By N Shivapriya
Last week, early talks were reported between Google and ad tech firm Inmobi for a possible valuation of over Rs 12,000 crore. Inmobi founder Naveen Tewari later told employees that he was not looking for such a deal. The same day, it was also reported that e-commerce firm Snapdeal was looking to acquire Komli Media, another ad tech firm, for a potential valuation of over Rs 1,800 crore. Flipkart acquired Adiquity earlier this month.
All this comes in the backdrop of a squeeze in the US. After an early flurry in 2013 and the first half of 2014, the number of ad tech initial public offerings have now dried up. But that hasn’t deterred new firms and existing ones from aiming for a slice for huge spends that are on stake as online ad spend continues to grow on the PC and mobile. It could also very soon enter the universe of wearables.
| inMobi: Going After Mobiles
CEO: Naveen Tiwari, Employees: 900
Last month, inMobi said it reached 1 billion unique mobile devices. This is precious real estate in the ad targeting world.
inMobi connects those that want to sell ad space, like content sites, apps or game developers, with those that want to advertise on the mobile platform. Its technology helps to serve the right ad to the right user. For instance, when you are in your newspaper app you could be shown an ad for a bag you were planning to buy earlier on an e-commerce app. This is a simplistic scenario.
inMobi builds audience personas and uses various targeting capabilities such as appographic targeting (based on a user’s app preferences) to determine the right user for the right ad.
When the user engages with the ad by clicking on it, inMobi gets paid. Cost per click or cost per mille (mille referring to a thousand ad impressions) are some commonly used metrics.
In addition to guaranteed engagement, there could other payment metrics such as guaranteed outcomes. For a game ad, the outcome could be a download, for an auto ad, it could a test drive query.
A game developer who is an advertiser can also specify the goal of the campaign to be a certain number of high lifetime value users, who download the game and play it frequently by purchasing features such as lives and coins.
“So as our ad network gets bigger, our knowledge about user behaviour gets better,†says Richard Sullivan, vice president and general manager, who attributes this and analytics and data sciences to better ad targeting and performance.
To improve engagement, inMobi also innovates on how the ad is delivered. Native ads, where the ad looks and feels like the rest of the content on the page, although it is called out as an ad or sponsored content, is one such innovation that’s been found to increase user engagement.
Komli Media: Helping marketers squeeze more value
CEO: Amar Goel, Employees: 300
It started as an ad network bringing together ad supply and demand for India and South East Asia. Today, Goel says part of its business is a demand-side platform and part of it is an ad network. The company is mostly about helping advertisers and marketers drive value through its offerings, such as the re-marketing demand-side platform, RevX, that is has developed.
RevX is programmatically driven and is used by almost all the leading e-commerce firms in India and South East Asia, Goel says. The platform also integrates with customer relationship management data.
The programmatic capabilities it is building are becoming a larger share of its business. It also executes rich-media campaigns and crossdevice campaigns, which are hard to do programmatically.
Media.net: Money in Targeting at Scale
CEO: Divyank Turakhia, Employees: 500+
It is positioned as a contextual targeting specialist. Contextual targeting serves ads relevant to the context of the page as opposed to what the user was doing a while ago or a few days back. For instance, a user may have been on makemytrip.com to check out some flights. But if the user is currently reading an article on used cars, then contextual targeting will analyse the content of the page real-time to show ads relevant to it – an ad for a second-hand cars website, for example.
“As of now the user may not be interested in seeing an ad about flights because he is researching cars,†says Turakhia. Most ad tech firms start with one niche and then expand to other areas, he adds.
Media.Net gets a cut from what the advertiser pays the publisher. “Publishers will come to us only if we are able to offer them good rates and advertisers will pay more only if they get the desired results. So our targeting has to be really good,†says Turakhia.
Source:The Economic Times
Copyright © 2015, Bennett, Coleman & Co. Ltd.
All Rights Reserved, Licensed to republish
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Future of Ad Tech Firms
Globally, companies spent about $140 billion on digital advertising last year. One or more ad tech firms have a role to play in every one of these dollars spent. Going forward, ad tech will continue to play a crucial role in targeting ad spends precisely at the right consumers.
