Telcos and their infrastructure suppliers need to invest outside of the box(es) in advertising if they are to stand a chance of weathering a fragile-as-black-ice economy that’s been hammered more than all of Rocky’s ringmates combined.

Why advertising? And why now? Because telcos typically cut capex in tough economic times – traditional network infrastructure spending, specifically. By introducing the advertising revenue river to telco and web TV providers, you end up with a return-on-advertising (ROA) that’s quicker and more impactful than switches and routers’ ROI.

TV providers, especially telcos, have been largely passing along ads that come with the content they aggregate, rather than getting money from selling spots themselves. That leaves them to rely on TV pack subscriptions, pay VOD and device rentals for their revenue.

That ain’t gonna be enough to weather much of any menacing economic storm.

But don’t take it from me, consider the facts. In the last few weeks alone, Cisco Systems Inc. (CSCO), Comcast Corp. (CMCSA) and Intel Corp.'s (INTC) capital unit, three huge players in their respective fields, have invested in BlackArrow Inc., Zvents and thePlatform, all of which are squarely in the ad business.

And in the last six months, Microsoft Corp.’s TV unit and Alcatel-Lucent have detailed plans for ad systems designed to let operators sell their own ads and manage their own inventories of national, regional and/or local ads.

The ROA on ads is huge. Just ask any of the large cablecos how many hundreds of millions they already make on selling ads per year. Then remember that they’re teaming up in the Project Canoe venture to sell ads across their collective regions.

And please don’t forget the Web and wireless. Online portals are finally getting the tools they need to switch revenue models from content syndication to actual ad sales. Wireless operators are staring to see multiplatform ad systems that enable mobile ads.

Network foundation technology is always a big need. But in the toughest economic times, look to investments that bring in Benjamins, such as advertising, over ones that bring in bulk bandwidth.

Stay tuned.

User Comments !

Hi Bob.. Nice post.

Quiet interesting to see how the big guns like Comcast, Intel & Cisco plan their business strategy efficiently during tough economic times.

Viki
Co-Author - XML for Beginners

Posted by: Viki | October 13 2008 05:21:09

When there is any economic slow down, you always find businesses advertising heavily to get the sales that are out there.
Excellent post, from everyone at PC Enclosures.

Graham Gallagher.

Posted by: Graham | October 13 2008 10:39:38