In the world of technology, advertising is no stranger to it. In fact, in the last few years ad tech and mar tech companies have found a strong footing with the former providing technology driven solution for targeted communication. Claiming ROI focussed business model for advertisers, Singapore-based global ad tech company, Affle is one such company in the ad-tech space which allows companies to create targeted communication for mobile.
Affle (India) Ltd reported a 21.4% rise in its profit after tax to Rs 66.4 crore in the April-June quarter of this fiscal. The company promoted by Singapore-based Affle Holdings had registered a profit after tax of Rs 54.5 crore in the first quarter of FY23, Affle India said in a release. The consolidated revenue from operations grew 17% to Rs 406.6 crore in the reporting quarter as compared to Rs 347.5 crore in the year-ago period. In an interaction with BrandWagon Online, Anuj Kumar, co-founder, COO and CRO, Affle talked about the company’s profitable CPCU model, advertising on connected TV, innovations in the adtech space, and more. (Edited Excerpts)
What is Affle’s ROI-linked CPCU (cost per converted user) business model? How has this turned the tide for Affle in terms of revenue?
We started our business when mobile itself was in its infancy stage. We have seen the industry evolve and accordingly, our business models have also kept evolving. But, the big turning point was around 2014-15, which is when a lot of people started transacting on the mobile phone, whether it was e-commerce, mobile payments, and others started gaining popularity. And now in 2023, India would possibly have the highest penetration for a lot of these services. This shift in consumer behaviour lead to a transformation in advertisers’ needs. The mobile device was no longer solely a tool for brand awareness; it became a conduit for transactions, registrations, and conversions. This evolution prompted the development of our CPCU (Cost Per Converted User) model. We recognised that on the mobile screen, everything became more measurable, in stark contrast to traditional screens like TV ads.
We thought what if we can have a model for the advertisers where we do all the hard work of targeting the right user, showing the right creative message, and charge the advertiser only for the conversion, because finally, anybody who spends money on marketing does not do it, because they love to spend that money but because they are expecting certain Return-on-Investment (ROI). Measurability is what drove the CPCU model. And today, that is the flagship business model for Affle.
If you see our financial performance, over the last five years, revenue and profits have all grown by over five times. This has largely been made possible because of the uniqueness of the model and how advertisers build a lot of comfort around that. Because now they don’t look at advertising as an input cost but look at advertising as a way to derive ROI and measure the important business metrics, which is what in the first place they started advertising for.
According to me, this business model has been uniquely successful because of the changes happening around the ecosystem, and how our technology has evolved to play a greater role to derive greater conversions when more and more time spent is happening on the mobile Internet.
The company promoted by Singapore-based Affle Holdings had registered a profit after tax of Rs 66.2 crore in the first quarter of FY24, you claimed to have achieved its highest quarterly revenue run rate ever – what worked in your favour? How do you plan to maintain the momentum?
In my perspective, our strategic collaborations with advertisers have played a significant role in our success. They highly appreciate our approach, as it offers a more risk-free advertising solution. This trust is evident in their willingness to allocate more substantial budgets to our platform compared to many traditional media channels, where growth is relatively sluggish. Fortunately, our growth has been propelled by this trust. Traditionally, Affle primarily focused on mobile advertising. However, in recent years, we’ve expanded our scope to encompass the entire cross-device customer journey, spanning mobile, connected TV, digital, and out-of-home advertising. Our objective is to drive measurable impact for advertisers, where impact translates into conversions, such as sales.
Consider a typical consumer’s day – exposure to different types of ads on various devices. We recognised the need to construct an integrated consumer journey that leads to conversions. This approach has gained significant traction in the Indian market over the past three years, amplifying advertiser budgets. They are now witnessing impact not confined to a single medium but rather comprehensively measured through conversions, which underscores our key strength.
You have rolled out the CPCU model on Connected TV globally, with household sync capabilities, empowering advertisers to reach users across devices – how is this going to be a game changer?
