Tuesday, January 7, 2014, 10:38 AM ET|Posted by Will Richmond
Mobile video is one of the hottest trends around. But the reality is that mobile video, is in fact, not very mobile. As I wrote last May, research firm Leichtman Research Group found that of people who watched video on their phone, 63% usually do so at home; for tablets, it's a whopping 89%. One of the big contributing factors to this is the availability of WiFi at home, which allows viewers to avoid using expensive wireless data plans when using their mobile device for video.
That's why a new plan announced yesterday by AT&T, dubbed "Sponsored Data," could have very interesting implications for moving mobile video outside the home, and potentially unleashing totally new mobile video use cases. With Sponsored Data, the content provider pays AT&T for the cost of the data consumed, rather than it counting against the user's monthly data cap. Sponsored Data would have the highest impact on video because it is by far the most data-intensive media format.
With Sponsored Data, AT&T mobile users wouldn't worry that video ads, promotional material or even content are eating up their valuable data plan. Rather, it means that content providers, merchants or anyone else who believes they can generate an ROI from a video message or content, would now have a new advertising channel at their disposal. From their perspective, Sponsored Data is akin to renting a billboard or placing an ad in a magazine - all just communications channels being temporarily rented to convey a targeted message.
But what's extra enticing for content providers / advertisers about Sponsored Data vs. these traditional options is that mobile devices are becoming a preferred media consumption device and that social media offers a viral/sharing upside. In addition, with proper engagement opportunities within or subsequent to the video (e.g. sign-up, flash sales, etc.), there's a closed loop ROI available. All of this means compelling Sponsored Data messages could have very attractive ROIs and therefore become very popular.
However, it's important to note that Sponsored Data isn't just about advertising. I found it intriguing that one of the charter companies using Sponsored Data is health care insurer UnitedHealth Group, which plans to run educational videos for new mothers. It's pretty easy to see how, between receiving visitors in the hospital, a new mom would find it valuable to view these videos. But, if doing so counted against her data cap, she might wait to watch at home on her WiFi (though given other priorities, she may never actually do so). With Sponsored Data, she could watch at will, with no impact her data plan.
This is just one of the many scenarios I can see for how Sponsored Data could help spur mobile video and importantly, move it out of the home. Not surprisingly, there have been concerns raised about whether Sponsored Data violates principles of net neutrality. While I agree that it's critical to be vigilant, as long as AT&T doesn't give Sponsored Data providers preferential bandwidth treatment (which it says it won't), then it seems to me these are just additional content choices for consumers.
We live in a world where companies with deep resources have greater access to advertising channels and where consumers constantly choose between paying for content or getting it for a discount or free, when accompanied by paid messages (think of Kindle with Special Offers). Sponsored Data is just another example. To the extent that it helps grow the mobile video pie by expanding out-of-home usage, it seems like a positive move to me.