Global ad-tech company Affle aims to create differentiation for itself by offering advertisers an ROI-focussed model. Anuj Kumar, co-founder and chief revenue and operating officer of the company, talks to Christina Moniz about its innovative cost per converted user or CPCU model, its focus on emerging markets and trends that will drive digital advertising in the near term. Edited excerpts:
With measurability becoming an important concern for digital advertising, how is Affle’s conversion-led model creating differentiation?
Affle has been in the digital and mobile advertising business for over 17 years now, but we have consistently stayed relevant over the years. What is differentiating us today is that we are a conversion-led advertising company. Although digital advertising is far more measurable now than it was a few years ago, it often continues to be sold using old world metrics such as impressions and clicks. The difference we are bringing to the industry is through our business model called cost per converted user (CPCU), which is completely ROI focussed. We are able to do this using a strong data management platform that we have built, which allows us to make predictions about the kind of product a consumer may be interested in purchasing. That way, only the most relevant ads can be shown to a user, making the chances of conversion far greater. The advertiser pays us only when the conversion happens.
This model has in fact transformed the advertising function in a company, which means advertising will now no longer be seen as cost to the company but rather as a revenue line item. Our CPCU revenue rose by 14% year-on-year to Rs 345.4 crore in Q3 of this fiscal, and the CPCU business recorded a strong momentum, delivering 6.8 crore converted users in Q3 FY23, an increase of 15.9% year-on-year.
In a cluttered ad-tech and martech ecosystem, who is Affle competing with?
Anyone who is competing for a share of the advertiser’s digital advertising wallet is our competitor. This could even be platforms like Google and Facebook, which we also partner with. For our sales team therefore, the objective is to always gain a larger share of the brand’s digital marketing spend. In India, we work largely with digital-first brands across categories like e-commerce, ed-tech, entertainment, fin-tech, food tech, FMCG, government, health tech, hospitality and travel. We have done a lot of work with companies like Swiggy, Spotify, Zee5, Tata Neu, Amazon, Flipkart and many more.
A large volume of your revenues today comes from markets outside India. Which ones are key performing markets for the company?
Over 60% of our business comes from international markets, though India continues to be the single-largest as well as our anchoring market. Affle’s journey has been very interesting, because we have always focused on emerging markets. Historically, you will notice that most digital-first, global companies tend to launch in the West, but seldom in emerging markets. Markets within South East Asia such as Indonesia, Philippines and Malaysia, the Middle East and Latin American regions like Brazil and Argentina are very important to our growth.
Though we have started doing business even in developed markets in Europe and the US, we are a smaller player there and we intend to continue our focus on the emerging markets. From a population standpoint, that is where a good part of global population resides. Moreover, these are rapidly growing markets and more resilient to challenges like recession. Our business model is also far more compelling to marketers in these countries, since they have limited resources and greater ambitions.
In 2022, trends like metaverse were expected to dominate the media and advertising industry. What factors do you expect will drive digital advertising growth during this year?
We are very bullish about the opportunity in connected TV (CTV), which is a fast-growing space. The cost of streaming is reducing and the quality of content on streaming platforms is way ahead of what broadcast TV offers. With Jio also pushing digital penetration with the IPL, we expect CTV to gain an impetus. The growth of AI is a very promising trend too, and we expect data-led advertising to become more impactful with AI. While we may not see things change rapidly in 2023, over the next three years or so, AI will definitely play an integral role in digital advertising.
The third area of growth is likely to be programmatic advertising, which allows you to choose the user to whom you wish to target your ad. Aside from CTV, we expect connected devices to become an emerging trend. Nearly every device a consumer uses will eventually become connected to the internet, from refrigerators to wearables. These are creating new touch points for brands, and are likely to be more relevant in the years ahead. As users move to new media, marketing dollars have to move along with them.