“The key shift we are seeing is in making marketing personal again,†says Kirthiga Reddy, MD, Facebook India. She compares it to the convenience of a kirana store that can predict what you will buy and also suggest something new you may like, but with the scale of mass media.
Facebook along with Google is leading the charge of ad tech with precise targeting and measurement capabilities in ways that weren’t possible earlier with a number of their products. They are the giants in the field. Every ad tech firm competes with them in some way but also collaborates with them because the size of the pie is so big.
Of the $ 50 billion US digital ad spend, for instance, over 35% is with companies that are not household names like Google, Facebook, Microsoft and AOL, points out Divyank Turakhia, CEO of Media.net, an ad tech firm that runs the contextual ad programme for the Yahoo-Bing network. His firm serves ads on websites that are part of the Yahoo-Bing network.
Ad tech firms – both big and small – are re-writing the rules of advertising, changing how online campaigns are created and priced and setting goals so precise that shopping for customers is no different from say, drawing up a grocery list.
For instance, an advertiser may want to target, say, only South Korean men between the ages of 25 and 40 years and who have a taste for Indian food. The advertiser can also specify the purse: $100,000. After the campaign, the ad tech firm will return measurable results and any remaining dollars as well.
The simplest kind is search targeting, where a person searches for a particular term. Here, the intent of the person and what he or she is looking for is clear. So the ads that come up are related to the search keywords. But a person searching for pizza delivery in Mumbai wouldn’t want to see an ad for a pizza delivery place in New York. This is where geo-targeting comes in, explains Turakhia.
“Similarly, there is demographic targeting based on what your age group is or whether you are male or female. These are conventional ways of targeting that advertisers used for their campaigns. But today there are multiple mechanisms of ad targeting in so many complex forms, which combines all the data signals that are available,†he adds.
A pizza delivery chain based only in New York can set a goal of 20 pizza deliveries for every $100 spent and the ad tech firm will try to get the results by optimising the ads to a suitable audience.
Sophisticated ad buyers such as eBay India place several millions of ad bids a day based on multiple variables and parameters to get the best bang for its advertising buck. “On a daily basis, we place about 40-50 million bids. When you’re working with such large numbers there is no way it can be done manually,†says Shivani Dhanda, head – marketing, eBay India.
It uses a bid management system that evaluates how much to bid for a particular user and if eBay wins the ad impression, the appropriate ad is dynamically put together. For instance, if the user is searching for a keyword ‘mobile phones’, the bid management system will consider various parameters such as if the user visited eBay, which phones he searched for and how likely he is convert before deciding how much to bid. The entire process from placing the bid in a realtime auction to when the ad is dynamically put together takes about 100-150 milliseconds and happens even as the user is entering a url.
The tools that help advertisers do this are also supplied by ad tech firms. eBay, for instance, uses software from Pune-based firm Sokrati, founded by former Amazon executives, to manage its bids, along with an in-house bid management system.
“Display (advertising) has risen from the ashes. Programmatic (real-time bidding) technology allows bidding for each of display unit on a one-to-one basis, recognising who the user trying to access the website is, what the context of the page is, and what the size of the ad unit is,†says Subra Krishnan, vice-president (products) at Vizury, a Bengaluru-headquartered ad tech firm, which has raised $27 million so far from multiple investors and has a presence in China, Japan, Korea and emerging markets such as India.
Players are Evolving
The industry has become so complex that most firms are reluctant to label themselves as anything more specific than ad tech players as they venture into areas that can add more intelligence and help in more relevant targeting of customers.
Vizury, for instance, is known in India for its ad re-targeting products on the mobile and desktop. But it is now venturing into proprietary data and the kind of work that large software companies typically do with business intelligence software. Its newest offering integrates multiple customer data such as call centre and loyalty programmes to provide better market segmentation and targeting of the customer.
“There are probably 100 different types of ad tech companies. It’s a kind of battlefield where various entities are trying to optimise various parts of the business and yet ultimately, there is the consumer who takes the final call,†says Tamara Gaffney, principal analyst, Adobe Digital Index, which provides research and insights on digital marketing.
