What is sponsored data? Free data in exchange for promoted content

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The French operator Orange introduced a new marketing tool that has enjoyed great support in America. In this article we tell you what sponsored data is.

The mechanism is simple, and consists of allowing the free navigation of its customers in the content sponsored by other trademarks.

More than two years ago, the U. S. operator AT&T presented sponsored data. Later, Verizon and T-Mobile were joined in the American country, although the sponsored data are present in almost all of the Americas, and is currently being tested in France, Germany or India and it seems that Spain will be the next to receive this service.

The subsidiary of the French operator wants Spain to start incorporating this innovative system. Orange has chosen our country as by far the most profitable market in the group, just after France. For now, only two companies have made a deal with Orange: Privalia, an Internet sales platform; and the American company Datami, dedicated to digital marketing.

Thanks to sponsored data, brands manage to get their promotional or advertising content through their own websites and apps, making it possible for users to navigate for free without spending the megabytes they have. Sponsored companies pay Orange for this data, without the user having to pay extra for it at any time.

With Mobile World Congress being the first contact, Orange is starting to test it with some users. Ferran Güell, CMO of Privalia, expressed his opinion on the agreement with Orange. Seventy percent of Privalia’s sales are already made through mobile devices and we’re exploring new ways to improve our customers’ service and experience in such a strategic channel as this,”Ferran Güell said.

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America, pioneer in sponsored data

Although it is a little more than two years old, there are already positive examples of this technique, such as the Brazilian bank Bradesco. The entity was overwhelmed by the number of people that were crowding together creating long lines in branches. They then launched the Bradesco Cellular Free Access campaign, which allowed customers to access their accounts from their mobile phone, without having to pay extra data.

Bradesco’s move helped them to double their clients in two years, and it seems that Telefónica will now be the one who wants to try his luck in the South American country. Through its subsidiary Vivo, it will test sponsored data with brands such as Privalia, Mercado Libre or Netshoes. The Spanish multinational will also try to enter other South American countries, although it seems that it will not be exported to Spain for now.

Net neutrality

Since AT&T will present sponsored data at the Las Vegas ESC in 2014, there have been many doubts regarding its implementation, although the neutrality of the network stands out above the rest. In short, the sponsored data represent a competitive advantage for large companies, which can make agreements with operators, leaving smaller companies at a lower level.

The sponsored data can thus become a double-edged sword, where the smallest has the potential to lose. For example, imagine that Netflix has reached an agreement with Orange to be able to consume the entire offer of the American channel for free, leaving small businesses or starups unable to compete in this field.

One of the first detractors was Public Knowledge, an association that seeks to protect the neutrality of the network. The company that connects you to the Internet should not be in a position to control what you do on the network. AT&T has just announced that it will do so,”said Public Knowledge on sponsored data.

In short, sponsored data can be of great help to users, as they will be able to access some pages for free, creating a very strong loyalty with them. The problem would be that the big companies would end up eating (more) the smaller ones.

What is your opinion about sponsored data?

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