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Since its inception in 2006, Affle has been working actively to build new mobile technologies which would enable easier and enhanced media and messaging consumption on the mobile.Anuj Kumar, executive director, South Asia, Affle in an interaction with Prasoon Srivastavadiscussed the company’s observation and business strategies for Indian market. Excerpts:
On the home page of Affle’s website, three words are highlighted prominently – ‘Making media mobile’. What should we read out of these three words and how significant are they for Affle?
There are over four billion mobile phone users worldwide and about 600 million of them are in India. However, most mobile users today use the mobile to primarily meet their communication needs. As a company we strongly believe that the mobile device has a very significant media potential and we see Affle playing the role of creating technologies which help in the realization of this potential. This is what the words ‘Making media mobile’ imply to us.
What kind of business model (revenue share or one time package deal) you run with telecom operators across the country?
Affle’s business model with telecom operators is based on revenue sharing as we believe that this model builds the best alignment and commitment amongst our partners for our products. It is worth mentioning here that Affle is one of the very few companies which create revenue for the telecom operator from sources other than the user, which is through advertising. We are thus in a position to bring in revenues outside the traditional ‘user-pay’ eco-system of telecom companies and create a new and sustainable revenue stream for them.
You have received investment from Microsoft as well as Itochu. Can you share with us details of these investments and how have you been able to utilize them?
Both Microsoft and Itochu are very large companies having business interests in technology, telecom and media across geographies. These investments are being utilized by Affle for building new technology IP, products, growing business interests and partnerships in existing and newer markets.
On one side we are seeing ARPU falling in India, which reflects that consumers are saving on cost, and on the other hand we are seeing telecom players battling to survive in a low tariff era. Do you see any trend that may come up in the next few months from mobile advertising space that can strike a balance between telecom operators and consumers?
The decline in ARPU levels does not imply a decrease in consumption among users. ARPUs have gone down over the recent past primarily because of two factors. First, the decrease in tariff and second the majority of new users being added are from semi-urban and rural areas, whose consumption pattern is different from their urban counterparts.
Advertising has been successful in driving various media like the Internet where most content today is provided to users free of cost, while users only pay for their Internet connections. We believe in creating a similar model for telecom where the user pays only for the spectrum he or she consumes. All content and services subsidized through advertising is very sustainable and the obvious way forward.
How is your readiness for playing in to Indian 3G era which is likely to start from September 1 this year?
On 3G, Affle already has a headstart over many Indian companies as it already does extensive business in 3G markets like Singapore and Australia. We have already invested in creating new technologies which could be best enjoyed by users in a 3G environment.
You have experience with some of 3G players in ASEAN region. What is your reading so far from their business model of mobile advertising?
In other 3G markets where Affle has operations, the penetration of smart phones is much larger, thus making media consumption much easier for mobile users. This is an area where change is expected in India as, with the onset of the 3G era, the penetration of smart phones is expected to dramatically increase. Thus, with an increased adoption of smartphones and better infrastructure, richer content could be seamlessly delivered on mobiles through 3G. With users starting to consume more media content on the mobile, richer advertising opportunities would automatically emerge, as advertising is best delivered when blended in a rich content environment.
Based on your learning from these 3G players, what are the suggestions that you would like to give to Indian telecom companies?
Telecom service providers in India have always redefined the way business has been done. So Indian companies need not look at others to learn how to do business. Indian telcos are adept in creating new paradigms, which has usually been replicated by telecom operators globally. With the kind of expertise the Indian operators have, I am confident that they will set new standards for other markets to follow. Despite being a late entrant, I am sure the world will have a lot to learn from Indian players on how to deliver cutting-edge 3G products and services at low costs, such that a large mass of 3G users could be built fairly rapidly.
What are the upcoming moves that we can see from Affle for Indian market in year’s time?
We have been working on a lot of newer mobile media products like SMS Live and Pinch for sometime, which we plan to now launch for consumers in the current quarter. The aim of the company is to take its technologies to more users through multiple distribution platforms and we are confident of doing this successfully in India this year.
Our mobile advertising services business, where we partner with telecom operators and publishers to create mobile advertising revenues for them, is also growing very rapidly. We intend to aggregate all these offering under the Affle Premium Exchange (APX) umbrella this year, and create a one stop access for advertisers to take their communication to millions of mobile users across voice, text, video, applications and several other platforms in India.