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October 21, 2016updated 20 Jul 2022 5:53am

Can AI reinvent mobile advertising?

CBR talks to Yandex, a Russian company which offers AI technology to mobile operators to help them serve content to their subscribers.

By

CBR reporter Alex Sword spoke to Artem Fokin, VP of international business operations at Yandex, a Russia-based technology company which recently launched operations in the UK. Its AI technology is used by mobile companies to serve content to smartphone users.

AS: Yandex is a search giant in Russia but relatively unknown in Western markets. What does Yandex aim to achieve with this launch?

We believe that our AI technology is one of the best in the word, and it is definitely a good fit for mobile devices anywhere across the globe. OEMs and telcos are seeing profit margins shrink increasingly but this can be fixed through software differentiation and currently this is not possible without AI technology behind it. So there’s a market opportunity here and we have a capability to address that opportunity.

AS: What are the dilemmas that mobile device makers face when trying to win customers?

Manufacturers would like to differentiate themselves from the competition, and with smartphone hardware being pretty much perfected over the years – differentiation should come from the software within.  But while differentiating, device makers need to be sure that the software experience they are offering is still familiar and easy to comprehend for the end user.

Since the hardware margins themselves are virtually non-existent, mobile device makers need to make sure that the software they are incorporating within their devices is capable of generating profit. Yet it is difficult to define which app (if the device maker should decide to pre-install it) would be relevant, and which would annoy the user by its very existence.

AS: How is the way that people use mobiles changing?

We’ve moved from a mobile-first to an AI-first world. Nowadays users expect mobile devices to understand their needs, interests and intentions and be capable of providing extremely relevant suggestions, recommendations or even applications.

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It is absolutely clear that such features need to become fundamental characteristics of mobile devices in order to be truly smart. However, AI technology is only good if it can benefit both the end user and the mobile device manufacturer. That’s why we at Yandex believe that AI solutions provided by independent developers are the key to being both relevant to the user and profitable for the handset manufacturer or OEM.  Until now profits from AI and ad revenue went straight to the mobile operating system developers.

AS: How does the Yandex solution work and how does it address this? What is the model for the UK market?

Our technology lets devices understand users’ interests and intentions, whilst providing relevant recommendations for both apps and content, when they are needed. With over ten years’ experience with mobile app development, Yandex ensures that only best in class design and UX techniques are finding their way into the final product. When presenting sponsored content within Zen – our content recommendation feed incorporated in both the Yandex Launcher and Yandex Browser apps – we’re making sure that it’s being done in the most un-intrusive way possible. And the revenue generated by this sponsored content is being shared with our partners, whether they are OEMs or telcos, which delivers tangible return on investment.

AS: How does it compare with Google’s bundling of its own apps with the Android OS?

First and foremost we believe that restrictive bundling – where device manufacturers are forced to pre-install certain apps or solutions – never benefits users. It is anti-competitive and might violate anti-trust rules in some countries.

We also believe that a customised AI solution from a third-party company is more beneficial to mobile device makers since it helps to differentiate and communicate its brand identity. It also addresses the needs of specific users and markets. This is far better than a one-size-fits all approach. It also helps mobile manufacturers to receive stable reoccurring revenue streams.

AS: Sometimes the demands of advertising is at odds with serving the user. Can the two be balanced and how?

Yandex

Artem Fokin, VP international business, Yandex.

The issue of unfriendly advertising is well-known and definitely might be experienced in some apps which are available on the market right now. However, both our Yandex Browser and Yandex Launcher are designed with the underlying principle of UX-first. The user would never find themselves in the situation where they need to take action to stop ads. With Yandex, user experience is un-intruded in every situation. If the user wants to launch an app, they should be able to do so without having to swipe away annoying notifications or closing a pop-up banner. The only acceptable way to offer sponsored content – whether in native format or as an app suggestion – is to ensure it is relevant and interesting to the user.

It is important to remember too that instead of pre-installing a number of random apps which eat up valuable memory storage on a device is not the answer. It is far more beneficial to deploy software which recommends relevant apps based on usage patterns, allowing the users to decide whether to install it or not.

This is in addition to providing app-based revenue to a mobile manufacturer. So when an app comes as a part of a good service and stays relevant to the user’s needs we can say that the balance between UX and monetisation is achieved. AI solutions enable mobile device makers and OEMs to achieve this balance.

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