Not so long ago, an ad exchange connecting marketers, advertisers, and publishers with mobile users was the hot new thing. There was no bigger news in late 2012 than social network Facebook kicking off its own ad exchange, FBX, to monetize its millions of users.
Just a few months back, Indian superstar InMobi – dubbed “the world’s largest independent mobile advertising network” – launched its ad exchange to capitalize on a growing trend of programmatic buying and selling of ads. Now, the next wave is already here as marketers want to go after only those users who are most likely to buy their wares.
Seeing the writing on the wall, Vserv, one of the leading mobile ad exchanges from India, has just pivoted. “We have repositioned ourselves as a smart data led mobile marketing company. Now, we deliver smart data led results to marketers,” says Dippak Khurana, co-founder and CEO of Vserv, in an exclusive chat with Tech in Asia.
For this, Vserv has partnered with key telecom companies across emerging markets – from Vodafone, Airtel, and Aircel in India to Globe in the Philippines, Indosat in Indonesia, and MobiFone in Vietnam. “We are the world’s first and only company to partner with telcos this way,” Khurana says.
The telco tie-ups are vital in mobile-first markets like India, where smartphone adoption is taking off but credit card penetration is crawling. Most users don’t have the means for in-app purchasing of various products and services with credit cards or other instruments. What they can do, thanks to Vserv-like initiatives, is to use their prepaid or postpaid mobile cards to buy apps or in-app offers, which gets tagged to their mobile bills. Innovative companies are even topping up talk or data time for users on their mobile accounts in exchange for engaging with an ad.
For Vserv, it’s a double whammy – the telcos allow users to buy apps and respond to ads, and Vserv also gains valuable user data. The company is no longer just an ad exchange, it’s a key facilitator in the mobile ad ecosystem.
From big data to smart data
Khurana founded Vserv in Mumbai in 2010 with Ashay Padwal, who now spearheads the technology and product development function of the startup. With 30 years of combined experience in the mobile and digital advertising space, they are used to spotting trends, thinking fast on their feet, and staying nimble. In four years, Vserv grew rapidly to garner clients in 200 countries and offices in 10, including the US, UK, and parts of Southeast Asia.
Khurana has been watching the internet spreading like wildfire in emerging markets like India. He noted how the majority of new adopters leapfrogged over desktops to sample the web first on their smartphones. For many of them, mobile phones were their primary as well as only digital medium. So they spend a lot of time using their smartphones to play games, buy products, read news, connect on social networks, and so on.
Vserv’s pivot was spurred by the voluminous data that appeared, thanks to the frenetic smartphone usage, countless apps, and various needs being fulfilled on the device.
“From telecom operators to marketers, all are witnessing the flood of big data. And they want to participate in this opportunity. Some of them want to just engage with consumers, some are seeking sales, and some want to generate transactions from users. To do any of that effectively, someone has to transform the voluminous amounts of data into smart data; in other words, make sense of the data available, mine insights from them. We are now doing that,” Khurana says.
Vserv has picked the key facilitator role in this mobile advertising ecosystem. To marketers, it will deliver sales. To app developers who are seeing plenty of users engaging with their apps, Vserv will help them monetize.
“The focus of the company has shifted to providing smart data led results, as opposed to just providing mobile advertising,” says Khurana.
The big how
Mobile-first markets are Vserv’s playing fields.
Right when it was just an ad platform, Vserv was gathering data about users – their interests, purchasing behavior, and showing them ads based on its insights. “We have over 500 million user profiles,” Khurana claims.
Then we realized that if we wanted to get smarter, we would need to expand the scope of our data sources, not just rely on the data Vserv had about these users. Only if we constantly augment the data about the users which we have, can we deliver sharper results to marketers and app developers. So we tied up with leading telecom companies in different countries.
According to him, telcos weren’t aware enough about the opportunity, and it took Vserv almost 10 months to convince them. The technology integration with the telcos’ data management platform took another six to eight months of effort. “With these carrier partnerships, what you have are two very large databases talking to each other and processing that information in a near real-time basis and using that to show the right ads. That is a huge tech problem to solve.”
