Hardware for the ads and the ad- nots

Privacy fears over advertising deals that tap into personal data in return for discounts

to become an even more central part of technology companies’ income as they look to combat the falling price of hardware.

The trend is exemplified by Tesco Mobile, which is to offer customers a £3 discount – up to 40% – on their monthly bills if they agree to watch adverts on their smartphones for 21 days per month. The news comes after Microsoft acknowledged that it was accepting adverts in the form of promoted apps in the Start menu of Windows 10, and follows similar tactics by companies such as Amazon.

“Consumers want rock-bottom prices, but if you’re in industry you want to maintain margins – how do you do that? You start to bundle in more ads,” said Dr Charles Knight, a digital economy expert at Edge Hill University, Lancashire.

Tesco’s move could be mirrored by other mobile companies, hardware manufacturers and websites, and advertising could lead to a two-tiered digital economy, where people willing to pay will enjoy a better experience. “If you want that rock-bottom price then you’ll have the ads, and if you want a more premium experience and have ads blocked at source then you’ll pay a little more,” said Knight.

“It’s like websites charging extra for premium content. For example, [Microsoft watcher] Paul Thurrott is doing this on his site, where for £60 a year you get ad-free and extra content. We’re seeing across a wave of consumer-orientated products and services that you’re either going to go cheap and have ads, or pay more.”

Privacy fears

The Tesco deal is open to pay-monthly and SIM-only customers, who must watch “at least one ad, offer, or piece of content” on at least 21 days each month to qualify for the discount. The ads would be shown approximately once every three times the phone is switched on.

While lower prices might be appealing, there are concerns that consumers will unwittingly give away

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Being forced to watch ads on your phone could become the norm more than just their time. “The implication is that customers get the £3 discount for giving up some of their time and attention to see and open or dismiss the adverts,” said Ed JohnsonWilliams, a campaigner for the Open Rights Group. “In reality, they’re also paying with their data.”

The group highlights that Tesco Mobile customers have to accept the privacy policy of its partner Unlockd. As well as collecting a user’s mobile number, email address, age, interests and gender during a sign-up process, Unlockd also harvests location data and creates data records to use “for any purpose”. Customers should “consider the implications on their privacy before giving it up for a discount,” said Johnson-Williams.

Ad neutrality

Some network operators are discussing blocking ads on their network as a way of appealing to customers that don’t want marketing on their handsets. “Educated customers that understand adblocking are going to be targeted by organisations that will offer to block ads – O2 and Three are looking at ad-blocking on their networks,” said Knight. “It’s one way people might differentiate their products and businesses in the near future.”

Whether those carriers would opt for a total ban or allow certain advertisers preferential access is open to a debate that mirrors the net neutrality concerns surrounding ISPs. “It isn’t clear if they’re doing that [blocking ads] to then say to ad producers: ‘We’ll allow some of your ads on our network, but it will cost’,” said Knight.

Tesco Mobile is to offer customers a £3 discount on monthly bills if they agree to watch adverts