore the price of so called free access to online media is paying 60% of your data cost for the delivery of ads.

Where’s the quid pro quo in that equation?