Mobile operators are diving deep into application programming interfaces (APIs), primarily for internal usage, but an Apigee executive says their next big push will be to use APIs to get a cut of the action in mobile advertising.
Apigee Corp. is a leading provider of API management and analytics that works with a number of large wireless operators like AT&T Inc. (NYSE: T). In fact, it is the largest standalone API company left as its competitors like Mashery and Layer 7 have been acquired in recent years. The well-funded company has been mulling an IPO for a long time now, but recent reports suggest it has already selected banks for its IPO that will value it at more than $700 million. (See Equinix Unifies the Cloud With Apigee APIs, Apigee Aims to Help Operators Monetize APIs, Summer: Cloudy With a Chance of Tech IPOs and Apigee Banks $60M for APIs, Analytics.)
Light Reading caught up with Apigee VP of Product Strategy Ed Anuff at the API company's one-day conference in Chicago on Tuesday, part of an I Heart APIs roadshow it's doing across the US. He wouldn't comment on the company's long-term plans, but he did shed some light on where Apigee's operator customers are focusing their API priorities.
Right now, he said, that's largely on using APIs for internal operations, such as supporting different channel initiatives or doing phone activations, which he said was a catalyst for AT&T's early API activity. AT&T, as a sidenote, has since expanded to cover a lot more ground, and he sees it as the vanguard of the role of a telco as an application services API provider. (See AT&T Opens up WebRTC API.)
So what are operators like AT&T and others interested in next? Areas where they can monetize their APIs naturally come up most frequently, and that's why the potentially extremely lucrative mobile ad industry is piquing their interest. Anuff says the carriers realize they have some unfair advantages here, i.e. their immense customer data and ability to target customers granularly, allowing them to use APIs for in-app and native ads.
Through super-cookies, they can also deliver a much more rich and consistent user profile to apps developers and advertisers than others have access to. Of course, as AT&T and Verizon Wireless have recently realized, customers aren't always okay with having their online usage tracked so closely. Mobile operators will also find themselves competing against big players like Google (Nasdaq: GOOG) and Facebook and maybe even regulators given the aforementioned privacy concerns. (See Operators Should Block Ads to Get Their Cut, Startup Says and Verizon Rewards Customers for Their Data.)
"If they can weather [the backlash], the carriers will become advertising powerhouses," Anuff said. "You can imagine a future where major percentages of consumer revenues come from advertising if they can control and leverage that."
Another challenge is in the type of ads mobile operators would like to deliver via APIs. Anuff says video ads are becoming the most popular format, annoying though they may be. Here, mobile operators are grappling with how to present them to their customers without burning up their bandwidth through features like AT&T's Sponsored Data and without inciting their -- and, again, regulators' -- rage. (See More AT&T Toll-Free Data Apps Trickle Out.)
"Really the killer app for Sponsored Data is video ads," Anuff says. "It allows you to deliver that type of content without the customer paying for it. It's just a matter of time before there's more rich media advertising programs."
Outside of the murky waters of mobile advertising, payment APIs are still of interest to mobile operators that can easily offer carrier billing as well, but Anuff says that is a challenging space because of the proliferation of over-the-top players. Video APIs are also important for some carriers as is the wide world of the Internet of Things, which can largely be enabled through APIs.
These are the APIs that Anuff sees operators having the most interest in and success with, but they are far from the only ones they are working on. For example, Apigee also powers the GSM Association (GSMA) 's OneAPI initiative to let developers write one API that works across their networks, but Anuff says it's still stymied by the business relationships at play there. (See OneAPI & the Global Mobile App Ecosystem.)
"Our approach has been we've done everything we can as a solutions provider," he said. "It's not that we're not enthusiastic, but some of these things take time."
— Sarah Thomas, Editorial Operations Director, Light Reading