Digital advertising market is growing faster than anyone has imagined and is now attracting a new set of players. Earlier this month, Temasek-backed Singapore Telecommunications Ltd or SingTel struck a deal to buy California-based mobile advertising solution provider Amobee for $321 million. The seven-year-old firm has raised $54 million till date from venture capital firms like Accel and Sequoia besides investors like Vodafone, Motorola and Cisco. The latest deal marks an interesting turn for mobile advertising business with carriers like SingTel (which holds 32.5 per cent in India's largest telco Bharti Airtel) directly entering this space. Venture capital firm Globespan Capital Partners was an early investor in Amobee and had also bet on another mobile advertising player Quattro Wireless (which was acquired by Apple in 2010 for $275 million). VCCircle caught up with Globespan's managing director and Amobee board member Venky Ganesan on his take on mobile Internet, carriers entering mobile advertising space and his investment firm's India plans. Here are the excerpts
How are you reading the mobile Internet market?
We are in the cusp of a very early revolution. Think about where Internet was in 1996. That is where mobile Internet is right now. The first 1 billion to 1.5 billion users on the internet came through the PC and the next 3 billion are going to come in through the mobile phone. That is a life changing experience that happens only once in a thousand years. That might seem bombastic, but there has been no other time in the history when half or two-thirds of the planet reached out on the same device. The opportunity presented by this is still very early.
In this context, how do you see the mobile ad market developing?
The first thing about mobile ad market is that it's going to be global in nature and different. Majority of people accessing Internet only through mobile will be outside America. The market will be global and may vary according to geography, but online advertising will drive and support a lot of services. What is happening is that carriers used to charge you for the calls, texts and data usage. But the problem is that you can't do that on a variable basis and data services will go at a flat rate.
But how do you make money when you are capped at a flat subscription rate? The way to do that will be through mobile advertising which will be a critical part of every carrier's strategy going ahead in the world. It is already so in the USA and it will be so soon in India.
Carriers need different value streams which are variable - mobile advertisements and payments will be the way to go. In India, RBI has already said that the carriers cannot do payments. So, mobile advertisement is going to be a big portion of how carriers make money in India in the future.
So do we see carriers, especially from emerging markets, continuing to hunt for ad solution providers?
Absolutely. Every carrier is thinking about what their strategy will be and in 5-7 years carriers are going to become technology companies. Carriers will end up going after cloud, which is perfect for them then mobile and big data.
Coming to Amobee, what do you think attracted SingTel particularly to the firm? Amobee is probably the only company in the world which has built its strategy around working with carriers. The company has built its technology at carrier grade which have high requirements. When SingTel decided on their partners, they wanted Amobee or nobody.
Finally, what about Globespan's view on investing in India market? We think India is going to be an interesting opportunity but it is still early. Currently it's a great opportunity if you want to invest in non-technology business and private investments in public equities (PIPEs). Traditional venture capital, what we do, will still like to see for a couple of years. I think Indian entrepreneurs like to do(build) more service companies than product companies but that is in early stages of change. In three to five years India will be a very interesting venture market to be in since the quality of talent in the country is very high.