Thursday, 27 August 2015

Indian ad tech companies try to secure footholds in US, Japan

Komli Media Inc., one such ad technology firm, is looking beyond its markets in India and Asia-Pacific




Companies developing digital solutions, which link online advertisers with publishers of desktop websites, are increasingly targeting developed countries that had previously been perceived as tough markets.
Komli Media Inc., one such ad technology firm, is looking beyond its markets in India and Asia-Pacific, said Mukesh Agarwal, vice-president, product and engineering, Komli Media.
“The US, Japan, China, South Korea, Germany are a few of the top markets in terms of digital ad spend, and we will be evaluating these markets over the next 6-12 months,” Agarwal said.
Earlier this month, Komli sold its South-East Asian operations to Malaysian telecommunication firm Axiata Group Bhd for $11.25 million.
Last year, Adadyn Technologies Pvt. Ltd, another ad technology firm that initially served clients in India and other Asian markets, left the region to focus solely on the US.
According to its founder and chief executive officer (CEO) Kiran Gopinath, Adadyn’s revenue grew three-fold for the year ended 31 March after it exited Asia.
Adadyn is also improving its mobile technology to prepare for a re-entry into emerging markets a few years later and for a gradual shift in the US advertising spend toward the mobile.
Smartphones are preferred medium of commerce and Internet browsing in countries such as India compared with the US.
Spending in the desktop and mobile ad markets in the US alone are much larger than in India.
In 2013, desktop digital ad spending was $32.44 billion while the mobile accounted for $10.67 billion, according to a 24 March report by eMarketer, a market research company.
This is expected to change in 2015 with mobile accounting for at least half of the total digital spending in the US.
In comparison, India’s mobile internet ad spending is estimated at only $173 million in 2015, though it may increase to about $1 billion by 2018, according to the report.
“Ad tech players focusing on the PC/destkop need to focus on developed markets, like the US market, as the Indian market is very small,” said Manik Arora, co-founder and managing director, IDG Ventures India.
“However, going after the US market requires tremendous differentiation and courage, given number of competitors there. Mobile ad tech players have more flexibility in choosing markets, as there is rapid growth in emerging markets like India and South East Asia with limited competition,” said Arora, who is also a board member at ad technology companies Adadyn, Vserv and Silverpush. “The US SME (small and medium enterprise) market is massive, and traditionally, only few companies have catered to SMEs because tech know-how and adoption among SMEs was low,” Adadyn’s Gopinath said.
“But that is changing; their willingness to experiment and compete with larger players is on the rise. It is very important to keep the consumer interest and trust at the core of the product. SMEs are lucrative customers, but to be successful, you need to create products that are feature-rich and yet very simple for SMEs to use at a price point they can afford.”
Even though India and other emerging markets are the fastest growing digital advertising markets, they still represent a lower single-digit percentage share of the global advertising market, said Komli’s Agarwal, adding that “it’s important to have presence in one or few major advertising markets like the US, China, Japan, South Korea or Germany as an ad tech company”.
Emerging markets remain a long-term plan for firms, such as PubMatic Inc., a marketing automation software platform.
“Because advertising tactics are also less sophisticated, marketers need a significant amount of education (about) advertising technology,” said a spokesperson for PubMatic.
Ankit Oberoi, a co-founder at Ad PushUp, an ad placement optimization firm, explains why the US market is more lucrative.
Revenues per ad impression from markets, such as the US are higher when compared to India. “So, the higher revenue allows us to build our billing model also around that and allows us to be flexible, and at the same time, charge more for those publishers because the value which we unlock for them is also in that same proportion,” he said.
In the Indian market, digital advertising accounts for only 10% of the overall ad expenditure.
However, Manish Vij, founder CEO of digital media network SVG Media, said mobile advertising will account for about 50% of the total ad spend in India by 2020. The digital ad market is growing at nearly 40%, he added.
For ad tech start-ups from the emerging economies, “North America tends to represent the largest opportunity and a local sales presence in major DMA (Direct Marketing Association, a national trade organization), such as New York City, is becoming a requirement,” said Seth Ulinski, practice manager/principal analyst focusing on ad tech at the research firm Technology Business Research Inc.
Companies such as InMobi and Ad PushUp argue that there is no reason for a company to limit itself to one region if its platforms are good enough to be taken to a larger audience in mature markets.
“Building the technology is the most challenging part in this business; if you believe you have succeeded in that, you should definitely leverage that asset and go global,” said Abhay Singhal, co-founder and chief revenue officer at InMobi.

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