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How Indian Firms Are Trying To Survive Global Slump In Ad Tech

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How Indian Firms Are Trying To Survive Global Slump In Ad Tech

Companies such as InMobi Technologies Pvt. Ltd and Tyroo Technologies have shifted to enable e-commerce through product discovery, a move that puts them in direct competition with Google and Facebook. Photo: Bloomberg

As Facebook Inc. and Google Inc. continue to dominate digital advertising sales, Indian ad tech companies are betting on two diverging and unproven strategies to try and survive the onslaught from the global technology giants.

Companies such as InMobi Technologies Pvt. Ltd and Tyroo Technologies have shifted to enable e-commerce through product discovery, a move that puts them in direct competition with Google and Facebook.

Other ad tech firms, such as Adadyn Technologies Pvt. Ltd, are improving technology and making products to enable easier automated buying of ads, called programmatic advertising.

It’s not clear which strategy, the commerce-led ad tech or programmatic advertising, will yield the results and allow the Indian firms to thrive amid a global contraction in ad tech.

The last two years saw companies like AOL Inc., Google and Yahoo! Inc. and Facebook Inc. aggressively buy smaller firms. AOL, which itself was bought out by Verizon Communications Inc., bought five ad-tech companies in this time frame. In a telling 2015 global mobile ad-sector landscape chart by LUMA partners, an investment bank that advises digital media firms, of the 80 firms listed under “ad networks,” 29 have been acquired, and two have been shuttered.

With mobile-first becoming a norm in India and other emerging economies, ad tech companies came under pressure to evolve, said Siddharth Puri, chief executive of Tyroo Technologies, a unit of SVG Media, which is one of the companies that is developing products in the commerce space along with InMobi.

Eventually though, “commerce and programmatic buying will converge over a period of time. It cannot remain separate,” said Rutvik Doshi, director at Inventus Capital Partners, a venture capital firm which invested in Vizury.

Global web advertising revenue is forecast to grow to $239.9 billion in 2019 from $135.4 billion in 2014, according to consulting firm PricewaterhouseCoopers LLP. Mobile advertising is the key driver of growth around the world, with advertisers expected to spend $64.25 billion worldwide in 2015, an increase of nearly 60% over the previous year, according to Technology Business Research, Inc.

Earlier this year, InMobi launched Miip, which tracks users’ browsing habits across various mobile apps and shows ads in the form of text bubbles instead of the traditional display ads. It is a big bet for the company that is backed by SoftBank, Kleiner Perkins Caufield and Byers, and Sherpalo.

Adadyn has a different approach. Its CEO Kiran Gopinath says he would rather focus on making audience management for marketers easier and better, something they will always need. He claims Adadyn’s self-serve platform makes it easy for marketers with little or no technical knowledge to manage their ad campaigns.

Other companies that have products in the same space include Komli Media (a unit of SVG Media), Vserv Digital Services Pvt Ltd., DataWrkz Pte Ltd, Kratos Ads Pte Ltd, and Vizury Interactive Solutions Pvt. Ltd.

Programmatic buying cuts out middle-men and the need for extended sales teams. “From a risk point of view, the shift to programmatic means you’re opening up yourself to bigger competition,” said Doshi.

Right now, the problem with programmatic advertising is how one deals with issues such as excess inventory (which drives down prices), or fraud inventory (there is no simple way to ensure the ads are being seen by real humans and not bots as it is completely automated). For all its claims of democratizing advertising, the whole process is also very complex.

Despite the troubles, “pure programmatic-based platforms will always be important because that’s where you’ll get a larger share of eyeballs,” said Karan Mohla, executive director of IDG Ventures India, an investor in ad-tech companies SilverPush Inc, Vserv, and Adadyn.

The challenge for these firms is to evolve with the market.

“One path is a programmatic path, the other is commerce; eventually when you have to converge will you be able to?” asks Inventus’ Doshi.

Globally, ad-tech has been in a bit of a slump with stocks of the listed companies plunging over the past year, including those of two of the industry’s biggest companies—Rocket Fuel Inc, and Millennial Media Inc—in part due to the continued dominance of Google Inc. and Facebook Inc. in the digital advertising domain, and Apple Inc.’s announcement of support for ad blockers in its latest mobile operating system iOS 9.

In India and other emerging economies though, with the wealth of data becoming available with millions of consumers coming online through smartphones, companies are optimistic about the opportunities that advertising on mobile offers, and are creating products either focused on mobile, or that are cross-channel at the very least.

That’s attracting more companies to the business in India.

Mobvista International Technology Ltd, a mobile advertising and game publishing firm, is planning to invest as much as $100 million in India in three years. Cheetah Mobile Inc. launched its own ad-tech platform here in September.

“(Those who bet on programmatic) have taken the technology route, but InMobi and others have taken more like a marketplace approach. It’s a different play and both have their own place in the ecosystem. If there is no technology innovation then also the ecosystem will saturate,” said Manish Singhal, an angel investor who has invested in AdSparx and AdPushup, which make technology to increase ads’ efficiency.

Resource By:- http://www.techgig.com/tech-news/editors-pick/How-Indian-Firms-Are-Trying-To-Survive-Global-Slump-In-Ad-Tech-40530

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