The tie-ups with telecom operators will give Vserv more insights into the users. For example, it will know whether you are a prepaid or a postpaid user, your telecom usage, current account balance, and so on. If Vserv had you profiled already, with the additional data sets, the sketch gets sharper. “So now, we are able to go to a marketer and say we have smart data about these many users, and therefore we can deliver smarter ad results for you by showing the right ads to the right audience,” Khurana explains.
The evolution of adtech
As internet penetration rose across the globe, so did the consumer footprints on mobile, digital, and social platforms. Data became big data. And marketers woke up to the promise of targeted ads.
Almost a decade ago, ad networks sprouted to broker buying and selling of ad space between publishers and marketers. Marketers couldn’t track whether they got the bang for their bucks as they didn’t know who was really seeing their ads. So by 2007, ad exchanges and real-time bidding (RTB), which let advertisers bid for advertising space via an auction model and deliver the ad impressions, came up.
The shift to programmatic buying and selling has been the most dramatic phase of ad evolution. Ad impressions are won in milliseconds – matching user profiles with ads, bidding, and delivering the ad – during the time it took for the online user to download a webpage. It’s a win-win for marketers and publishers, and of course for the facilitators.
There are terrific new niche startups like BidStalk selling a white label mobile advertising platform, upon which ad agencies, advertisers, publishers, and ad exchanges can build their business to trade mobile ad inventory at scale with zero investment on technology.
There are older ones like AdNear, with unique geo-location data, adding 1.2 million user profiles every day. Backed by Sequoia Capital and Canaan Partners, AdNear focuses more on developed markets like Australia, Singapore, and Japan. Anil Mathews, founder and CEO of AdNear, calls it a big data company now, given its humongous dataset which can be sliced and diced to provide unique insights to brands looking to target specific customer segments.
See: Why 7 of the 11 Fortune 100 auto companies are AdNear clients
For Vserv, the differentiator comes from its hard-won partnerships with telcos, which give it unique access to mobile user data. “The company which understands users best, which has smart data about its users, is the company which would clearly win in this market,” Khurana says.
‘Consumers are far ahead’
Vserv’s philosophy is now centered around “smart data of the emerging billion connected users.” Marketers work with Vserv on a cost-per-click model. “We are making the click more efficient by bringing in new data sets,” Khurana says.
For example, Freecharge, one of Vserv’s clients, wants more and more people to recharge their prepaid mobile phones, direct-to-home satellite television connections, or data cards through its platform. So before showing a Freecharge ad to a mobile user, Vserv checks two things. First, is she a prepaid or postpaid user? Second, does she need an urgent recharge or does she have enough balance to tide through to the next week or more? Postpaid users and those with enough balance in their prepaid mobile wallet are not of much use to Freecharge.
For an OEM like Samsung, which is running a campaign with Vserv, it pays to know the age of the current device of mobile users. If you are using a brand new phone, it makes no sense to show an ad tempting you to buy a handset. For gaming companies, ecommerce players, and others who want to sell digital goods and services, it is important to know whether the user falls under their target audience as well as their purchasing power at that moment for that micro transaction. “Only if those two intent signals are correct, will we show the ads to them,” Khurana says.
India is Vserv’s biggest market. Roughly 35 percent of their user profiles are Indian.
Smartphone usage in India is already higher than in the US. On average, Indians spend 198 minutes (3 hours 18 minutes) everyday with their smartphones, while the average in the US is 132 minutes (2 hours 12 minutes), a recent study by telecom equipment maker Ericsson found.
Are brands in India ready to respond to this and shift a large portion of their advertising budget to mobile? Yes, Khurana believes.
“Though users are already spending more time with their smartphones than in front of television screens, the monetization of mobile is much lesser than the television medium. That has to happen. Consumers are already far ahead in the game, companies like us are behind them,” he says.
See: With $33M funding, Sequoia-backed FreeCharge pivots to targeted advertising
(Images: Wikimedia, Flickr user Garry Knight)
Here’s why this Indian ad exchange with clients in 200 countries just pivoted
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