O2 and Buongiorno: Winning with Two-Sided Advertising

Not so long ago, we published a research note on content wholesaler Buongiorno and its successful transformation towards a two-sided business model. Specifically, we liked the way their platform allowed rewards - like airtime top-ups - to be based on rules, firing off an event whenever specific conditions are satisfied. Their Top-Up Surprises product with O2 UK, for example, offers a giveaway of extra SMS messages and minutes for prepaid users who top up more often; not only does this encourage the subscribers to use more of the core voice, messaging, and data product, but it also creates an opportunity to sell to upstream customers. Although there was no evidence that O2 had yet considered such a move, we speculated that a useful two-sided move would be to make the surprise associated with somebody's brand - for a fee, of course.

We recently got this press release:

O2 Media will be opening up the hugely successful O2 Top-up Surprises reward scheme to allow UK brands to reach O2's 10million Pay & Go customers. Recently ranked by Hitwise as the most visited competition website in the UK*, Top-up Surprises is one of the most popular reward schemes in the mobile industry.

Launched in November 2008, Top-up Surprises rewards Pay & Go customers on O2 every time they top up. Surprises range from extra texts, picture messages and minutes through to prizes such as holidays, TVs and mobile phones. Rather than traditional 'push' direct response campaigns, Top-up Surprises gives advertisers access to a channel through which consumers are already actively engaged and proactively visiting.

Blockbuster has been one of the first brands to take advantage of this opportunity with a campaign designed to drive cost effective customer acquisitions. O2 customers visiting Top-up Surprises to claim their reward were offered a 30 day free trial of Blockbuster's unlimited rental service, a £10 voucher to spend in a Blockbuster store or online and £1 off the monthly fee if they chose to take up the unlimited rental service. 52% of customers chose to take up the Blockbuster offer and of these 11% have already redeemed the offer voucher.
It's worth noting that this wraps up a number of Telco 2.0 principles - the importance of the core voice & messaging product, the value of upstream customers and wholesale, and the problem of respecting data sovereignty while utilising the customer data pile.

In the light of the recent Hoofnagle et al paper on the acceptability of behavioural advertising, it's worth noting that this play both offers a direct reward for the customer, and respects the boundaries of their privacy relationship with the operator.

[Ed. - Buongiorno and O2 UK will be talking about this and other related topics at the 7th Telco 2.0 Exec Brainstorm in London next week]