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Contextual marketing uses machine learning to help CSPs improve customer satisfaction

Atul Arora Senior Analyst, Research

Contextual marketing solutions offer service providers an opportunity to increase customer satisfaction while also generating additional revenue.

Contextual marketing

Communications service providers (CSPs) face increasing competitive pressure as over-the-top (OTT) players encroach upon their traditional revenue streams. At the same time, consumer expectations continue to increase: among other things, they demand ubiquitous network availability at high speed, self-service capabilities and personalised offerings. The first two may require large investments, but contextual marketing can address the need to continuously personalise offers while also providing CSPs the opportunity to increase revenue through upselling and cross-selling.

Contextual marketing presents offers to subscribers based on their circumstances

Contextual marketing produces automated marketing offers that are presented to the subscriber based on their circumstances (for example, their current activity, location or usage history). Specialist vendors such as Emagine International, Globys and Pontis offer solutions to CSPs using innovative business models that provide easy implementation and low-risk revenue-sharing business models, while ISVs such as AsiaInfo-Linkage offer such solutions as part of a larger product suite. Contextual marketing solutions includes an analytics platform, an end-to-end execution engine and possibly an app platform for serving offers.

Working model

The solution is integrated with the CSP's systems that gather customer data primarily from the billing systems to profile each individual subscriber using their xDRs data. The execution engine manages the customer profiles and outgoing campaigns following segmentation using analytics and machine learning algorithms. The engine also helps manage consumer profiles by constantly analysing and updating the usage behaviour on a real-time basis. The machine learning capability helps marketing departments to enhance campaigns by recording and dynamically analysing the success rates of previous campaigns and correlating them to changes in consumer usage patterns. Subscribers are targeted with relevant marketing campaigns using campaign management systems, while the responses are dynamically analysed to assess the performance of the campaign in order to improve the campaign.

Business model

Delivery models vary between the following two approaches, depending on the needs of the CSP:

  • an out-of-the-box solution with on-site support
  • complete support, including managed services that may include supporting data centre, privacy and security issues.

The financial structure of the deal between CSP and vendor involves an initial payment (20–40%) for the implementation of the platform, ongoing operational support costs and a significant performance-related payment based on take-up of marketing campaigns and the increase in revenue.

Contextual marketing solutions will evolve to include a holistic view of the subscriber

The contextual marketing solutions currently on offer focus on supporting CSPs with marketing campaigns that are based on information from billing systems and are primarily targeted towards prepaid customers. The future strategy should be to include more real-time event-detection capabilities by extracting data from the network elements and deep packet inspection to generate a real-time holistic view of the customer (see Figure 1).

Figure 1: Current and future contextual marketing solutions [Source: Analysys Mason, 2014]

Figure 1: Current and future contextual marketing solutions [Source: Analysys Mason, 2014]

Complementing this with predictive analytics capabilities and complex processing engines will enable next-best-offer predictions for individuals. All subscribers – including postpaid – could then be targeted with personalised and relevant offers.

Contextual marketing solutions offer service providers an opportunity to increase customer satisfaction, improve their Net Promoter Score (NPS) and turn current subscribers into advocates of their service, while also generating additional revenue. Subscriber profiling enables CSPs to identify high-value customers who they can specifically target, while the business model offers a low-risk opportunity in which the return-on-investment period is not more than a few months. Contextual marketing solutions will evolve to offer CSPs the opportunity to reduce operational costs while also increasing ARPU.