Telefonica Digital has just hired a Director of Product and Innovation to lead a new team, based in California’s Silicon Valley, that will develop new formats for mobile advertising, including video and data.

Tarifica’s Take

Mobile ads are clearly a very high-growth business opportunity, considering the dramatic expansion of smartphone and tablet usage and the ability of these devices to channel sophisticated, rich-format ads directly to users. We envision lots of entities getting involved. Google, of course, has been a pioneer in mobile advertising, and other leading tech companies are following its example. Equally important, the world’s preeminent advertising agencies are very interested in exploiting the potential of mobile devices as a cost-effective and efficient way to reach diverse audiences of consumers.

So we commend Telefonica for recognizing the potentially sizable financials rewards associated with mobile ads and for bringing in someone with an excellent pedigree (his previous experience was gained at Apple, EBay and AOL) to spearhead development in this space. We are not sure exactly what his mandate is, but our approach would be to think about innovating alongside some of the major non-MNO players rather than trying to compete with them. A savvy operator could, for example, partner with an ad agency to deliver and even co-brand content. But to go head-to-head with companies that are already well-established as creators and disseminators of ads would likely be too difficult for a mobile operator at this point in time, even one as large and sophisticated as Telefonica.