Vserv's Plan: Build a mobile ad network for emerging markets, basic phones

18 May, 2012

What makes Mumbai-based Vserv, a late entrant into the mobile advertising space, tick? It's the company's positioning as a mobile ad network for emerging markets, and its focus on phones with basic features instead of feature rich high-end mobile phones.

Vserv, founded in January 2010 by Dippak Khurana and Ashay Padwal, was  one of the Techcircle Fastrackers (see list) this year.

"We saw users (in markets like India) increasingly downloading mobile apps and mobile content, and we wanted to capitalise on this burgeoning opportunity," says Khurana.

Both the founders have hands on India mobile advertising experience as they have worked at Mauj Telecom, a People Infocomm Pvt Ltd (Shaadi.com group) venture, which is India's probably one of the oldest mobile advertising, branding and marketing providers. Khurana has over 16 years of experience across the Internet and mobile Internet space. Prior to Mauj, he was in the wireless India business of Yahoo. Padwal comes from a similar background and also worked with Yahoo prior to joining Mauj.

Are emerging markets ready for an ad network? Remember Inmobi, India's best-known mobile ad network, didn't have an India focus initially, instead it ventured into global markets like the US and Europe. Only now it has started focusing on India and recently appointed an India country manager (see our story).

The timing may be right now. India has emerged as one of the fastest growing mobile advertising markets in APAC. Vserv cites a report from Berg Insight, an independent wireless analyst firm, where it is estimated that the total value of the global mobile marketing and advertising market will see 37 per cent growth to $22.6 billion by 2016.

It means mobile devices (especially after the none-too-expensive smartphone invasion, both locally and globally) will dominate the future of Internet and data services as accessing those through the mobile is more convenient. Consequently, mobile advertising is getting cheaper and players in this domain are getting competitive. But it is also driving newcomers like Vserv to make the most of the huge opportunity that lies untapped.

So what is Khurana and Padwal trying to do differently?

Vserve's flagship product is AppWrapper (previously called AdWrapper), which adds advertisements to developers' mobile apps (mostly J2ME apps), enabling them to monetise their apps with minimal effort and providing advertisers with a medium to target the growing mobile audience.

Vserv claims to have more than 10,000 apps listed while 150    advertisers are advertising and around 8,000 publishers are  connected to the network. Plus, 15 billion ad requests have  come in during April this year, as claimed by the company. The  differentiation from other products in market AppWrapper  enables app developers to include ads in their app without  disturbing the source code and thus developer doesn't have to rewrite the code post integrating the ad.

Now how does the company make money? While the app is free for developers, the publisher is charged. If the ad listed on any of the apps gets clicked, a 60 per cent of the revenue is given out to the developer (who can be the publisher as well, depending on the case). AppWrapper reached one of the biggest milestones, when Twist Mobile, a mobile games and apps developer, saw 20 million downloads through AppWrapper.

Vserv, which closed its series A funding of around $3 million from technology venture capital firm IDG Ventures India in July 2011, has grown from a 3-4 member team initially in 2009-10 to a 50-strong group and is looking to grow further by expanding its footprint across the globe.

The Mumbai-headquartered company already has offices in Delhi and London, while it plans to open one in Singapore soon, and later in the Middle East and Africa. "We have grown 10-12 times of what we were a year back," says Khurana, without revealing the numbers.

So what is Vserv betting on?

"India already has close to 100 million mobile Internet users. And in the next three years, this may increase to 250-300 million. We are looking to become a $100 million company in the next three years and the No. 1 mobile ad network for emerging markets," says Khurana.

The company may be up against well-funded rivals, but the market opportunity is huge. Inmobi recently raised $200 million from Japan's Softbank at a rumoured $900 million valuation while Google lapped up Admob a few years ago for $750 million. The space will remain hot for a few years to come.