I expect to see more acquisitions in the next 2-3 years: Saurabh Bhatia, Vdopia

With Facebook acquiring video ad tech startup LiveRail and now Yahoo! slated to buy BrightRoll, is programmatic buying and selling platforms for mobile video advertising the future? What does this mean for companies like yours?
A possibility of Yahoo! acquiring BrightRoll is good news for Vdopia because it is a validation of what we are doing. There is no doubt that mergers and acquisitions in the digital video advertising space have heated up at a global scale in the last two years. Also, with much of the content being consumed through mobile, the handheld device is emerging to be the first screen of choice instead of the television set. This definitely says that programmatic companies will have an important role to play in the future. Moreover, mergers and acquisitions of such magnitude bring companies like us into focus because as mobile video emerges to be a very important category, companies will be on the constant lookout for key players operating in this category. I expect more start-ups to be acquired in the next 24-36 months.

Does this mean that you are open to joining hands with a large player?
We have so far raised $12.6 million from private investors. We may look at raising more funds next year. As a company operating in the space of mobile video ad tech, we are open to both organic and inorganic growth. Also, as an organisation we are absolutely committed towards taking the company to the next level by introducing new advertising solutions in the space of mobile.

Tell us about your existing ad tech platform Dot vdo as well as the newly launched technology Chocolate. How are these two solutions different from the video advertising solutions offered by other players including Google?
Through Dot vdo a user can watch a video without having to leave the browser. For example, on sites such as YouTube when one clicks on a video a separate window pops up which actually runs the video whereas with Dot vdo one can watch the video without leaving the browser. So the technology gives us massive reach across mobile sites and apps. Some of the features such as ‘skip an ad’ are similar to YouTube’s Trueview format, where a viewer can skip the ad after a few seconds.

This year we have introduced a new technology called Chocolate. It is a marketplace for mobile advertisements which allows brands to auto-play video ads on mobile web pages and apps, adjacent to content on any smartphone, without disrupting the user’s web-browsing experience. This keeps users on the page and increases video reach and measurability.

There are three different ways to advertise through the marketplace. First, ‘programmatic direct’ – where the ad rate is finalised at an earlier stage after which either the advertiser or the media agency can pick up a spot on a mobile video that meets its criteria. For instance, if a video on cooking is running on a site, then a kitchenware brand can buy a spot and run its ad.

The second way to advertise is called ‘programmatic RTB’. Just like a real auction, here too the bidder, in this case, the advertiser or its agency, can buy ad spots on a real time basis. The third method is called ‘managed service’ where a representative at Vdopia’s call centre manages the purchase of an ad spot for an advertiser.

At a global level, Vdopia’s technology is integrated with over 10,000 mobile sites/apps. In India, we have tied up with 1000 publishers/mobile sites including India Today, AOL, News Inc, Dainik Bhaskar, Sony Live, etc. Our new advertising product Chocolate is positioned to do more than a billion auctions a month.

What is the kind of revenue that Vdopia is making globally? How does India fare in this?
Our global reach is 200 million that is the number of viewers we reach, of that 25% is attributed to India. As far as expanding our services is concerned, our sales team has a very clear-cut goal when it comes to the newly launched technology platform Chocolate. We plan to reach 5000 publishers/apps in the next one year. Last fiscal we generated revenue worth $30 million globally with North America being the largest market. Asia Pacific region is the second in line as more than 25% of our revenue comes this region. Moreover, in the Asia Pacific region, India is the largest contributor. We saw a 50% growth in revenue last year and the plan is to grow by 50% once again in financial year 2015. Also, in quarter one of next year, we plan to launch another very interesting tool.

What kind of presence do you have in India?
Until last year, our ads were mainly consumed by consumers residing in metros and tier one cities in India. With increased penetration of smartphones, this year 43% of ad consumption is by viewers living in tier two and three towns. The other factor which has fuelled growth is that mobile is gradually turning out to be the first screen for watching videos. I am sure that by end of FY 2015, more than 50% of our video views will come from tier two and three cities.

What kind of content is trending in India on the internet? How do you plan to sell ad spots for the content which is in demand?
A significant portion of our consumer base watches content related to entertainment; mainly Bollywood music, shows on celebrities, apart from lifestyle content, etc. Moreover, the consumption pattern fluctuates depending on the season. For example, consumers tend to watch news related to national importance apart from watching sports, particularly cricket, online.
We plan to use our new tool Chocolate in seasons where the demand for content such as news and sports is high. For instance, we will be
selling the ad spots for the upcoming Budget session which will be shown online. So, instead of pre-selling the spots, we would like to operate in a marketplace with Chocolate, where one would bid for each and every spot. So, if earlier we saw a 5-10% hike in ad rates when we sold online marquee content, this time we expect a 40-50% rise, as advertisers will be bidding for ad spots.

With Google’s YouTube being the most preferred destination to watch videos online, how will you ensure that viewers in India come to you?
In India less than 5% of the content available on mobile is video and 95% of the content is non-video. Even if YouTube is the market leader in the space of videos, it has only been able to capture 5% of the market. The beauty of our technology including Dot vdo service when combined with Chocolate allows us to run video ads even within non-video content.

So while YouTube is the leader of 5% of the market, we are able to tap into the remaining 95% of the category. For instance, we play videos on the front page of India Today Group’s website. Our job is to cater to the needs of publishers who do not have the ability to run videos on their site.of publishers who do not have the ability to run videos on their site.