” There’s nothing right now that we’re doing in terms of changing or buying HT Media’s stake in the JV with Velti,” Velti CEO, Alex Moukas told MediaNama. Velti has two business operations in India – around three years ago, it set up a mobile marketing joint venture with HT Media, and last year, it bought Air2Web for around $19 million. Moukas also told us that Velti was planning to launch Mobclix, its mobile advertising exchange, in India. Excerpts from our interview with Moukas:
MediaNama: What are you doing in India? Why do you have two businesses in India – Air2Web and the joint venture with HT?
Moukas: We have a joint venture with HT, and have some products and customers there. For corporate and accounting reasons, investors told us we have to consolidate because the HT Media stake is a minority, we decided we have to have something more solid, with the Air2Web acquisition. We’re supporting the JV, going after customers, offering all of the services and products of Velti, and support HT Media’s customers remotely.
MediaNama: Is Air2Web supporting the joint venture with Velti?
Moukas: Of course
MediaNama: What’s the difference between the client base of the two ventures?
Moukas: I can’t really get to that level of detail. We fully support them.
MediaNama: Air2Web was always an enterprise focused venture, whereas HT is…
Moukas: Of course, we are training the local folks to support the broader set of Velti tools. After the acquisition, we started training Air2Web on the Velti tools and then incorporated Air2Web technologies to Velti’s broader offerings.
MediaNama: We’re curious about this from a conflict of interest perspective. You have Air2Web which has one set of clients, and HT has another set of clients. How do you manage…
Moukas: Carefully. I cannot really get into the details.
MediaNama: How are you going to manage this relationship of having a joint venture with HT as well as Air2Web in India? Would you buy HT’s stake in the venture, since they have 65% of the business?
Moukas: The answer is no. Well, there’s nothing right now that we’re doing in terms of changing or buying them out.
MediaNama: What’s your Indian operation like?
Moukas: The team size in India is around 100 people, mainly in Delhi, Mumbai and Chennai. We’ll be doubling the headcount in the next 18 months. We’re going to be offering our full product portfolio in India, and we’re almost 80% there. We’re opening a Bangalore office, which will be a sales office.
MediaNama: What sort of a client base are you targeting in India?
Moukas: We’re trying to do the same thing in India, what we’re doing globally. In our mind, all of our products touch the consumer. Globally we are focusing on wireless carriers, retailers, media companies, financial services companies, retailers, quick service restaurants, some entertainment. We’re not really there. We’re providing these people with the right technology to engage with their customers.
MediaNama: What are advertisers buying?
Moukas: You’d be surprised. A lot of times, agencies are more set in their ways, but CMO’s and their customers are more open minded. Our India revenues are set to grow 50% in a year, compared to last year, even with the regulations. The revenue contribution was around $3 million for the quarter that we consolidated, and around $8 million for the year. We should see 40-50% growth in a year.
MediaNama: Where is the growth coming from?
Moukas: They are doing more of what they were doing before, and they’re doing new stuff.
MediaNama: Air2Web was primarily SMS based…
Moukas: SMS is a critical part of what we’re doing. We have introduced a smartphone element into everything that we do there. If you look at the number of smartphones in India, it’s a huge number. It’s two major european countries put together. Even on the tech side, we are introducing our newer thinking in terms of charging for results, as opposed to charging for messaging. Not just the communication layer, but helping them drive results. If you look at what we’re doing for a car manufacturer, it’s about how we bring more qualified leads into a dealership. It’s not just communication and optimisation. It’s about allowing the consumer to interact.
MediaNama:Did the TRAI guidelines impact you?
Moukas: Somewhat. We saw a dip in a quarter, but it’s not affecting us that much. When I first saw the regulations, I was like – oh great- because it was right after we announced the acquisition. There was a small dip in that part of the business but the remaining Velti platform helped us make up for the dip in the revenue because it’s a business with much higher margins.
Note: Moukas showed us some examples of campaigns that the company has run internationally. In addition, the company provided us with a presentation on three initiatives. Two of them were CRM initiatives, one for HDFC Bank and another for Tata Motors, while a third was a promotional campaign for Hero Honda, a white-labeled Cricket game (named Hero Honda Kricket Ka Karizma) that allowed users to register and play the game through the Hero Honda website, facebook application and mobile, which it says got over 75000 registered users during the Cricket World Up in 2011.
