The Medium is the Message

July 12, 2011  Source: The Business Times | view original

Affle chairman Anuj Khanna banks on mobile advertising and mobile messaging as areas of growth in Asia, reports LESTER HIO

ANUJ Khanna, CEO of homegrown mobile media advertising company Affle Pte Ltd, is excited to be going back to school. The newly-minted chairman of the company, a position he took up in May this year, is currently making sure he manages his new position to the best of his ability by attending the Stanford Executive Program, a postgraduate executive management course held at Stanford University.

According to the self-styled ‘student entrepreneur’, being placed at such an executive position means that he has to let go of the day-to-day dealings of the company and start having a big-picture view of the company’s strategy and product innovation, and it is this revelation that prompted him to strengthen his managerial resume.

Such a move was timely, as Mr Khanna has started his own businesses when he was in his 20s, when he was an undergraduate at the National University of Singapore. Anitus Technologies, Mr Khanna’s first company, was acquired by the publicly-listed Malaysian conglomerate MCSB and renamed myMCSB. His second company, SecLore, which dealt with information security, was acquired by Herald Logic in 2007.

‘I was a student entrepreneur,’ says Mr Khanna. ‘I started Affle because I saw the technology business in Asia and mobile as an area of huge growth, with mobile advertising and mobile messaging as the next big thing.’

‘Around 2005-2006 mobile phone devices had started to become more powerful. However, SMS continued to stay in 160 black-and-white characters. We said, ‘Hey, there’s an opportunity to really use our tech expertise to change the game and create the next generation of messaging,’ and that was how Affle was started,’ says Mr Khanna.

Its first product, SMS2.0, was launched in 2008, two years after Affle first started in 2006. An update, named SMSLive, which blended greater social network integration and enhanced messaging capabilities, was released in December last year. To date, it has over four million active users, mostly in India and Indonesia.

SMS2.0, Affle’s flagship product, enhances the default messaging client on mobile phones. It improves the core messaging functions by offering more emoticons, personalised messages, and interactive customised content.

It is available free to users of Affle’s partner telecom networks, such as Telekomsel in Indonesia and five operators in India (Idea Cellular, Bharti Airtel, Tata DoCoMo, Reliance and Aircel), and M1 in Singapore.

Affle uses its Singapore headquarters to focus on R&D, while its commercial markets remain largely in countries such as India, Indonesia, Malaysia and Thailand, where Affle focuses on delivering intuitive, advanced messaging solutions.

Says Mr Khanna: ‘Affle is still a young company, but we prioritise regional market expansion over trying to do a lot of business locally. For the same dollar spent in Singapore, we can get 10 users in India or Indonesia.’

Affle has some 60 staff spanning a number of countries, with the majority concentrated in Singapore and India. It counts among its investors Microsoft and Japan’s Itochu Corporation, as well as its latest tie-up D2 Communications. Till now, it has raised around $19.5 million in investments.

Affle’s latest offering is the Pinch iMessenger, a messaging client that sends messages through data, rather than on standard messaging platforms. Currently still in beta, Pinch is ready to be rolled out later in July this year.

Mr Khanna says that Pinch will be available globally for almost every mobile operating system, such as iOs, Android, Symbian, BlackBerry and even the older Java-based mobile systems. The last one is key, according to Mr Khanna, because even though the smartphone market is expanding, the majority of mobile users in regions Affle is interested in, such as India and Indonesia, still uses non-smartphones that sport slightly dated operating systems.

In India and Indonesia, Pinch is integrated into the native messaging client of the mobile phone, due to partnerships between Affle and the mobile carriers.

‘We are working with the carrier to zero-rate the data of our service. The user need not be signed on to a data plan to do Pinch-based data messaging,’ says Mr Khanna. This allows a Pinch user to send messages to non-Pinch users, without worrying about incurring message charges.

These carrier partners, Mr Khanna notes, are important in creating a different level of value proposition between the consumer and Affle, as Affle provides the consumer with an innovative service and the carrier partner with advertising revenue.

‘The carrier will not buy into Affle unless there is a monetary incentive for them. We have a revenue share agreement with the partners, and so the carrier becomes motivated and says, ‘Yes, I will support you, and I will create an innovative service for the consumer by zero-rating the data consumed on the service.’,’ explains Mr Khanna.

This arrangement works out well for Affle. ‘The consumer is happy, the carrier gets an innovative service and a new revenue stream, and Affle creates a comparative advantage which cannot be replicated by another technology company unless they come and do the same kind of ecosystem with advertising sales and carrier relationships,’ says Mr Khanna.

Affle’s route and business have not changed since its inception in 2006, when Mr Khanna envisioned his company riding on the mobile telephony wave and structured Affle’s business model around mobile advertising to take advantage of it.

‘We said mobile advertising was going to be our primary business model and till today our vision still has not changed. If you look at our products – SMS2.0, SMSLive and Pinch – this has not changed. These are all next-generation messaging and they are all powered by mobile advertising,’ says Mr Khanna.

And the future looks even brighter for Affle, as the mobile phone userbase in Asia continues to grow. Mr Khanna puts it as such: ‘I believe that in the next decade you’ll find very large companies being created in Asia in the mobile and media spheres. By sheer numbers, the mobile users in Asia will overwhelm users in Europe.

‘As the economies in Asia continues to grow in the next decade, we will see mobile and media being a huge opportunity in Asia compared to anywhere in the world.’

Affle plans to continue growing in its existing markets, and to expand into other regional markets, such as Thailand, Vietnam and China. Affle is currently in a ‘fairly fast growth mode’, according to Mr Khanna, and the company is looking at an initial public offering sometime in the future.

In the meantime, Mr Khanna is still hard at work while at Stanford, networking and making connections.

‘Coming to Stanford is creating a great opportunity for me to reflect, and to get other perspectives from the top executives in the world. That would be a very big intangible value to the success of the company. A couple of bright ideas (obtained) here could be time really well-spent,’ says Mr Khanna.