(Image Credit: iStockPhoto/rvlsoft)
TelecomsTech spoke with the CEO of Tesco Mobile and the founder of mobile advertising technology company Unlockd to explain how the technology behind Tesco’s bill-reducing “Xtras” scheme works and what benefits it might offer consumers.
Xtras, for those unfamiliar, is a new offering from Tesco Mobile that claims to reduce customers’ monthly phone bills by around £3 through delivering location-based advertising. Research suggests Britons could be spending as much as £811 million a year on things they don’t need, and for the equivalent of about £36 a year many people may prefer to avoid advertising entirely. However, Xtras presents an alternative: consumers can opt in to receive targeted promotions in exchange for a lower bill.
“Whether mobile users are willing to accept ads in return for cheaper bills will depend on how intrusive and how relevant the messages are,” says Ernest Doku, telecoms expert at uSwitch. “Geolocation will be used to offer promotions for shops and cafés nearby. For some, this will feel too ‘Big Brother’, but others will appreciate the personalised and timely deals.”
While beacon technologies like Apple’s iBeacons and Google’s Eddystone are often mentioned in discussions about modern retail advertising, Unlockd chose to rely on standard device location services. That approach avoids the need for retailers to install additional hardware, though it can be less precise and may increase battery usage.
Smartphone battery life remains a concern for many users. GPS is a known battery drain, and the more time a screen spends showing advertisements, the sooner the device will hit the dreaded “low battery” warning. Unlockd founder Matt Berriman says the company’s app is “non-chatty,” adding that it typically consumes around two percent of battery life.
Unlockd is currently available only on Android because of the platform’s openness compared with competitors. Given that Google earns heavily from advertising, questions arise about whether Google might one day block system-level advertising apps. Berriman says Unlockd has spoken with Google and, unless there is a fundamental change to the operating system, the company is comfortable with its position on Android.
There has been speculation that Google may tighten Android’s architecture to address fragmentation and compete more directly with Apple. If Google were to make the platform more closed, it’s likely the company would want to protect its advertising revenue. For now, however, Unlockd operates within Android’s current framework.
On the decision to work directly with mobile operators rather than launching solely as an independent app, Berriman says Unlockd respects the relationships telcos have built with their customers. “Tesco Mobile has a strong bond with their users and a trusted brand,” he notes. “For a company like ours, building that level of trust independently would require significant time and capital.”
Consumers are increasingly intolerant of advertising, a trend reflected in the growing use of ad-blocking tools. “Our job is to ensure we don’t just provide ads — we’re focused on delivering a great customer experience,” Berriman emphasizes. That means balancing relevance, timing and non-intrusiveness so users feel they are getting value rather than being bombarded.
When asked whether ad-based services like Unlockd are the best route to lower customer bills, Tesco Mobile CEO Anthony Vollmer said: “It’s one angle, but we don’t expect this service to suit everyone. For people who are comfortable with adverts and find the service engaging and helpful, it’s a good fit. We like this proposition because it’s one of the first examples where customers share in the value of the advertising. Our motivation isn’t to profit from the ads, but to grow our customer base.”
A major UK operator, Three, has recently trialled network-level ad blocking — an opposite approach to Tesco’s opt-in model. On that, Vollmer commented: “We have no plans to follow that approach. We’ve chosen to focus on an entirely opt-in proposition.” He added, “There’s no contract or ties. If people enjoy it they can stay; if not, they can simply opt out. From my perspective that’s the right approach because it gives customers complete choice about participation.”
Subscribers who sign up for Xtras receive a complimentary 200MB of data each month so the ads won’t eat into their regular data allowance. Ads are automatically paused while users are abroad, and Tesco states it will not share customers’ personal mobile data with advertisers.
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