BSE listed Intrasoft, which owns the online greetings business 123Greetings has launched its mobile site, MD Arvind Kajaria told MediaNama. The company plans to launch its invites business by October, just in time for the festive season; The second half of the fiscal year – from October to March accounts for a majority of the company’s business. 123Greetings reported a profit after tax of Rs. 98.19 lakhs, up 14% year on year, on consolidated revenues of Rs. 7.86 crore for Q1-11, up 100%. MediaNama spoke with Kajaria to better understand the company’s business, covering its cyclical nature, advertising trends, investments, its gifting business, and its plans for an online invitations business:
MediaNama: How many of your advertising deals are direct?
Arvind Kajaria: We have two sources of revenue: one is merchandising and the other is online advertising. I can’t give you the exact break-up, but my current sense of advertising would be 50% is from networks and 50% direct.
MediaNama: But how many of these are long term deals? What sort of visibility would you have on your revenues?
Arvind Kajaria:We’re projecting for a topline of Rs. 52 crores this year. The network deals are long term deals, and the direct deals are on an every day basis from direct clients. They are difficult to predict – some are for 15 days, some for 4 days, some for 30 days. Look at it as any other kind if advertising. Short term deals come and go as per clients. They’re more during the holiday season. Right now you’d see Cadbury’s for Rakhi.
MediaNama: So seasonality is a big part of your business, and a sequential comparison is not right?
Arvind Kajaria:Absolutely, because all the major festivals in the second half of the year. We’re slightly cyclical, and Q3 and Q4 would account for much much bigger number in terms of both topline and bottomline. Our Q3 (October-December) has Diwali, Christmas as well as Thanksgiving and Halloween, while the fourth has Valentines Day and the Chinese New Year.
MediaNama: What sort of trends have you seen in the US market in terms of CPM trends?
Arvind Kajaria: Last year was pretty bad. This year should be an improvement. The rates are not going not so much, but we are getting more inventory filled up and better quality of advertising. Instead of a banner ad (around $2 CPM), we’re getting rich ads (of around $5 CPM), and we’re not getting more of rich ads. So our net CPM should go up. The market rates might not go up because there is still competition. We’ve also implemented the PowerMTA this quarter. It gives us higher returns than it was giving, because it is a stopper of spam. It allows people to block their emails, block the senders, smoothens delivery, IP addresses. For the holiday time, we took about 20 minutes to send a card over Diwali. Hopefully, we should complete that in 5 minutes. The faster you finish the delivery, the faster the recipient sees the card, and hopefully becomes a sender.
MediaNama: How much of your business is from Advertising served in the US, and how much from India?
Arvind Kajaria: Generally, we’re 60:40, with 40% being for the rest of the world. We’re also trying to expand to Europe in the current.
MediaNama: How do you account the fee based revenue from gifts? At the gross level, or at the net level?
Arvind Kajaria: We do it at the gross level. If you look at any model, whether Hallmark, American Greetings or Archies – the gifting business becomes an important part of any greeting cards industry. Emotion is connected to gifting. With so many people coming in, with that emotion in mind. We see it as a natural revenue.
MediaNama: How do the margins work in Gifting?
Arvind Kajaria: It’s like any retail business – you have to tie up with a vendor, and as you achieve volumes, the margins will be impacted. Our plan is to growth both topline and margins. The margins might be low initially, but as things settle down and we get control in terms of pricing, I think he margins would be adequately matched – it may not be as high as online advertising, but with the volumes being more, in terms of actual numbers, it should equal if not beat advertising. That is what my hope is. That is what we are working towards.
MediaNama: How do you view Social Networks, particularly with invites and greetings moving to sites like facebook?
Arvind Kajaria:I’ve viewed Social Networks as a tool for traffic acquisition. I don’t view them as competitors. A substantial amount of traffic has moved to Social networks, and will continue to move. Our strategy is to get people to our website from social networks, to use them as yet another source of traffic, like Google.
MediaNama: What are your plans for the Invitations business?
Arvind Kajaria: We plan to launch it in October, hopefully by 15th October. It synergises very well with the greetings business. In the US people are open to sending e-vites, as compared to India. The work has already started on it. (ED: An invitations segment is live here
http://www.123greetings.com/invitations/ ). The monetization in the invites business is from advertising. We have an address book, which we launched recently. That is the base of our invites. Once you’ve signed on as a registered user, you can use the address book that you have at 123Greetings. We’re going to launch more features on this.
MediaNama: How are you planning to address the situation, wherein a lot of the usage in the US is shifting to smart phone.
Arvind Kajaria: We’ve also just launched a mobile version of our site, and we have services across platforms. You can send a card from an N95 across to Android. The second part of our mobile strategy is applications. This may take a little longer, because right now we’re focused on our invites program, which we have to roll out before the holiday season. We’re going to launch an app across mobile phones. We’re looking at mobile advertising for monetizing that.
MediaNama: But the issue with Mobile Advertising right now is that yields are substantially lower on mobile.
Arvind Kajaria: We don’t look at it from that point of view. We look at this from the perspective that so long as our community keeps growing, so long as our user base growing, and so long as the popularity of 123greetings keeps growing, newer opportunities will come up. We can always go to direct clientele, but as we always do, we’ll start with networks, learn the business, ensure that our technology, delivery and services are in place, and then hand it over to a sales team.