vservMobile ad exchange Vserv recently released its annual growth report in which the company claims to have grown 82% Year-on-Year (YoY) in terms of ad inventory, after serving more than 2.4 billion ad requests on a daily basis. The number of clicks on ads has also increased two folds, with most of the growth coming from ads on mobile apps. We spoke to Vserv co-founder and CEO Dippak Khurana to understand more about its business, focus areas and challenges:

On ad rates in India

“In India, CPC rates starts at 2 cents per click and goes up to 15 cents a click. For advertisers seeking downloads, the Cost Per Install (CPI) varies from 30-40 cents to as high $1 in India” Khurana says.

dippak_khuranaIndia is still the largest market for the company with 33% of its customers, followed by SE Asia with 20%. Latin America accounts for 18-19% and Middle East and Africa form a combined 15%. South Africa is however the most lucrative market right now, where the rates are as high as 40-45 cents a click. In Latin America CPC rates starts at 12-15 cents a click, while in SE Asia it is 7-8 cents a click.

“India is in that way the lowest when it comes to ad rates. That’s to do with just the cost of media here. For us we’re clearly seeing growth across all  key regions as mobile internet adoption is going through the roof in all these markets,” he says.

For the ad rates to increase in India, the demand from advertisers need to exceed the supply, this has not happened yet.  “Supply of media is increasing by the day in India and more pages are being browsed. The supply of media is ramping up at a crazy pace and the advertisers are also scaling up, but in short term it won’t reflect on these rates. As supply starts settling down, and once we have 300-350 million users, the growth of supply will saturate. However, growth of advertiser will continue ramping up. Till we come to such an equilibrium where advertiser demand is increasing faster, only then will it (ad rates) increase. Till this happens, eCPM will remain more or less flat as it has in the past three years,” Khurana adds.

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Who advertises in India

“Electronics is the most active vertical in India, followed by automobile and FMCG. The latter is still catching up in India. Some categories are more active than others when it comes to adoption of mobile platform. FMCG for example, is ahead in SE Asia by 5-6 months in comparison to India in terms of adoption,” Khurana says.

“There are three categories of advertisers. The first group are the conventional brands, who opt for mainstream media first to advertise. The second category are online first customers, such as e-commerce players and OTA services. These companies are getting most of their traffic from mobile, but they are now trying to increase the number of transactions that happen via the platform. For most of the players in this category,  only 15% of the transactions happen on the mobile and the rest are still from a computer,” he says. It is worth noting that Snapdeal had announced that 50% of its transactions came from mobile.

The third category consists of mobile first advertisers, who have carrier billing services and in-app purchases enabled. “For these companies, the only way to attract customers is through advertising since carriers are not doing it for them any longer. Earlier the discovery part was managed by the carriers who used to charge a higher commission per transaction, but this has changed since the TRAI regulation,” Khurana adds.

 

Tie-ups with more telcos

The company had tied-up with Airtel last year for AudiencePro integration, that would let the company target audiences better. Khurana say that the deal with Airtel is going quite good and the company is now extending the partnership to other carriers. Vserv is in the process of rolling out the service with Vodafone, Aircel and RCom now. It is also creating similar partnerships with telcos in Middle East-Africa and SE Asia. “This is a new concept for most telcos so it is taking some time to get integrated into their system,” Khurana says.

 

Operator billing

“We believe that app stores like Google Play will very soon enable carrier billing as they will need to dip into a larger wallet. We believe so, since if you look at the new Nokia X store, all those Android apps are connected on Nokia Store. All those apps have in-app billing with over 200 carriers globally. It’s a tricky position between Google and carriers. These operators might not see Nokia as much of a threat, as opposed to Google where it’s an interesting dynamic,” Khurana says.

Khurana says that the company doesn’t want to get into operator billing and that it wants to concentrate on providing efficient customer discovery, rather than be on the transaction side. That said, the company had tied-up with Vodafone to add operator billing to its AppWrapper product. “AppWrapper offers multiple SDKs for monetization, tracking and analytics. On the monetization front, we support in-app purchases via operator billing through Fortumo. We tied-up with Fortumo for the same 3-4 months backWe also offer API support for in-app billing via Google Play, Samsung API and Nokia billing.,” he says.

