AI Insights · Abraham Yousef · February 2024
UK Telcos: How Advertising is Driving User Acquisition
UK telecom firms have reduced digital ad spend due to tough market conditions over the past year, but some like Smarty, Three, and O2 have increased their investments. Vodafone and Three's merger could create a dominant mobile operator in the space. Recently, Sensor Tower data shows that Three's ad spend increase has led to a rise in MAUs, while O2's 'EU Roaming' campaign boosted user retention.
Key Takeaways:
Facing tough market conditions, UK telecom firms have scaled back their customer acquisition efforts, reducing their digital ad spend by 2% YoY in 2023 to $420mn
A few operators defied the downturn: Smarty, Three and O2 (excluding Virgin Media), ramped up their ad investments, with their YoY ad spend surging by 90%, 60%, and 7% YoY, respectively
The UK telecom sector is moving towards further consolidation, with Vodafone and Three's planned merger set to create the country's top mobile operator by revenue. A combined Three and Vodafone would also become a powerhouse in the mobile telecom industry, commanding 52% of downloads and nearly 50% of MAUs, showcasing its potential for market dominance
Three’s pre-merge ad spend push has coincided with a 36% YoY increase in MAUs across its portfolio of apps in 2023, driven by its Three+ reward app (up 84% YoY)
Amid the launch of its game store, EE allocated 19% of its 2023 digital ad budget to gaming-related ads, with a 400% YoY increase in spend on gamer-favored platforms like Twitch and TikTok in the UK
In 4Q23, despite EE’s gaming pivot, its app users’ likelihood to be gamers (+74%) remained below Virgin Media’s (+109%), despite Virgin's lower spend on game-centric ads
O2's 'EU Roaming' ad campaign in the summer of 2023 significantly correlated with a surge in MAUs. Following a 24% MAU rise by campaign's end, MAUs have stayed above the previous year's average by 50%, suggesting the campaign might have been effective in achieving long-term user retention
For more information, request the full report from reports@sensortower.com.
Written by: Abraham Yousef, Senior Insights Analyst
Date: February 2024