Naveen, your company began with a strong focus on the Indian market. Can you tell us about the basic structure of that market?
In fact there are 2 distinct sets of users in the Indian market.
The first segment uses the mobile as a “snacking device”. They have other ways to access the internet at home or work, and the phone is a secondary means.
The second segment is the one that I think is more important. These are people whose first access to the internet is through mobile. The mobile is not the “third screen” for them, it is the only screen. This second segment is actually more exciting because it is really huge, and will grow significantly over the coming 2 to 3 years.

What factors do you see effecting growth of the Indian market?
A couple things have to happen over the next couple of years. First of all, more local mobile content needs to be developed and published. Most of the mobile content distributed today is primarily global. We have local entertainment content over mobile, but it doesn’t go much beyond that.
We see that one of the main reasons behind this is that the size and reach of the mobile market in India is not really well understood by the content community. Correcting this view is something we are working hard on over the coming 6 to 9 months.
We believe this will help the local mobile publishing industry to grow, which in turn will provide much more high quality mobile inventory into which InMobi can sell mobile ads.
So in effect InMobi is working to “prime the pump” in the Indian market.

InMobi has moved well beyond the Indian market, what areas does InMobi see as high growth over the next couple of years?
We’re actually making a couple of long term bets in Asia-Pacific and Africa.
In both of these regions there are lots of people coming on line for the first time, and for most of them mobile is the only means of access. This is the group we would like to target, although in the short term the value of these markets might not be appreciated.
Luckily though, there are pockets of activity where the value of these segments has already begun to be recognized. For example Indonesia and Malaysia are both huge markets, and South Africa is very upbeat.
These are “lighthouse” markets in each of these developing regions that showcase how vast this media can become. InMobi currently reaches 50 million people in Africa and 100 million in Asia each month, but it may take another 2 to 3 years for the entire region to fully develop. This is a long term bet we are playing.

Recently you’ve made some strong moves into other more developed markets, how does that fit your strategy?
The second segment of our overall strategy is to go after the more developed, higher value - lower volume, “mobile as a third screen” markets, such as America and Japan.
In these markets consumers are already splitting their time between PC and mobile, and we’ll be working to take a share of the mobile segment.
In the short and media term these markets show a lot of promise, and over the next couple of years they should be the leaders for us as the developing regions mature.
However, at some time they will hit a saturation point. At that time, we expect that the developing markets will have grown to a point where they become the larger part of our business.

What about the level of competition you have seen in these various markets?
In the US you have lots of competition as there are many ad networks, and we were prepared for this.
However, outside the US, the competition is very similar in Asia and Europe, and I was actually pretty much surprised by this. In each market we see a couple of competitors, but it is pretty much the same.
We are also now just starting up our operations in Japan, and there the competition is not other mobile ad networks, but rather it is the mobile arm of existing ad agencies.
Is there a differences in the ad formats you need to support in different regions?
We actually support the same set of ad formats across the world. However, the uptake may change by region – for example in Africa it may be 10% rich media buy where in Europe it would be 40%.

Of course there certainly are regional nuances that we need to take into account. For example, when we came into Europe we needed to get a good app strategy in place because the smartphone penetration is much larger. And when we entered the US we had to spend more time working with ad mediation agencies.
Overall however, I’d say that 80% of our business is globally applicable. And that is why our business is scalable.

What is your view of the role of ad exchange & optimization companies?
I think it is too early for them to pop up, and in the short term it may be hard for them to survive.
They work well when you have significant supply and demand side complexity, for example if you are solving the problem that a publisher doesn’t know how to work with 20 ad networks.
The reality is that a publisher doesn’t have 20 mobile ad networks to work with, only two or maybe three. So your value as a mediation layer is not that high at the moment.

What future trends do you see for the next 12 to 24 months?
There are several things we think are important to be aware of.
App Economy: First, the whole app economy will grow into a very different thing. I believe that in the long term browsers will again become dominant. But in the short term, apps will make consumption of data services very easy, and so they will increase the consumer uptake. Apps can change the user experience and take it to the next level so that phones become a major media for data consumption. This is what apps will do for us.

