T-Mobile Acquires Octopus Interactive And Says It’s Still Committed To Ad Tech

Comic: Ad-ceptionIt’s become a familiar tale over the years: a major telco makes a big investment in ad tech followed by buyer’s remorse.

AT&T and Verizon offloaded their respective ad tech stacks, Singtel is reportedly looking to divest Amobee and Telenor sold Tapad.

But T-Mobile is defying the trend.

On Monday, T-Mobile Marketing Solutions, its ad platform and data unit, announced the acquisition of Octopus Interactive, a rideshare-focused advertising startup that convinces Uber and Lyft drivers to install a tablet in the back of their vehicles that riders can use to play games, watch content and, of course, see ads.

Terms of the deal were not disclosed, although T-Mobile is extending offers to Octopus Interactive’s roughly 50 employees.

“We have an ambition to be a multibillion-dollar player in the ad tech business,” said Mike Peralta, T-Mobile’s VP of Marketing Solutions, who joined the company last June.

To date, T-Mobile’s ad tech ambitions have been somewhat muted, but that’s part of the plan, Peralta said.

Rather than make massive content acquisitions (à la AT&T and Verizon), T-Mobile started small in 2019 with a deal for PushSpring, an ad tech company specializing in mobile ads and push notifications. Since then, the telco launched T-Mobile Marketing Solutions but hasn’t aggressively pushed the business. For instance, the T-Mobile ad group doesn’t target iPhones and iPad devices out of an abundance of caution following Apple’s recent iOS 14 privacy changes.

Four out of five riders who use Octopus Interactive tablets are iOS customers, said Cherian Thomas, CEO and co-founder of Octopus. That means, although Octopus does reach an attractive customer segment, T-Mobile doesn’t use its ad tech to retarget those users on their phones or elsewhere.

Octopus Interactive isn’t a massive addition to T-Mobile’s reach or inventory. The startup says it reaches five million unique viewers per month, according to its Nielsen numbers.

But Octopus Interactive does open up multiple new programmatic channels for T-Mobile, namely video and digital out-of-home (DOOH).

“This adds new arrows to our quiver,” Peralta said.

Octopus Interactive is able to make a pitch for TV ad budgets, because it offers video on a large-ish screen – “a living room in the backseat of a rideshare,” Thomas said.

T-Mobile Marketing Solution doesn’t yet serve CTV or video ads, but it’s a logical extension of its offering and a necessary part of the roadmap if T-Mobile does have multibillion-dollar ambitions for ad revenue.

For now, though, T-Mobile is staying dutifully noncompetitive with CTV, broadcast and video content companies – again, in marked contrast to AT&T and Verizon, which both bought themselves major video entertainment assets. Some of T-Mobile and Octopus Interactive’s largest shared customers include Audible, Fox Entertainment and Philo, a streaming service co-owned by A&E Networks, AMC Networks, Discovery and ViacomCBS.

Rather than owning media and monetizing it with its ad platform, T-Mobile is more focused on app installs and other performance metrics prized by media companies. One of Octopus Interactive’s most valuable features is that it serves QR codes that users can scan to claim promos and install apps on their phones.

But Octopus Interactive’s tech will help T-Mobile’s own media, in a way. One of the aspects that made T-Mobile an attractive home is that a majority of its rideshare drivers use T-Mobile as their wireless provider, Thomas said.

Another “great synergy” of the deal is that T-Mobile could create offers specifically for rideshare drivers who already use its mobile service, Peralta said. Octopus Interactive already promises improved tips and per-rider revenue, but T-Mobile could also create value or savings for that overlapping customer base.

The big prize, eventually, will come if and when T-Mobile can consolidate its mobile user data with Octopus Interactive, especially on Apple devices.

“The focus for us is around the first-party data and how we create scale and expansion for that,” Peralta said.

In the meantime, though, T-Mobile plans to continue holding off on targeting iOS users or consolidating its opted-in IDFA data with Octopus. This is all part of the strategy, as is taking slow, steady steps into TV ad sales with the addition of mobile video, which provides a Venn diagram overlap of sorts with CTV.

Caution is necessary considering Apple’s privacy rules, which still exist in a sort of grey zone when it comes to enforcement.

“We’re waiting and watching how things develop,” Peralta said.

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