Smartphone consumption in India has seen an increase over the past couple of years. With this, mobile advertising has also seen adoption by brands and advertisers. Singapore-based Affle takes advantage of this rise and claims to offer a better return on investment (ROI). A proprietary consumer intelligence platform through which it delivers consumer engagements, acquisitions and transactions using relevant mobile advertising, Affle reported 127.9% year-over-year revenue growth in first quarter of fiscal 2023. In a conversation with BrandWagon Online, Anuj Khanna, Founder, President and CEO of Affle, discusses the changing mobile advertising landscape. (Edited excerpts)
What new trends have emerged in digital advertising?
In India, as well as other global emerging markets, total digital ad spend, relative to total ad spend, is still under-calibrated. For example, in most emerging markets, total digital or mobile ad spend would be around 20-30% of total ad spend. Whereas, in most developed markets around the world, this already accounts for more than 50% of total ad spend. Therefore, while during times of covid consumer adoption of digital payments, connected devices, mobile devices has increased, we are under-penetrated as there are at least another 600 million connected devices to come of the Indian population. Over the next five years, new consumers will come to connected devices every year. As a result, there will be a massive shift in advertiser budgets to at least 50% digital and mobile, from 30% currently. This growth is rooted in two trends: consumers are disproportionately turning to digital and mobile-connected devices and are comfortable making payments from these devices. As a result, advertisers have no choice but to shift at least 50% of their ad spend to mobile and digital.
What new innovations in the digital advertising space have you rolled out?
At the start of CY2022, we unveiled our Affle 2.0 mainstream platform stack. The stack includes some key innovations and capabilities that our company is focusing on and this can be explained by two Vs – vernacular and verticalization. In the vernacular, we have refined our focus on customer centricity, so that we can predictably serve all product, application, content recommendations, in the audience’s vernacular affinity preference. in advertising. We work on very granular consumer experiences with vernacular.
When it comes to verticalization, we cover industry verticals across all categories – E, F, G and H. E includes education, e-commerce, entertainment; Category F includes Financial Services, Food Technology, FMCG, Category G includes Gaming, Government, Grocery, and Category H includes Healthcare and Hospitality. Our team works on deeply integrated innovations with each of these verticals, and helps these verticals, to give them a very compelling proposition to consumer segments and cohorts.
Additionally, we are also building innovations for connected online and offline consumer journeys. The online journey means that the user sees something on the phone and completes the payment transaction on the phone itself. Meanwhile, in an offline journey, the user sees something on the phone or searches on their digital device, but goes to the physical store to complete the transaction or purchase.
Specifically in terms of mobile advertising, how do you see programmatic developing in India and evolving?
The programmatic part is a part of the consumer journey where app publishers have made their inventory available programmatically. We believe the programmatic side of the ecosystem will continue to grow, as it has in developed markets, even in emerging markets. It will remain as part of the consumer journey. Affle covers the entire consumer journey. We work with carriers and OEMs for on-device experiences. We work with premium apps including Google and Facebook, Affle integrates with them. So we don’t exclude ourselves from any part of the consumer journey.
How does your revenue model work?
So our revenue model is rather unique, we call it cost per user converted. Our business is to provide conversions to advertisers and marketers. On the one hand, advertisers see conversions, on the other, consumers see relevant recommendations. Now the conversion can happen in three use cases. One is a new user who has never converted with the advertiser before, converts through us. The second is a repeat conversion, where the user has already converted with this advertiser before, but thanks to our recommendations, opts for a repeat conversion with an online advertiser. And the third conversion category is where we show engagement on the phone, but drive visits to offline locations and drive offline conversions. So those are the three main categories of conversions that we help advertisers generate. For every conversion we deliver, we charge a certain rate. So, in the current quarter, where we have seen around 128% growth in our revenue, compared to last year, we generated 61.9 million conversions at an average cost per conversion of Rs 52. ,1. This accounted for over 90% of our revenue in the prior quarter.
By the end of the financial year, how much do you expect to achieve based on your income?
In the first quarter of FY2023, Affle’s consolidated operating revenue was Rs 347.5 crore, registering an increase of 127.9% year-on-year growth. This growth is both organic and inorganic. Our organic growth was approximately 45% year over year during this quarter. Our goal is very simple, we believe that our industry should grow by at least 30-35% and we should be able to keep pace with this type of growth model, even with the macroeconomic factors that are sometimes concerning. We are confident that we can beat the industry average growth rate in emerging markets.
What measures do you have in place against ad fraud?
Ad fraud is a threat and it must be contained. The only way to contain it is with technology. We launched our fraud analysis tool called mFaaS in 2017-18. We have nearly 10 patents filed in the areas of digital fraud prevention. It should be noted that digital fraud is not a new phenomenon. It’s been around since digital advertising has been around for over 20 years now. The reason it was not contained is that many recipients of ad fraud were unaware of it. In our business model, unless and until a clear human user converts with an advertiser, Affle makes no money. We therefore have a clear interest in ensuring that all non-human, digitally driven impressions and clicks must be absolutely eliminated.
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