Mainstream Mobile: Secondly, mobile as a marketing medium will become more mainstream over the next two to three years. Before it was always budgeted as part of “Other”. Now it has started becoming its own line item, even though it’s still a small line item.

Data driven: Finally, we need to make this medium much more data driven. The promise has always been there that we can know a lot about unique users. But that has been the promise for the past 10 years, and where is it? We are now working on ways that we can know the user based on their consumption that we see across our network. Then we can put this out to advertisers so they know they are reaching the right users far more precisely and targeted.

Each month, we reach out to 170 million people across the world. We need to know much more about those 170 million people than we do today - we want to enrich the information about each user. And if we can get that data in a useable form, that is valuable information that will help this whole ecosystem to grow.

Original Post:

If you haven’t heard of InMobi yet, don’t worry. You will. They’re coming. Having already locked up the Far Eastern markets (7.5 billion mobile ad requests a month, 170+ million user reach), InMobi is the biggest mobile marketing giant that you’ve never heard of. If you’re into mobile applications (or websites) in any way, you should definitely check out the range of services InMobi are offering to help developers monetise their properties. We bumped into James Lamberti, their newly appointed Global Marketing Director to find out a little bit more about the company.

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Naveen Tewari talks to Akin Naphtal from Mobile World about the future of Mobile as well as what InMobi has in store ahead. While he predicts mPayments to be the next big wave, he also strongly believes in InMobi continuing to be the world’s leading independent ad network. Read on to see how he predicts the future would unfurl.

Mobile phones will become substitute for credit cards

InMobi belongs to a category of mobile advertisers you might term “the Outsiders”. It’s a big company, with big reach - but it doesn’t have a huge presence in the US or Europe…. yet. GoMo News has reported on InMobi a lot in the past, and I leapt on the chance to talk to them at MWC. I spoke to InMobi Founder & CEO Naveen Tewari and VP of Global Marketing, James Lamberti. We had a great interview about the InMobi business model and expansion strategy - I had not realised how strongly technology driven InMobi is. We also discussed the fascinating concept of “engineers as marketers” and talked about some idiosyncracies in the Japanese market.
First, how about little background on InMobi?
James: We’ve got an ad-serving platform that works for any device and avertiser, on feature phones or smartphones. We have reach and scale that’s unprecedented - InMobi is currently serving 7.5 billion ads per month. Our strongest presence is in Asia PAC, South Africa and other Africa countries - and we’re moving into Europe and the US.
How do you prepare the ground for a new expansion?
Naveen: We don’t work with operators - because its just too hard and takes too long. We just use our existing base of international publishers to get into a new market. Look at Europe, for example. We’ve already got a reach of 13 million in Europe - and that’s without any offices or employees! We made our first European hire last month, he’s going to build on those 13 million. That’s our expansion strategy: we measure the influence we already have in area, then go hunting for new publishers. Because of our publisher base, we’ve already got scale in areas we haven’t even moved into yet.
James: We’re soft-launching in the US as well. In January we were at 250 million impressions, without launching. Today, one month later, were at 500 million - and we still haven’t really launched there. I believe that the future of marketing is is not being “a brand guy from Procter & Gamble”,it’s about reading the data. I believe in engineers as marketers.  Analytics is the future of advertising.
Naveen: We want to come out with an independent voice. The large acquisitions like Quattro and AdMob are now filtered through Apple and Google - we want to be the largest independent player.
What’s the future for InMobi, beyond the expansions?
Naveen: We don’t have time to think about that yet! We’re launching in a lot of huge markets right now. Launching in Europe is a lot of work, 46 countries! Getting strong in the US is hard - we’re a late entry. We’re even launching in Japan…
Japan? Isn’t that a very saturated market?

Naveen: It’s less saturated than how it looks from the outside. A lot of their business is very relationship driven - each agency has its own arms and branches in mobile advertising. So while the relationships are very good, they haven’t done any real development in around the TECHNOLOGY of mobile advertising. A lot of the time there’s no analytics in Japan, no one tracks anything. The physical infrastructure is very advanced, but the media structure isn’t very good. And since that’s what we’re about, there’s a definite opportunity there.
Is there really room for you in these markets? You’re entering them very late
Naveen: We fell that as long as our technology is good, there will always be a place for us at the table. Our philosophy has been to gather together a group of amazing minds and engineers, and create a truly excellent centralised offering. Now we’re expanding that offering to different markets around the world and making it local with new offices and new hires.

