Telefónica starts exchange for targeted mobile ads

Axonix' ambition is to compete with Google, Facebook and Twitter in the mobile ad space

Telecom operator Telefónica has launched the first mobile ad-exchange platform to use the operator's customer demographics and real-time location data to serve targeted mobile ads, the company said on Wednesday.

The Spanish telecom provider launched the ad-exchange together with private equity firm Blackstone. The London based advertising company is called Axonix and will rely on technology acquired from MobClix, Telefónica said. MobClix went bankrupt last year.

Axonix' ambition is to compete with Google, Facebook and Twitter in the mobile ad space by using the data the company collects from its 330 million customers, the company said.

It will especially focus on regions like Latin America where mobile advertising is in its infancy and big tech companies currently have a limited presence, Axonix said. But mobile advertising space will also be sold in the U.S. and Europe, it added.

Telefónica will share demographic customer data such as gender, age, home address, handset and contract information as well as real-time location data and inferred interests based on historical mobile behavior with Axonix, said Axonix CEO Simon Birkenhead.

"All of this will be anonymized and aggregated, with all personally identifiable information removed before it is passed to Axonix in order to ensure we comply with privacy and data protection regulations," he said.

"Partners and advertisers will be able to use the data to target their ads to specific segments of customers who have the required characteristics or interests," he added.

Axonix will operate as an independent company with Telefónica and Blackstone as its shareholders. CEO Birkenhead was formerly Telefónica's director of global advertising sales.

During 2014, Telefónica will be integrating its anonymized customer data into Axonix to allow its partners and publishers to benefit from Telefónica's verified demographic and real-time location data, Birkenhead said. "Few other companies are able to provide verified data for mobile advertising," he said, adding that no other exchanges will have access to Telefónica data.

The telecom operator's move comes at a time that mobile advertising is taking off, according to figures published by ZenithOptimedia in early April. The company estimated that the global expenditure on mobile ads will grow from US$13.4 billion in 2013 to $45 billion in 2016, representing 28 percent of Internet advertising expenditures and 7.6 percent of all, it said.

"This means mobile will leapfrog radio, magazines and outdoor to become the world's fourth-largest medium by the end of our forecast period," it predicted.

Axonix is entering a market that has the interest of the big tech companies from Silicon valley. Twitter for instance bought the mobile-focused ad exchange MoPub in September last year, reportedly for about $350 million. And Google bought mobile ad company AdMob in 2009 for $750 million.

Loek is Amsterdam Correspondent and covers online privacy, intellectual property, open-source and online payment issues for the IDG News Service. Follow him on Twitter at @loekessers or email tips and comments to loek_essers@idg.com

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