MediaNama: Most of the (international) campaigns that you’ve shown: is it too early in India for what you’re trying to do on mobile? How aware are media planners of your platform?
Moukas: There are two different things – Mobile Advertising and Mobile Marketing. Advertising is banners and marketing is how you engage with the consumer once they click. A majority of what we do happens on the post-click marketing side. Because our customers are big companies, they are spending a lot of money on traditional media. Which means that we always get many more customers to come to our campaigns, because of a mobile call to action. Media planning is a small piece of it, but we need them to insert mobile call to action. In general, in the mobile channel, customers have a much higher expectation of privacy and you cannot be spamming customers. Consumers need to self-select themselves, and they do that through traditional advertising and through mobile ads. It has to be pull, as opposed to push. The pivot is that you will see push go dramatically down, and pull will drive. Our pitches are to build the right balance to have a big pull component.
MediaNama: Were you a little too early in the market?
Moukas: Obviously, we have a certain set of chips to play with, to make our investments. In a market that grows so fast and is as strategic as India, we’re not losing tons of money, we’re actually making money, you cannot be too early. It takes a lot of time to penetrate a customer base. From my side, in terms of where we should direct our investments, the moment we decided that India was critical to our growth, the earlier we could go there, the better.
MediaNama: Is there some sort of a ruboff, because you have several companies who are international clients that have Indian branches? Or are Indian companies too set in their ways?
Moukas: That’s a good scenario. If people are happy with their campaigns…they don’t force somebody, but they usually give a strong recommendation. It could be quite helpful.
MediaNama: One of the issues with banner adverting has been that there aren’t enough mobile websites. One of your products allows people to create websites. How is that working out?
Moukas: That’s critical. You look at Google’s earnings calls, they say that only 10% of the brands right now have mobile optimised sites. As that increases, mobile advertising will increase. People were buying banner ads, but there were no landing pages. It’s a big part of what is happening in the market right now.
MediaNama: What’s your client base in India? Are they coming from agencies?
Moukas: A couple of hundred. We have financial services, mobile operators as brands, who want to increase ARPU, reduce churn. It’s 60-40: 60% of our base is direct, 40% is indirect, globally. We don’t give a local breakdown. It used to be 100% direct, and we didn’t have an indirect channel, a few years ago.
MediaNama: This market is transitioning from being an SMS market to a mobile web market. Have you seen a shift?
Moukas: The market on the display side is growing much faster, but you would expect that to happen because it is a small base, but the overall market is also growing. You are seeing commoditisation in SMS pricing.
MediaNama: On the mobile web front, do you see more focus on the performance side, or is it more about branding?
Moukas: It depends. You see people from the ecosystem buying inventory, so it’s really some of the inventory and has been bought by the developers themselves. As the market matures, you see more brands coming in. We’re seeing less performance based ads – cost per installation, clicks.
MediaNama: Impressions would be a branding metric…
Moukas: Even that is changing. We’re seeing that a lot of the major brands are not only interested in reaching out to random consumers, instead of looking for relevant consumers, to make sure that there is a right audience. You click on an ad and a game pops up, and you have to play the game and win the game before you’re deemed worthy to go to the landing page. We did that for Toyota, and they only wanted to target young people. Some of the brands try to measure people, and try and buy $15 for a qualified lead versus $15 CPM.
MediaNama: What kind of data do you collect for an advertiser?
Moukas: Most of the data, we get from the advertiser themselves. A majority of our business is not about the lead acquisition business, but managing the existing relationship between brands and consumers, and in helping their consumers spend more money and stick around longer. There is already a CRM system there. Most of the data, we sell with the advertising.
MediaNama: What makes India interesting?
Moukas: The size, the evolution towards smartphones, makes it very interesting. You also have some consumers using mobiles in different ways all around the world. It’s a long answer, but what you have is high levels of illiteracy, tons of different languages which require some sort of voice component in the mix, and you have shared resources in terms of phones.