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• The three month growth average for the InMobi network was 11%
• InMobi launched in the USA and has seen positive results with almost a 1000% growth
• Europe continues to show significant growth with Ireland clocking the maximum growth of 433% in the region

• Top five countries in terms of mobile web page views according to the InMobi network traffic are
  • India
  • Indonesia
  • Malaysia
  • South Africa
  • United Kingdom

Handset and Manufacturer Data according to InMobi Network Traffic

• Samsung SGH - E740 saw a jump in traffic to take the top 3^rd position in the handset race
• After a long lean period, Nokia witnessed a welcome break with a small jump of 2% in the network share of traffic

Country Spotlight: India

Country Spotlight : Indonesia

Country Spotlight : South Africa

Country Spotlight : United Kindgom

Note : All data presented above is with respect to InMobi’s Network Traffic

KPCB and Sherpalo Ventures buy more stake in InMobi while early investors Mumbai Angels exit with double-digit returns.

Bangalore-based Inmobi (formerly mKhoj), a mobile advertising network startup, that not only changed its name but its entire business model in its three-year existence, has actually ended up rewriting its destiny.
The risk of altering the business course has paid off for Naveen Tewari (in pic), the co-founder and CEO of Inmobi, which operates in a space that has seen some bulge-bracket global acquisitions in the last two months.
Consider this: Google bought out AdMob, the largest mobile advertising network, for     $750 million in stock. Apple acquired Quattro Wireless for a reported $275 million earlier this month. US-based ad network Amobee Media Systems (backed by mobile operators Telefónica and Vodafone) acquired UK’s mobile ad buyer RingRing Media and Norway’s browser maker Opera Software buying AdMarvel, a small mobile advertising firm.
InMobi set out three years ago as  mKhoj, a mobile platform helping consumers find the best deals in their locality through the use of SMS and WAP.
But, Tewari was quick to realize that the mKhoj model would require lot of time and money to scale. So, six months after starting out, the founding team went back to the angel investors with the new mobile advertising network model.
For InMobi, these are clearly interesting times. The InMobi co-founder feels this sector will continue to attract deals. “The number of people that need to get into mobile advertising are far more than the number of players that exist,” he said, in an interview to VCCircle. The global mobile ad spending is expected to surpass $13 billion by 2013, according to a report by Gartner.
The global spotlight on this sector also means great paydays for venture capital investors. InMobi raised $7.1 million from Kleiner, Perkins, Caufield & Byers (KPCB) and Sherpalo Ventures (started by Google’s early investor Ram Shriram) in 2008, and turned profitable last year. These VC investors, KPCB and Sherpalo, both early investors in Google, are now buying an additional stake in InMobi.
VCCircle has learned that Mumbai Angels, the seed investors in InMobi, are selling their shares in the company to KPCB and Sherpalo in a secondary transaction. The Mumbai Angels invested $500,000 in 2007, and have seen the valuation of the company rise by over 25 times since then. The deal marks the exit of all the angel investors from InMobi. The return on the investment here is tipped to be the best angel investor returns in recent times.
Tewari declined to comment on this transaction. An email sent to KPCB and Sherpalo also did not elicit any response at the time of filing this story.
“Naveen was quick to realise that his initial business model was not working and decided to change it pretty early,” said Praveen Chakravarty of Mumbai Angels, who was the founding board member of InMobi. The valuation for this transaction could not be ascertained.
A number of players like Nokia, Microsoft, Yahoo, WPP and Qualcomm could be looking for possible acquisitions in this space. How does a three-year-old Indian company take on the might of Google and Apple? “You cannot compete with them on money,” says   Tewari. “The game for us is based on building better technology and a better product,” he added, although it helps if you can hire some key executives from your competitors.
So, that is what he precisely did. InMobi recently poached Rob Jonas, Google’s Director of Strategic Partnerships for Europe, Middle East and Africa, to build its business in Europe. It earlier hired former Group M executive Emmanuel Allix as head of Asia Pacific (APAC) operations.
InMobi, which claims to be the largest independent ad network, is now gunning for the developed market to get a larger share of the revenue pie after building a strong presence in Asia and Africa. It’s also present in South America, where its ad impressions have grown by 1306%. Since its launch in Europe in August 2009, it has become the second largest player in the region only behind AdMob with 850 million impressions a month. InMobi says, it does 7.5 billion monthly mobile advertising requests globally.
InMobi has built a leadership position in emerging markets like Asia and Africa. While these markets have low adoption rates, their future potential is huge. Mobile internet forms the first internet experience for a lot of users in markets where internet and fixed line connectivity is unreliable. “They have been very smart by initially going after emerging markets where there was no competition and became an established player,” said Chakravarty.
Since the mobile advertising market is small in India, InMobi has been expanding overseas with offices in Singapore and Palo Alto, California. With Jonas of Google on board, the company will also have an office in London. “India is an emerging market – its small but it’s something that has the potential to become very large in the next 2-3 years,” said Tewari, an IIT Kanpur and Harvard Business School grad, who has earlier worked with McKinsey & Co and VC firm Charles River Ventures. InMobi’s co-founders are Abhay Singhal and Amit K. Gupta.
The number of people using internet in next three years in India could reach 200-300 million with the advent of smart phones and 3G licenses, he says. Smart phones are expected to account for 45.5% of all mobile phone sales in 2013, up from just over 9% 2008 as per Gartner.
But, InMobi could face severe competition from Internet advertising firms, says an industry tracker, requesting anonymity. While Google is a prime example of an internet ad firm entering this space, other Indian firms like Ybrant Digital and Komli Media can also eye this space. But, Tewari thinks that it might be a little too early for such companies as he prepares InMobi to enter the US market

