#1: The telco (to techco) landscape

The telco sector is going through a paradigm shift. Increasingly, companies are looking to transform into “techcos”—the idea of being more capable of growing and adapting to changes in their environments, and more agile to allow for rapid change. This shift, in no small part, can be attributed to the following key trends:

• Economic challenges: Challenging economic environment and increasing costs
  

• Industry transformation: The 5G revolution offers a unique opportunity to redefine telcos in a digital society
  

• Deeper personalisation: Surfacing the right product to the right audience, at the right time, and through the most effective channel mix
  

• Product diversification: Diversifying across product lines: mobile, broadband, TV, content and more
  

WARC’s paper states three critical areas to building brand distinctiveness as techcos (Page 11):

1. Find meaningful ways to enhance the customer experience
   
2. Develop and drive new products and services
   
3. Be proactive in attracting tomorrow’s customers
   

To deliver on the three critical areas above, telcos need to use their communications strategy effectively to land key differentiators and drive brand distinctiveness.

“Moving from telco to techco is definitely a part of our strategy. We believe that this is the way to grow. Traditional telco businesses will hardly grow in the future. We need to play a different role. We are doing so in several ways, firstly by enriching our services but also by playing a central role in the technology that our customers buy.”

—Marta Barri, Head of Marketing, Mobile Offer | Vodafone Italia

#2: There is widespread recognition of change

The research also found that 91% of respondents believe the industry’s approach to advertising is evolving to some extent, whether due to new media channels becoming available, changing behaviour from key demographics, or a greater reliance on targeted messaging which utilises first-party data.

There are several key drivers behind these shifting channel strategies: Telcos are looking to enhance CX, drive adoption of new products and services, and effectively attract customers as they enter the in-market stage of the purchase cycle.

#3: There is a positive outlook

Despite challenging economic environments, 60% of respondents expect budgets to increase in the year ahead, with a focus on the following key areas (Page 17):

• Customer Acquisition
  
• New Products & Services
  
• Customer Retention
  
• Brand Building
  
• Promotions
  

To drive these priorities, respondents anticipate they will increase their investment in digital audio (+50%) and podcasts (+53%), behind only social media (+71%) and online video & display (+58%).

“I think plannable reach is our biggest issue. There’s a loss of reach on media like TV and a big challenge in digital is that we’re in an ecosystem of silos... We will go into digital audio more and more. This means we need measurement options across the silos; and if that’s not coming, I think it will become difficult.”

—Norman Wagner, Head of Group Media, Deutsche Telekom

#4: The Digital audio opportunity

The increase in streaming digital audio is being driven by an ever-growing appetite for on-demand music and podcasts. In fact, according to the research, digital audio now commands a higher share of time spent than social media does.

In the UK, Italy and France, there are now more people streaming music than those listening to broadcast radio. That trend hasn’t quite yet emerged in Germany—but is forecast to do so in 2024.

Zooming in on the UK alone, music streaming and podcasts represent 17.6% of total media consumption (rising to 24% amongst those aged 16-24)—compared with 22.4% for broadcast TV, and 16.7% for social media.

All these trends point to a great investment opportunity in digital audio as an advertising channel—yet there remains very little uptake of it overall within the telco sector.

Our research suggests digital audio has over 17% share of total media consumption and yet in each market, the spend on digital audio as a percentage of telcos’ total spend in 2021 was below 0.6%.

Moving the lens back to the UK—and considering telcos’ total investment in audio as a media channel—the percentage share of digital is highest at 18%. Other UK sectors, however, are moving even faster. Tech & Electronics, for instance, now spend 34% of their audio budget with digital platforms.

#5: Telcos recognise the benefits of advertising on Spotify

There are many benefits to marketing with Spotify—and telcos we interviewed seem to agree. In the research, “Reaching a relevant, targeted audience” emerged as the top benefit, while “Adding incremental reach to your media plan and “Connecting with attentive, engaged audiences” in “A brand-safe, trusted environment” were amongst the other top responses.

These findings support a second research piece Spotify recently conducted (in partnership with Qualtrics) which suggested that people who are highly engaged with Spotify are more likely to be planning to switch or upgrade their telco providers or plans.

Of European telcos investing in digital audio, 65% believe music streaming is more effective than other media; and 63% think podcasts are more effective. With Spotify, there is the opportunity to invest in both formats—and support your audio assets with clickable video and display banners which lead listeners to wherever you want them to go. In general, digital audio platforms like Spotify are increasingly synergistic with other media channels and can help amplify campaign returns.

Sounds good? There’s more to come

The research provides a fascinating insight into the trends, challenges and opportunities in the telco sector across EMEA, and how these relate to digital audio as a marketing investment.

With the increase in consumption of digital audio across many markets—along with the evident effectiveness of advertising on this channel—there is a great opportunity for telcos to lean further into audio to differentiate their brand and build deeper engagement with their audiences.

The research shows further education (Page 33) would help to drive more investment towards digital audio. The next part of this series will focus on how Spotify’s advertising solutions can help telcos address the challenges identified in this report, and support brands to achieve their objectives.

Download the full whitepaper below, or watch a recently recorded webinar to hear about the results in more detail.