Tesco Mobile looks to replicate Spotify’s business model as it introduces mobile ad service

Tesco Mobile is offering brands the chance to reach its customers on the homescreen of their mobile phones, with users able to save money on their mobile phone bills by opting in to the new service. The mobile operator’s CEO Anthony Vollmer says it could signal a move to a business model like Spotify’s where consumers could get a free service based on the ads they watch.

Tesco Mobile is working with mobile platform Unlockd to create the new service, which aims to make advertising relevant to its customers. The service is available to any Tesco Mobile customers and doesn’t require them to sign up to a separate contacts. Those that sign up will receive £3 off if they opt in for at least 21 days of the month. They will then see tailored ads and discounts when they unlock their phone, which can also be saved to view and used at a later date.

Talking to Marketing Week, Vollmer explained that the new scheme is about offering its customers choice and value. “It is completely customer led, there is no contract and complete flexibility. It’s a bit like being paid to watch ads on TV,” he said.

Tesco Mobile is currently working with between 30 and 40 brands in the UK, including Doritos, Branston, British Airways and McDonalds, to show ads to customers with a guarantee that their ads will be seen. This is because, for example, in order for a user to access their Facebook account or visit Google they will have to unlock their phone and view the ad first.

Tesco Mobile plans to promote the new service over the summer and will be talking to customers via social channels to ensure it caters to user needs. “We want to launch it, start talking to customers about it and then increase the focus to tell as many customers about it as possible,” Vollmer said.

“It will be interesting to potentially see an advertising funded model that puts money in the pockets of consumers.”

Anthony Vollmer,Tesco Mobile CEO

Tesco Mobile is currently the only mobile operator in the UK to offer a service that allows customers to get a discount for viewing ads. However it is not alone in its focus on mobile advertising.

So far, digital companies such as Google and Facebook have been the main beneficiaries as brands increase their investment in mobile. O2 has previously argued that its role as a mobile operator and the data it has on customers puts it in a unique position to serve ads to customers on mobile via its mobile ad business Weve. Three, meanwhile, has opted for a different tactic by testing network level ad blocking.

Vollmer believes mobile operators have a right to play in this market. “Some will choose to participate in this place, some will not and there are different ways to compete. It is really important for a business like ours that we are finding ways to compete in the market,” he said.

He also suggests that, if the service proves popular, it could open up a whole new business model for mobile operators more like that adopted by services such as Spotify. If the model becomes strong enough, he said, customers could get a free service based on the ads they watch or Tesco Mobile could offer a tiered service – with those wanting to avoid ads paying more.

Vollmer also said there is a lot more the telecoms industry can do to serve customers:

“By staying focused on the really important things we have managed to get the lowest number of complaints of any UK teleco company. We’re ‘Which’-recommended for six years running but all this needs to be constantly worked at because nothing stays still. We have a lot to do to continue meeting customer expectations,” he concluded.

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