France Tel to review portal advertising

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France Telecom is considering changing the supplier of advertising to its internet portal, in what could be another blow to Yahoo’s efforts to build momentum for its online advertising business.

The US internet company feeds adverts to France Telecom’s portal. With 13.5m unique visitors, the telecoms company’s websites are the third-most visited in the country, after Google and Microsoft, according to comScore World Metrix.

“We are reviewing the possibilities,” said Didier Lombard, chief executive of France Telecom.

Speaking in an interview while visiting Silicon Valley last week, he did not rule out the possibility that the telecoms carrier would try to build its own advertising system rather than rely on an existing online network.

The review of France Telecom’s advertising relationships reflects the significant role advertising could play in the company’s future, according to Mr Lombard. Mobile advertising could prove to be particularly important, given the scope of the company’s mobile networks, he indicated.

Telecoms companies also have more control over data carried over their mobile systems than traditional wireline public networks, making this potentially a more lucrative channel for them.

Like other telecoms companies, France Telecom has looked to advertising as a potential source of new income at a time when traditional telecoms businesses are under pressure.

However, most carriers have been slow to develop revenue streams from the internet, leading to growing pressure from some telecoms companies in the US and Europe for the right to levy tolls on internet companies that rely on their networks.

For Yahoo, meanwhile, the loss of France Telecom’s business would represent another blow as it struggles to complete an overhaul of its advertising system.

Mr Lombard said that retaining Yahoo was one of the possibilities under consideration.

The French executive was in Silicon Valley last week as part of an attempt to revitalise the company’s extensive research and development efforts.

“We can’t continue to spend all of this money on R&D unless it is of value to the company,” he said.

Mr Lombard said he had already changed the company’s organisation to connect R&D and product management and marketing executives more closely, and had narrowed the number of projects the company was working on.

He said he had chosen the French carrier’s California lab as the site to unveil a brand for its overall R&D organisation, Orange Labs, to stress that France Telecom was abandoning its “not invented here” mentality.

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