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The Mobile Marketing industry made strides in 2009. But will a rise in mobile internet users translate to an increase in confidence among marketers? asks Media magazine. Emmanuel Allix from InMobi believes that 2010 could indeed be the year of mobile advertising and goes on to tell his predictions for the year ahead.

Will 2010 prove to be the year of the mobile?

InMobi Network Summary

• The three month growth average for the InMobi network was 15%
• Africa and Europe showed highest growth

• Top five countries in terms of mobile web page views according to the InMobi network traffic are
  • India
  • Indonesia
  • Malaysia
  • South Africa
  • United Kingdom

Handset and Manufacturer Data according to InMobi Network Traffic

• Nokia N90 saw a sudden jump in traffic causing it to be top handset contributing InMobi’s network traffic
• Apple sees a slow but steady growth overtaking Motorola and LG for the first time

Country Spotlight: India

• Nokia N90 as well as Samsung SGH-E740 climbed the handset model chart
• The carrier chart witnessed some drastic changes in the past month
  • BPL fell by a large margin of 10%. It was previously the second largest contributor
  • Aircel grew by 5% creating a rather wide gap between the second and third contributor

  

Country Spotlight : Indonesia

• Nokia took a positive spin in Indonesia occupying 9 out of the 10 top handset spots
• SonyEricsson dropped by a significant margin of 4%
• Carriers in Indonesia saw the scales tipping after a long period of stability
  • Indosat fell by a 11% whereas Telkomsel grew by 6%

  

Country Spotlight : South Africa

• While there hasn’t been any significant change in the network traffic share contributed by handset manufacturers, operator traffic contribution had some variations
  • Vodacom grew from 0.2% to 2% last month while Cell C saw a drop in traffic share contributed towards the network
  • 

  Note : All data presented above is with respect to InMobi’s Network Traffic

Web startup companies are synonymous with the Silicon Valley due to the trend that has been set over the past decade. This is understandably so, with companies like Google, Cisco, Intel, Sun and a lot other renowned multi-billion dollar companies emerging from the Valley. So, do all successful internet based product companies emerge out of here or is this just an assumption?

