Adtech wiz Bidstalk’s journey to acquisition traces the rapid evolution of online advertising
Little over a year old, Bidstalk has a cool tool to help advertisers bid for ad slots from publishers in real time on ad exchanges. The real-time bidding (RTB) product, launched at the Mobile World Congress last year, unshackles advertisers from traditional ad networks, while at the same time throwing open new revenue possibilities for publishers.
AppLift, which is in the business of marketing and monetizing apps and games, was one of Bidstalk’s clients for the last six months. That association inspired the two companies to meld.
Vaibhav Gupta, co-founder and CEO of Bidstalk, explains the rationale behind it in an exclusive chat with Tech in Asia:
In a way, we are a more technologically advanced company, while they are a very successful business with strong sales and marketing. Both of us are a good fit because we can help them grow their business programmatically and they can help us get more sales.
Tim Koschella, co-founder and CEO of AppLift, also explains what it means from the German company’s point of view:
We believe that in order to build an outstanding mobile marketing company, one needs to master the three pillars of data, technology, and services. AppLift has been strong on leveraging data for our clients’ user acquisition campaigns. What Vai and his team at Bidstalk bring to the table is their RTB expertise paired with rockstar technical skills. The RTB module was a missing part in our mosaic.
The deal is on a thin line between a merger and an acquisition. “It was more of a stocks swap. Our whole team has become part of AppLift, but our product will stay as Bidstalk,” says Gupta.
Fast moving space
Adtech is one of the most rapidly evolving spaces. It hasn’t even been a decade since ad networks that connected publishers and advertisers burst onto the scene. They aggregated inventory from multiple publishers to help marketers buy impressions across many websites.
Then came a more dynamic model – ad exchanges where ads are auctioned. Publishers too could now pick and choose advertisers easily, and vice versa. Both could do business programmatically and real-time bidding (RTB) became a game-changer.
In late 2012, there was no bigger news in advertising than social network Facebook kicking off its own ad exchange, FBX, to monetize its user base of millions. Indian startup superstarInMobi, which claims to have the world’s largest mobile advertising network, also launched an ad exchange recently.
“Advertising has become more competitive than ever before. There are so many biggies, including Google, Facebook, and LinkedIn, getting more and more into the advertising business. Frankly, I feel a big player with deep pockets has an advantage,” says Gupta, pointing out the logic behind the AppLift acquisition of Bidstalk to be a viable player in this fast moving game of online advertising. “Two medium-sized companies merging to become a big company today makes more sense than a small company trying to fight its way to growing big tomorrow,” he says.
A seven-month roller-coaster ride
When I first met Gupta eight months ago in September 2014, Bidstalk had just graduated from the Blackbox Connect program. It was the only Indian startup picked for the two-week intensive course in Silicon Valley, where entrepreneurs, investors, and experts put their heads together on every aspect of running and scaling up a business.
Bidstalk had 20 clients, a team of 23, and a bunch of media partnerships on the anvil. Then in November last year, at the ad:tech conference in New York City, Bidstalk launched its mobile video platform with partners Mopub and Inneractive. It simply floored the pedal in the next few months – “doubling revenue every month, turning profitable, and growing the team to 44 people.”
If there’s one thing that the Bidstalk journey throws up clearly, it is the shortening adtech innovation cycles.
Let’s go back to the beginning, when Gupta got his feet wet in online advertising.
A dummy’s guide to digital advertising
Gupta started out 12 years ago with the Advertising.com team in AOL. A freshly minted engineer from the Bangalore Institute of Technology (BIT), he was thrilled to work for one of the three biggies of advertising. Like Advertising.com which was acquired by AOL, the other two – RightMedia, and DoubleClick – were acquired by Yahoo and Google respectively.
That was an age when digital advertising was manual. You had to make calls if you wanted to place an ad. Even when Google first displayed ads, a sales rep sold the ads.
The pay-per-click, self-service model ushered in by the likes of Advertising.com might not sound very impressive now, but back then, it was novel.
Inspired by what he saw and learned, Gupta started a company, GoLive Media, in 2008. A subsidiary of GoLive Mobile in the US, it focused on content delivery on mobile phones through text messages or SMS.