“So what is happening is when developers uses AppWrapper, he is not restricted to a single channel for monetization. So we are providing multiple options for developers,” Khurana adds.

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On premium ad inventory

The company says that India accounted for 27% of its premium inventory in its annual report. Premium inventory are essentially Vserv’s rich media format ads available for app developers and publishers.

“We’ve seen an increase of 3 fold in absolute terms and we expect this to increase to 32% in a year. We are seeing good adoption for premium ads in India, Indonesia and Brazil, as it resonates well with the brand advertiser as opposed to performance advertiser. Native ads will not be included in this category even when we launch it, that will remain a separate category,” Khurana says.

He also said that 70% advertisers on the platform are performance advertisers as of now. “We are seeing growth of customers in digital category at a very good pace and this is is only expected to increase. App developers are making money from ads and reinvesting it to get more users,” he adds.

 

On Native ads

The company is launching native ads for news and information category services in this quarter, after which it will roll out the feature to utility category. “Native ads as an ad unit has been around for a bit, it’s just that it has got repositioned a bit. Now there is a lot of focus and talk around it. Typically, a native ad will have a user experience that is specific to a site. In case of media sites, they will be like advertorials in a newspaper,” Khurana says.

“Taking the same philosophy, native ads give will be ad units with the look and feel that is similar to that of the property. For us we had launched app wrapper with such units, for launch and exit of apps. But those were used mostly by gaming customers. What we are really doing now is taking it further and taking native to non-gaming assets.

“Potentially if I go to Medianama, we could provide different elements of the ad and let the publisher place elements — thumbnail, call to action, text, multiple color templates around it — in a way that is configurable by the publisher. This is about getting seamless look and feel to my property, so you come extremely close to making the ad unit look closer to the property. It will provided in an automated tool

The company is working on adding native customization support for each segment as the needs varies for each category. “Native ads for information related content will be different from a site that has cricket scores and it will be different for a music app,” he says. Once the company has figured out the level of customization they need to offer for various categories, it will provide these ingredients in a flexible format to gaming and non-gaming services.

The company had created mobile apps for several publishers as part of an ‘appification’ programme and this feature should be on these apps when they launch native ads according to Khurana. “We have server-to-server connection with other non-appification publishers as well, so even they should have it within a month from launch,” he adds.

 

 

On becoming an ad exchange

“The company introduced Real Time Bidding (RTB) in the last couple of months and that’s when it shifted to being an ad exchange from an ad network. The main difference from the operational perspective is that ads now work on CPC and impression level. The other big difference is that the company’s internal sales team competes with other sales channels such as its Demand Side Partners (DSP). Advertisers appoint DSPs for programmatic buying of media, so they are an extension of the advertiser for the company,” says Khurana. It is worth noting that 14% of the inventory is RTB enabled.

Adding DSPs helps the company scale faster according to him. “Doing everything internally is not efficient; we can’t hire 100 sales people and this way we’re bringing in more sophistication to empower more people,” Khurana says.

The company claims to have reached out to 421 million users in India, Latin America, South East Asia, Middle East and Africa. “Vserv has sales team in some countries in these markets and DSPs helps us in countries where we don’t have a sales team. Our ads were served to people in 160 countries overall,” Khurana says.

There are some clear where we’ll have our own sales force. Vserv has established sales teams in India, 6 countries in SE Asia, South Africa, Dubai (for Middle East and Africa). It is also planning to set up teams in Brazil and Mexico before the end of the year. These teams cater to local advertisers who want to reach people in their country via Vserv platform. The company also has global sales team which works with global advertisers. These teams are based in San Francisco, London and Mumbai.

Corrigendum: An earlier version of the story incorrectly stated that CPI meant Cost Per Impression. The error is regretted.