InMobi is one of the world’s fastest growing mobile advertising networks that has emerged out of India and has proven that this is definitely a false assumption. Make no mistake; Silicon Valley still holds its charm with the unique advantages that it provides. Yet, there have been instances of successful product companies emerging out of the other geographies as well and InMobi is just the example to dive deeper into the phenomenon.

The usage of mobile in the emerging markets is probably what tipped the scales in favor of InMobi. Firstly, the numbers of mobile penetration are compelling. Mobile penetration has overtaken PC penetration in almost all emerging nations. Since the fixed line infrastructure is bad and unreliable, the ubiquitous mobile forms the obvious substitution. This set up the environment for mobile centric product companies. InMobi leveraged this platform and concentrated on innovation in their vision and technology. This helped create a world class product in a geography where the usage is exploding creating the right blend for success and voila!

Naveen Tewari, CEO and Founder, InMobi, says “India and the emerging markets are the hub of opportunity and potential. The usage is just booming making it the right time for entrepreneurs”. When asked the secret behind the success, he said “It is mandatory to completely understand the usage patterns and trends. That was what we did and realized that mobile ecosystem was the on the verge of a mighty explosion and we wanted to be a part of it. Once we had the idea in place, we needed a business model and that sealed the deal for us. We used the reverse market strategy where the emerging markets formed the development and test base for the Product and then it enters the global markets.” While the internet user base in the US gave Silicon Valley its platform for success, the emerging markets have a mobile user base to provide the fuel for progress.

InMobi was started as MKhoj in 2007 with Mumbai Angels backing it. At that point, the business model aimed at solving the local information problem using SMS based search and worked on SMS based monetization as a revenue model which would eventually morph into an SMS Ad Network. Post that, the team saw the growing potential of the mobile web and the business model was taken back to the drawing board. This was the turning point in InMobi’s life, when the SMS based model was dropped and InMobi took a dive into the mobile web ecosystem. InMobi decided to become a mobile advertising network, where advertisers can display their ads on mobile internet sites. The idea was soon bought into by Kleiner Perkins, Caufield and Byers as well as Sherpalo Ventures and InMobi began its journey into the mobile web and advertising world.

Today, InMobi is a global mobile ad network offering mobile web advertising solutions to its partners. InMobi helps advertisers reach their target consumers as they surf the internet on their mobile phones. InMobi believes in the future of the mobile web, and the power that it can provide publishers, advertisers and consumers. InMobi aims to develop the mobile web industry, and work to provide the highest level of value to advertisers, publishers and their audiences.

InMobi has built a strong network in Asia, Middle East and Africa and has grown into the leader as the largest ad network in Asia. InMobi’s success is rooted in the emerging economies where digital marketing is still at its infancy. This has translated into continued innovation as they deliver ground up solutions for their advertisers while effectively servicing global publishers. InMobi’s innovation has allowed it to successfully deliver industry leading results that have helped it to scale in such a short time.

The quality of InMobi’s network combined with their strong targeting capabilities and proprietary quality assurance technologies have enabled them to deliver both, reach and performance for their advertisers. In turn, InMobi’s large advertiser base, global infrastructure and intelligent ad serving technology allow them to deliver exemplary revenue levels, quality of advertising and ad response times to their publishers. All these coupled with InMobi’s principle of transparency with its customers makes InMobi the most preferred ad network to both advertisers and publishers in these regions.

InMobi has got itself a very strong client list that it flaunts proudly with name like Reebok, Nokia, MakeMyTrip, Yamaha and many more other top brands in the kitty. Their partner publisher list includes names of MocoSpace, eBuddy, friendster, hi5, Rediff, Zedge etc. that have provided InMobi tremendous support achieving the position that they have today.

The potential for mobile internet advertising is only growing. An increasing number of people are using their mobile to stay connected at all times. The need is to tap into this audience and serve relevant ads so that which is of value to them. This is easy to achieve as advanced services like location based services start coming into the picture. Hence, the mobile environment is such that, it can sustain the business they are in and it is really up their capability to be able to provide an edge to all their partners.

