Digital Marketing Company for Sale

T-Mobile’s Octopus buy complicated by pandemic

T-Mobile's Octopus buy complicated by pandemic
Written by publishing team

While T-Mobile US Inc.’s The acquisition of a ride-sharing ad network gives the carrier the weapons to reach a coveted demographic of high-income youth, and the deal comes at a critical time.

T-Mobile said on January 10 that it had signed a deal to acquire Octopus Interactive, which operates a network of interactive video screens inside Uber and Lyft cars. Octopus will become part of T-Mobile’s advertising technology business, Marketing Solutions. The financial terms of the deal were not disclosed.

Octopus Interactive reaches 5 million unique contestants every month; 80% of these riders are between the ages of 18 and 49 with an average annual income of over $130,000. One analyst notes that this is an attractive audience for advertisers, but it’s also a ride-sharing audience Mobility is likely to slow again due to lifestyle changes linked to the pandemic. Thus, the purchase of Octopus, despite its small size, could represent another failed attempt by a wireless carrier to expand its digital advertising business.

There is a long list of unsuccessful efforts by telecom companies to get into digital advertising. Last year, T-Mobile TVision Home, the pay-TV service, shut down its 2018 acquisition of Layer3 TV. Verizon Communications Inc. It spent nearly $9 billion to acquire AOL and Yahoo in 2015 and 2017, respectively, and divested in 2021. AT&T Inc. agreed. In December 2021, the company announced the sale of the global automated ad market Xandr to Microsoft Corp. for an undisclosed amount.

Buying Octopus is much smaller than some of these previous deals and could be a smarter move, said Raul Castañón Martinez, chief analyst at 451 Research.

“This is a well-defined segment that plays well with T-Mobile’s key strengths – network coverage and reliability,” said Castañón Martinez. “The deal can help it expand its marketing and advertising offerings, and enable brands to reach a key target audience for geographically targeted campaigns.”

On the other hand, Castañón-Martínez said the COVID-19 pandemic has limited the growth of out-of-home advertisers, or OOH, such as Octopus Interactive because people are spending less time engaging in public activities, such as using public transportation.

“[Out-of-home advertising] It also depends on leisure and entertainment activities; Given current inflation concerns, this may translate into a slow recovery in 2022.”

Spending on out-of-home advertising fell 25.6% in 2020 and was expected to grow just 11.9% in 2021, according to MAGNA, a global investment in media and intelligence firm. This would put OOH’s global advertising sales were just 83% of their pre-COVID-19 level at the end of 2021, according to the company.

“The slower and more gradual recovery of OOH was expected due to declines in consumer mobility, particularly in the heavily advertised transportation sector, hurting OOH’s media audience and access for most of 2021,” MAGNA said in December 2021.

However, the company sees a definitive recovery in the sector, saying it is “confident that ad sales will increase by double digits again in 2022 and grow again to the 2019 level by 2023”.

As soon as this happens, Castañón Martinez said the octopusIt could represent a significant growth opportunity for T-Mobile’s Marketing and Advertising unit. ”

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