Connected TV (CTV) plays a pivotal role in our business model. What sets CTV apart is that, unlike traditional TV, users don’t typically interact with ads by clicking on a remote. It’s not an intuitive user action, and while technically possible, it’s rarely practiced. To bridge this gap, we developed a technology called ‘household sync.’ This innovation allows us to display ads on CTV and then retarget the same households on their other connected devices. This means advertisers can launch high-impact campaigns on TV and subsequently amplify them on mobile devices, where user engagement is more straightforward. This process provides a comprehensive view of the advertising funnel, particularly when CTV is used to enhance brand engagement. Advertisers can monitor actions across multiple screens, delivering measurable impact.
We’ve witnessed good outcomes, not only from app-based companies accustomed to measurement but also from legacy brands, including fashion brands and others that typically don’t employ conversion or full-funnel measurement. Our technology has expanded the CTV market, empowering advertisers to track and optimize their campaigns effectively.
Some of Affle’s platforms include Appnext, Jampp, MAAS, mDMP, mediasmart, mTraction Enterprise, RevX and Vizury- how do you utilise these platforms? What are the different sectors where these platforms find their use cases?
Affle’s approach involves tailored platforms designed to address distinct digital advertising needs. Rather than pursuing a one-size-fits-all strategy, we believe in specialisation within specific domains. For example, mediasmart specialises in connected TV, while Appnext focuses on on-device engagement through integrations with OEMs and carriers. Connecting these platforms is a critical layer of data management, distinguishing between good and bad data.
Good data is invaluable in predicting which ad suits each user, while combating ad fraud is equally crucial. Our technology and algorithms, encompassed in the good data and bad data layers, are dedicated to identifying and eliminating fraudulent activities. Each platform has a unique use case, maintaining its distinct brand identity and dedicated team to ensure expertise in its respective domain. This specialised approach is more effective than attempting a unified platform for all use cases.
Our platforms predominantly cater to the EFGH categories, encompassing Entertainment, e-commerce, FinTech, gaming, health tech, hospitality, and travel companies. These digital-first entities leverage our platforms for user engagement. Interestingly, traditional legacy companies are also venturing into the app domain to establish a direct consumer front end, making our platforms more app-centric.
However, mediasmart extends its reach beyond apps, especially in areas like connected TV and Household Sync Technologies. This allows us to actively engage with a broader spectrum of industries, including consumer packaged goods (CPG) and fashion brands, where apps might not be the primary interface, but advertising plays a pivotal role in driving customers to physical retail stores.
Currently, 90% of our business is derived from the EFGH categories.
A large volume of your revenue today comes from markets outside India. Which ones are key performing markets for the company?
India remains as the single most important market for our company and that is why we are interested in India. But if you compare India and rest of the world, so markets like Southeast Asia, Latin America, Middle East Africa, are where traditionally our business has been very strong. We have moved into developed markets like North America only recently. But even today, emerging markets is the mainstay of our business and within that India is our number one market, both in terms of priority and current revenue.
What are the recent innovations in the martech and adtech space?
A significant ongoing transformation, spanning the past few years, is the rise of programmatic advertising. In the Indian market, programmatic advertising has emerged as a fundamental element of digital advertising. However, the intriguing aspect is that all forms of advertising are progressively adopting a digital essence. Even TV is transitioning into connected TV, enabling programmatic interventions. Likewise, out-of-home advertising is evolving into digital out-of-home, accommodating programmatic strategies.
Another noteworthy advancement involves technologies like generative AI. Ad tech has long employed artificial intelligence. For instance, in a conversion-focused business like ours, data science is pivotal. It’s about forecasting which users are inclined toward specific products or offers. Precise prediction by our data science algorithms translates to impactful results with minimal impressions. Our continuous investment in these technologies has facilitated billions of connected users.
Thirdly, the emergence of connected TV (CTV) commands attention. CTV is reshaping the traditional TV landscape, which has historically dominated advertising, especially in markets like India. Rapidly, consumers are severing cords and embracing streaming content, gradually drifting away from scheduled broadcast programming. This transformative shift is redefining how advertising engages with audiences.