Adobe also has offerings in ad tech, which integrate a number of technologies.
“It’s hard to explain but there would be players around targeting, optimisation, analytics… a good analogy would be the financial services industry where are buyers and sellers but many intermediaries,†says Amar Goel, CEO, Komli Media, which started off as an ad network bringing buyers and sellers together but is now building a lot of programmatic (realtime-bidding) technology and leveraging data.
He declined to comment on reports of Snapdeal acquiring Komli. The driver for such ad tech deals, says Anupam Mittal, CEO of People Group and angel investor, is the access that large e-commerce firms like Flipkart and Snapdeal have to customer shopping patterns and behaviour. “These ecommerce firms have billions of page views. They know people’s shopping habits and what they are looking for, so they have some level of context just like Facebook and Google. They also want to acquire good teams that can help to build their own ad proposition to customers,†he says.
Still, many listed ad tech firms have seen their market value fall on Wall Street. “Ultimately, there are two kinds of ad tech: one captures the intent of the user, and Google does that.
The second is when you know so much about the user that you can present the relevant ads. Facebook does that. Everything in between is a promise of something that will be built. Margins are wafer-thin if at all they are there.
Google and Facebook own their audience so their margins are much better because they are not sharing the outgo with the publisher,†adds Mittal (see table).
However, it’s equally true that there are smaller firms building smart capabilities that the likes of Google, Facebook and Twitter are interested in. “The very fact that Google buys companies nearly every year shows that they are getting beaten at their own game,†points out the CEO of an ad tech firm, requesting anonymity.
Google’s mobile ad platform, AdMob, was through an acquisition in 2009. Similarly, Twitter bought MoPub, a startup helping mobile publishers manage their inventory
Consumer is The Sweet Spot
Fashion e-tailer Myntra, which uses both Vizury and Komli, says it has translated to higher revenues. “Our pain point as an e-commerce player is we create the intent but the average conversion rate (people who buy after visiting the site) is only two out of 100,†says Priyanshu Kumar, digital marketing manager, Myntra.
On January 3, when Myntra held its ‘End of Reason’ sale, it notched up a record Rs 100 crore in eight hours. At least 3% of that revenue could be attributed to the re-marketing campaigns run by Komli and Vizury on that day as they brought back potential customers who had visited the site but dropped off, says Kumar. “They were very aggressive going after the users who had visited our site but not converted,†he says. Myntra saw a conversion rate of 6% on that day as compared to the e-commerce industry average of 0.8% – 2.5%.
The most reliable data about users online is first-party data, which is collected by the site you are browsing, says Gaffney. Second-party data is obtained from exchanges which, in turn, get the information from participating sites that sell their information to the exchange for a fee.
Such success stories are also helping ad tech win new following among companies in manufacturing, consumer and other industries in India. “Three years back, only internet companies were the most visible users of our ad offerings. But since then we have seen traditional industries like auto, FMCG and the government take it up signficantly,†says Nitin Bawankule, industry director (Ecommerce, Local, Technology), Google India.
Ford India has hiked its digital ad spends from 5% of its ad budget to 15%-20% in less than four years, says Anurag Mehrotra, director (marketing, sales and service). Tushar Vyas, head digital (South Asia) at advertising agency, GroupM, says digital ad spends are growing three times faster than the overall ad growth.
The mobile is the next frontier in advertising with its ability to identify the user location as well as predict user behaviour based on the device being used.
This could be the next level of evolution for ad tech firms. With the mobile, for instance, advertising technology can even find out if the user is standing or sitting, says an ad tech executive.
“If the advertising landscape is complex, the mobile landscape will make it more so. When you combine the advertising technology landscape with the mobile technology landscape, you could end up with this almost supernova of advertising targeting and data collection opportunity,†says Gaffney. The launch of Apple’s smartwatch and other smartwatches could take that to another level. Ad tech is here to stay and grow.
Source:The Economic Times
Copyright © 2015, Bennett, Coleman & Co. Ltd.
All Rights Reserved, Licensed to republish
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