“We were one of the early mobile traffic buyers and had astounding revenue growth for three years. In 2011, we were ranked the fastest-growing media company in the US by Inc,” Gupta recalls.
Meanwhile, social networks took off. Facebook got into advertising.
Hopping on to the Android bandwagon
Android was just starting to gain traction around then. Not many cellphones had the operating system but the early adopters were already gushing about it.
Gupta and the GoLive team decided to get on Android quickly. They launched a software development kit (SDK) for interstitial ads – full screen ads that cover the interface of their host application – but that didn’t click. “So we started pushing our ads through the notification tray of Android. That became our unique selling proposition,” he recalls.
Gupta also enrolled into an MBA program at the Indian Institute of Management (IIM) Calcutta. But he found pushing the envelope on adtech much more engrossing. “2011 and 2012 – that was the golden age of ad networks. InMobi did fabulously well. VServ was growing.”
But the next cycle began soon enough. Ad exchanges arrived. And real time bidding.
A metamorphosis in buying and selling ads
A thorough insider of the space by then, Gupta knew it was time to shift gears in 2013.
Real time bidding (RTB), by then, had moved from being just an appealing concept to a reality, as more and more publishers on the web and mobile apps embraced it. In an automated, algorithm-based process, RTB lets advertisers buy inventory from publishers in a live auction. Bids are placed in real time on a per impression basis.
“RTB makes ad buying and selling more targeted, transparent, and efficient. It gives an advertiser the potential to maximize impact by reaching consumers anytime, anywhere,” Gupta explains.
While all this was going on, Gupta met Guna Kakulapati, who was a technologist with Google. With a decade’s experience in advertising, Kakulapati had 10 patents to his credit. He and Gupta founded Bidstalk in November 2013. They later roped in two more co-founders – Rishi Agarwal and Vipul Jain.
A plug-and-play tool
The idea was to build a “white label DSP (demand-side platform). In simple terms, the product enables advertisers – who mostly work through advertising agencies – to bid for ads programmatically on exchanges.
DSP is the system that allows buyers [ad agencies or advertisers] and sellers [publishers] to operate in multiple ad exchanges and do real-time bidding. A white label product is something made by a company that other companies can buy, tweak, and rebrand to make it appear as if they had made it.
“Using our product, advertisers or agencies can transform into mobile programmatic buyers overnight as they get our customizable DSP,” Gupta says. According to him, the key benefit for advertisers is access to massive real-time inventory, which helps them buy suitable ad slots at the price they want.
An initial mistake Bidstalk made was to assume that the market was ready for the plug-and-play white label DSP. While publishers were taking to it, advertisers were hesitant to acquire a new technology and learn the ropes of wielding it. “So, we changed our approach. We now let advertisers or agencies try out Bidstalk for a month or two. They can see how it works, what it involves, and find out if it is useful for them. Only after they are fully aware of all the aspects will we ask if they will be a client. This approach helped us get clients much faster,” Gupta says.
Bidstalk also got into strategic partnerships with several premium exchanges like Google, Twitter, and Flurry (Yahoo) to make its product more appealing for advertisers.
Means to an end
Today, marketers access analytics to figure out their target audience and want to go after only those users who are most likely to buy their wares. And publishers, in turn, want to pick and choose their advertisers. Ad networks enable that to an extent but publishers, marketers, and advertisers prefer to be in the driver’s seat with more control. RTB gives them that.
For example, if I am Angry Birds, I wouldn’t want to show my users ads of a competitor. I want to show ads of brands that do not compete with me in any manner. I also want to know how much money I make per ad impression, so that I can decide on how much advertising to allow on my app.
Also, RTB makes pricing more transparent for both advertisers and publishers. “So an advertiser can go after an unexplored market where he doesn’t know the real market value for the ad slot,” Gupta points out. A Bidstalk plus is that its clients do not have to integrate multiple SDKs if they want to work with multiple ad exchanges.
Now, with the AppLift merger, Gupta expects Bidstalk to outdo competitors like LiquidM, a German company. He can relate to Snapdeal’s acquisition of Freecharge last month. “Both were medium-sized companies doing quite well independently. But now, after the merger, they are bigger than any of their competitors in the Indian market for mobile commerce,” Gupta says.
ASquare Media News department was not involved in the creation of this content.