InMobi has a strong sales team that is very proficient in keeping up to date with the market needs. InMobi has a unique way in which the sales, marketing and communications team work together to achieve lead generation and eventually converts into clients. With this InMobi has built a strong network in Asia, Middle East and Africa and has grown into the leader as the largest ad network in Asia.

While, InMobi could peg AdMob and Google as their competitors, they also believe that their unique focus and value proposition provides their partners with an advantage that is not available in the market. Their geography focus helps them prioritize and solve real customer needs and increase their value proposition to their partners. InMobi has consistently focused on providing higher quality and monetization levels for their publishers and greater return-on-investment (ROI) for advertisers, many of whom are trying the mobile internet medium for the first time, or for the first time in their region.

Over the past several months InMobi has invested in getting their technology in place and bringing key team members on board to lay the foundation for scaling up the business significantly. Currently, InMobi has presence in 33 countries and is growing at the rate of 40% each month. Moreover it now has the capability to serve over 10 billion impressions a month and is already catering to ad requests totaling to over 7.5 billion / month. The number of publisher sites that InMobi has tied-up with is more than 3000 with 200+ active advertisers. InMobi has one of the highest levels of customer retention rate that of 75%

Their focus for next plan of action is to continue to be the #1 mobile ad network of choice throughout Asia for both publishers and advertisers. Building the mobile ecosystem from the ground up in Africa is where they see tremendous opportunities. They are also looking forward to attaining in Europe the same kind of scale that we have achieved in Asia and Africa making sure that they continue to operate with the highest level of integrity and a principle of transparency.

InMobi also recently launched in Europe. As a developed nation, Europe poses different challenges and opportunities. Their plan was to grow in these markets as well. Recently, UK entered their list of top 5 countries in terms of traffic proving that their expansion plans are going in the right direction.

The biggest challenge lies in the diversities of all these markets. To be truly successful in mobile advertising, it is mandatory to understand the nuances of every market. Growth, for InMobi, does not stop at just entering the market, but has a lot to do with what and how much value they can provide to their partners. Hence, the launch in a geography needs a lot of their dedicated effort to understand the working of the market so that they can provide their partners the insights that no one else can give. That takes time and effort but, it is well worth that investment if their partners are satisfied. With all this, InMobi is sincerely looking forward to give its competitors a serious run for their money.

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In August, we covered mobile ad network InMobi, which has been performing very well in the Asia and Africa and beginning to expand to Europe. My colleague Robin Wauters wrote that while InMobi was seeing success in some global markets, traction in Europe is key for the ad network to really take off. Four months later, InMobi is now profitable and seeing a fair amount of growth in Europe and  America.

Asia, where the ad network had a stronghold, currently employs the highest number of ad impressions for InMobi, with 4,950 million ads each month. In Africa, InMobi delivers 900 million impressions per month. But the rapid growth for InMobi has been concentrated in South America, where ad impressions have grown by 1306% in the last six months, and Europe, where InMobi has delivered 850 million impressions per month. InMobi also reports that it has delivered 7.5 billion monthly mobile advertising requests globally.

Based on our understanding of their eCPMS, growth and past monthly revenue, it looks like InMobi is now generating $1.6 million in monthly revenues and could be on pace for a $20 million annual revenue run rate.  And InMobi is eyeing the U.S. market for additional expansion. The company’s mobile advertising service, which is targeted more to the mobile web than applications, is currently available in 30 countries, cites advertisers like Reebok, Yamaha, and Cricket Nirvana and recently signed on several new global publishers including Ebuddy, hi5, and Friendster.

For InMobi’s profitability and considerable growth, the startup has raised relatively little money compared to some of its competitors. The company raised a total of $7.6 million to date, starting out with a $500k seed round from a group of angel investors and followed up by a multi-million financing round led by Kleiner Perkins, Caufield & Byers and Sherpalo Ventures (the VC firm started by Ram Shriram, early backer and founding board member of Google).

Of course the big elephant in the room is Google’s recent acquisition of AdMob and how that will effect InMobi’s continued expansion into the U.S. market. And there’s the possibility that Google could make a move to overtake InMobi’s stronghold in other countries.

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