Even after 9 years, Smaato sees itself as a startup
CEO and Co-founder Ragnar Kruse spills the beans on how to get top billing in the mobile ad businessBy Jonathan Toyad 08 Jul, 2014
Mobile ad company Smaato announced that it will be teaming up with Indonesia’s telecommunications company Indosat to expand in one of the biggest Southeast Asian mobile market. With a global office spanning 117 people, with 20 of them working in Singapore, the company is adamant on making sure a majority of budding developers and producers use its services to maximise their revenue. Its top clients include Zynga and EA Mobile.
Is there any secret to doing so and netting those prolific companies? Is there a certain kind of magic or aura you need to get the ad clicks and revenue you want? The answers may not be as cryptic as you think.
Make sure your app is credible
Smaato CEO Ragnar Kruse mentioned a few obvious-yet-profound keys to mobile ad revenue windfall: build a great app you and your team can believe in (games or otherwise), get more users through any means necessary, and follow business practices when it comes to monetisation. “Don’t try to do something cool for the sake of being cool and don’t be afraid of advertising; advertising will be the majority of your revenue streams. Only a few companies have done really well on digital goods.”
While Smaato’s mobile ad system is automated, it still requires monitoring from the publisher’s part. When they start monitoring it, they should discipline themselves from pulling off spamming tricks and tactics for the sake of a quick buck.
“There’s always been talks about (advertising) fraud,” Kruse said. “We first make sure publishers provide their inventory and apps that can be used for advertising in a proper way. And then we have to check on ad quality so that there’s no kind of spamming and no improper ads. For publishers, it means that they should not attempt to inflate the system.”
Kruse stressed that people should never, ever assume that showing more ads equals more money. He explained, “Automatically, if users are refreshed too early or too often, end users can’t interact with the ad properly and click-through rates are too low. Advertisers who see this will declare the app as a non-performing inventory.”
“There’s a trade-off here; ideally you have to balance the number of ads and the number of users, which can achieve a click-through rate of 0.5 per cent. That percentage is seen as good-performing inventory,” he added. At the end of the day, it boils down to mathematics: when a publisher puts his app together and switches app mid-way, there should be different placements that aren’t longer than 30 seconds. “15 is good, but 30 seconds net a good click-through rate,” he noted.
Besides, publishers don’t need to hit different key markets and advertisers with the shotgun approach. Smarter ones are willing to pay more for effective costs per mille.
All roads lead to China
e27 also asked about the best regions in which startups can launch their mobile apps; unsurprisingly he said China, which has the highest iOS adoption rate right now.
The challenges one will face when opening up shop in Asia is relationship-building. “If you want more to monetise, you need to have more partners on a global basis,” Kruse said, adding that India and China comes in second and third place in terms of the biggest Asian market startups need to target for higher ad revenue.
The important thing is that the whole of Asia has bought into phones being an ‘all-in-one’ device serving entertainment and business needs better than desktop PCs. Kruse said that Android’s volume base is bigger in the market share, while Apple is leading in revenues.
He said that Android’s volume is picking up much stronger even in China, thanks to other smartphone manufacturers using the OS and attractive prices like the Xiaomi.
Teach me Sensei
The company closed its last quarter with 174 per cent increase in its mobile revenue; a huge step up from last year’s results. At the end of the day, however, its long-term goal is to make sure every business owner with a mobile app idea is educated about the market and the importance of ad services. “Even at nine years in, we still see ourselves as a startup,” said Kruse, implying that despite the profits the company sees, it actively stays hungry and seeks out new ways to spread its business and new partners.
“There’s always new stuff coming out; you constantly need to innovate. Other players in the field are far from being profitable. It’s a matter of where you invest. ” Speaking of which, he hinted at a big investment deal coming soon, but couldn’t disclose more than that.