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Why ValueFirst Acquired SMS Social Network Tagg.in

ValueFirst, a Mobile VAS company, has completed its third acquisition this year by buying Tagg.in, an SMS based mobile social network/publisher. Tagg.in appears to be similar to SMS GupShup, allowing the formation of mobile communities.

Kumar Apoorva, COO, ValueFirst, said that ValueFirst has acquired a majority stake, and Tagg.in’s initial investors still retain a significant amount. He declined to comment on the amount, but said that this is an all cash deal, like the previous one with PacketShaper. ValueFirst is still looking at 2-3 other opportunities for acqusition.

Tagg.in has around 2 million opt-in users, and around 7-8 million unique “touch points” (including invitees to the group). From a revenue standpoint, he confirms what we suspected: “Revenues were negligible for Tagg, primarily from managing branded groups, a few campaigns with companies like Spykar Jeans, as well as some paid groups.” The company’s headquarters will shift to Gurgaon, where ValueFirst and SpotOn operate from.

Tagg.in has at least three TV brands on board: MTV India (5497 subscribers), NDTV’s LumiereMovies (8238 subscribers), and UTV’s youth brandBindass 152,501 subscribers). It was the official partner for MTV Roadies for two seasons. At present, it has limited its user base to 20 SMS’ per day, probably trying to control costs. The company was founded by Ashish Deora, promoter of BSE listed IPTV company IOL Broadband (now IOL Netcom), and Vatsal Desai (CEO of the company). In October last year, ValueFirst acquired VAS company CellNext (details), and followed it up by acquiring products company PacketShaper (details) last month.

Why has ValueFirst acquired Tagg.in?

Our take is that the Tagg.in deal is primarily an inventory acquisition for serving SMS advertising from ValueFirst subsidiary SpotOn Media, which already operates an SMS based alerts service Alertrix. SpotOn serves advertising on SMS updates to mobile subscribers, and Tagg.in brings in a ready-to-monetize user base. Additionally, there is clear synergy on the cost side: ValueFirst’s Bulk SMS business will help reduce the cost of serving for Tagg.in.

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Kumar Apoorva, COO, ValueFirst says that it’s not just an acquisition of advertising inventory, saying “We’ve realized that consumer led communities have had traction in India, and we want to do 200-300 million impressions per month. We expect opt in subscribers to 15 million by the end of the year, because we have SMS capacity.” SpotOn itself ranges between 50-100 campaigns a month. “We don’t have to create a separate burn for a sales force for this: ValueFirst sales can generate the leads, and the business is completely handled by SpotOn.”

Tagg.in has been a ValueFirst customer for over 18 months, and “spending actively on building a community, doing almost 140-150 million messages a month at their peak, before they decided to cut back. “This is a starting point. We saw social media consumption as a key trend, and we wanted to get into the consumer space. Tagg has seen a brisk build up of community, and was opt-in driven. We believe that we’ve been able to advertise inventory better.

On Mobile SMS Advertising; Network-Publisher Conflict of Interest?

But why would ValueFirst need Tagg.in when it already has Alertix? Apoorva says that Alertix is purely like MyToday, content on the go, not an interaction point, a group or a blog. Tagg is about interaction, and this is the acquisition of a potential (mobile) media property for the company. “We have traction on the enterprise play. If tagg.in is able to get 15 million users, and it goes into the league of a way2sms, 160by2. The value lies in the community,” says Apoorva.

One challenge that we foresee for SpotOn, as an SMS advertising network, would be remaining independent while serving inventory across its owned and operated site Tagg.in, and the rest of its network. Apoorva doesn’t disagree, but says that clients don’t have issues, and the medium hasn’t evolved yet. “Mobile advertising didn’t have the notion of remnant inventory for a while, which is when we launched Alertrix. Now that has changed, and we offer clients both our inventory and remnant inventory. It’s a question of how the medium is reacting. The whole problem is around mobile publishers who dont have the concept of a blind network.”

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Written By

Founder @ MediaNama. TED Fellow. Asia21 Fellow @ Asia Society. Co-founder SaveTheInternet.in and Internet Freedom Foundation. Advisory board @ CyberBRICS

MediaNama’s mission is to help build a digital ecosystem which is open, fair, global and competitive.

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