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Apigee VP: Mobile Ads Are Ops' Next API Push

Sarah Thomas
2/4/2015
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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."


Catch up on operators' use of APIs on the mobile apps and services channel right here on Light Reading.

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

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Mitch Wagner
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Mitch Wagner,
User Rank: Lightning
2/5/2015 | 1:08:55 PM
Re: year of mobile ads?
"You're walking past Starbucks and an ad for coffee pops up" is a hypothetical. I haven't seen that either. 

Based on what we're seeing on the conventional Web, I don't see personalization having a lot of promise. Personalized ads on the web mostly seem to consist of showing me ads for things I've already decided I don't want to buy. 

(It's a khaki beltless safari jacket. My wife says since I already wear khaki pants nearly every day, if I had the jacket too I'd look like I work at the San Diego Zoo.)
sarahthomas1011
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sarahthomas1011,
User Rank: Light Beer
2/5/2015 | 11:35:16 AM
Re: year of mobile ads?
Yeah, I agree, however, that ideal of "you're walking past Starbucks and an ad for coffee pops up!" still hasn't happened, at least in my experience. Targeting is still pretty bad. Funny that we want it to be better, but don't want our privacy invaded. Hard to have one without the other.
Mitch Wagner
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Mitch Wagner,
User Rank: Lightning
2/4/2015 | 4:58:14 PM
Re: year of mobile ads?
Location is the opportuntiy for mobile ads -- show people what opportunities are around them where they are. 

But the ads have to be focused. No sense in showing ads for burger joints to vegans. 

Maps are to mobile ads what search was to thedesktop Internet. If I'm just walking down the street an ad on my mobile is an annoyance. But if I open up my maps app and search on "coffee," well, ads become useful information to me. 
sarahthomas1011
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sarahthomas1011,
User Rank: Light Beer
2/4/2015 | 4:53:13 PM
Re: year of mobile ads?
That sounds like another potential role for mobile operators -- acting as the gatekeeper for ads and only letting in those that are relevant. That involves a certain degree of customer info though, which brings up the privacy concerns. However, I think, as Mitch said, almost anything would be seen an obtrosive just given the small real estate of a smartphone screen.
smkinoshita
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smkinoshita,
User Rank: Light Sabre
2/4/2015 | 4:44:08 PM
Re: year of mobile ads?
In terms of mobile ads analytics, the important part will be seeing if the users are actually interacting with the ads or only clicked them out of error.

The problem I see is that too many scams or shady advertisers on mobile ads.  I think before mobile advertising will be a real thing there's going to need to be some effort made to keep the riff raff out and more effort needs to be put in matching up the ads to where they're shown.  Not just in terms of what's being advertised, but how.
Mitch Wagner
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Mitch Wagner,
User Rank: Lightning
2/4/2015 | 4:38:21 PM
Re: year of mobile ads?
I question whether advertising even works on the mobile Internet. The screens are so small, and people engage with their phones in short bursts of time. 

And I wonder whether sponsored content would run afoul of net neutrality restrictions. 
sarahthomas1011
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sarahthomas1011,
User Rank: Light Beer
2/4/2015 | 2:17:28 PM
year of mobile ads?
I'm not going to say 2015 if the year of the mobile ads, because that's been said every year, but it definitely seems like operators are taking them much more seriously now. They are exploring any way to get involved from super cookies to APIs to blocking ads (remember, Shine?). I thin the API strategy is the best route, but data has to be exposed so carefully or the backlash will be quite strong. It already has been and only the surface has been skimmed so far.
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