Paul: Welcome to The App Guy Podcast. I am your host, it's Paul Kemp and this is the show where we go around and meet some of the great business founders, entrepreneurs, the leaders in mobile, and we try to help you as an app entrepreneur or app developer. Even if you're doing this as a side project or working on a startup, this is the episode for you because I have a great guest. He delivers huge amounts of ads in an ad network that is called Smaato. He is Ajitpal Pannu and he is the chief business officer, so we're going to talk to Ajitpal. Hi, welcome to The App Guy Podcast.
Ajitpal: Thank you, Paul. I am happy to be here. Just one correction - we are actually not just an ad network, we are an RTB exchange, and you can call it a supply-side platform if you will.
Paul: Yes, please educate us, Ajitpal. That's what you are here for. How would you describe yourself?
Ajitpal: Smaato as a company has been around for the last 10+ years, and within the last three years or so we have identified an area where we're able to demonstrate a lot of value, and that is essentially on the supply-side of things. When I say supply-side of things, it means anyone who creates content, anyone who creates an app, they are creating something that attracts users and audiences. Some of the times they can generate revenue by selling something inside the app, or charging for their app inside the store, but most of the times they are creating content and they are leveraging advertising to help them generate revenue. We are a company that built a platform that helps those guys get started without having the expertise of being an advertising expert internally.
Paul: How do you do that?
Ajitpal: Sure. First and foremost, anytime you're driving a vehicle from point A to point B, you need a vehicle, and that's essentially a platform. What composes that platform is something that allows you to manage your entire monetization stack. So if you're selling any advertising to anyone, we call that direct sales. If you are looking at someone in a programmatic world, helping him monetize that inventory, that's usually an RTB exchange, and then obviously you also work with a few folks who will take your advertising, or take the advertising space on your app and help you fill that with ads, and most likely those are ad networks who will be going out and reselling your inventory, if you will. In order for you to manage all three of those monetization stacks - that's what we end up calling them - you need a platform that allows you to do that, and the platform is called an ad server. So first and foremost we provide an ad server that we built within the last 18 months. The reason I highlight "the last 18 months" - it's an ad server that's built with all the efficiencies of monetization that are in play today. It's not an ad server that was built 10 years ago and we're repurposing it, reselling it or handing it over to our app developers, if you will. And then the second most important point is this is a free ad server. You can go to Smaato.com and within three steps you can sign up for it and start generating revenue for your app. So that's the first thing we do. Second thing is, once you have an ad server, what do you do then? How do you make money? Obviously, if you have a sales team, you could go out and sell the ads, you can traffic that inside an ad server - that's possible, but most of the times you are good at building apps, you are not good at going out and hiring a sales team and selling that content within those apps to attract advertisers. So in that scenario, programmatic marketplaces have been extremely helpful, because a programmatic marketplace is where a lot of demand partners, a lot of advertisers are connected and they are looking for sources to help them buy inventory, and they do this in a very fast-paced auction environment. So we own and operate our own exchange, and you'll hear me mention this as an RTB ad exchange, and we are very mobile-specific. This exchange operates globally, it's got a total of 290 demand partners that are plugged into it. Happy to go into details, you can tell me when it's too much or too little detail.
Paul: Well, first of all, this is great because I do remember coming across Smaato way back in 2009. What I love is that you're helping app entrepreneurs. My big question to you is there are a lot of app entrepreneurs listening to this show right now who are trying to make an income on the app store. From the things that you deliver, the ads that you deliver, the app developers you work with - is it possible for small, independent app entrepreneurs to make a living in this world now?
Ajitpal: Of course, I think it's a lot easier to make a living in this world than it was 20, 30 or 40 years ago because you needed to own a printing press, and you needed to not only own a printing press, you needed to also find a method of circulating your message. Today all you do is you build and app, and if you build an app that fulfills a need or gap within the ecosystem, you go in and put that on really just two app stores, obviously iOS and Android. And once that's done, if there's a need for it, either via word of mouth, or either via some sort of creative marketing techniques you will gain traction, you will have audiences. If you have those audiences, advertisers are interested in those audiences. And if advertisers find value in those audiences, you have a programmatic way of literally not only attracting those audiences globally from within the app store, but then also monetizing those ad impressions, where people are viewing content within your app, either playing a game or they're essentially reading through something that you might have out there. And you're able to monetize those audiences within three steps if you will.
Paul: Actually, Ajitpal, I was wondering from your perspective... The types of entrepreneurs listening to this show have sometimes tens of thousands of downloads, sometimes hundreds of thousands of downloads. What kind of revenue could they expect from monetization strategies that you offer, for several hundred thousand downloads, for example? Could you give us some sense of what we would likely earn?
Ajitpal: Sure. If you have several hundred thousand downloads, let's just say each one of those downloads happened to come in and spend time in your app... I'm trying to simplify the message here, so let's say they go in and they click on ten things within your app. So that's hundred thousand translates into somewhere in the ballpark of a million to 2 million impressions, if you will. Again, it depends on your app, how much usage there is, how much time somebody is spending in the app, and how much navigation there is and what other things they're doing. Because every single time someone goes to a new page or new section of your app, you have an opportunity to serve them advertising. So let's just assume that number is somewhere between 10 to 20 for those hundred thousand downloads. That adds up to somewhere in the ballpark of 2 million or so views and let's assume they end up visiting your app, to be realistic, 20% of the time within a given month. So that essentially translates into somewhere in the ballpark of 8 or 10 days, and you multiply that with 2 million, so you're coming at somewhere around 20 million impressions on a monthly basis. If that is the case, 90% of the audience - again, these are all assumptions I'm making - let's assume happen to be based out of the U.S. So out of those 20 million impressions, you have the ability to monetize around - another assumption - 15 million impressions, and those are U.S. audiences. Average CPM, which is Cost Per Thousand impressions in the U.S. happens to be somewhere in the ballpark of a $1 - $1.50. Again, this is a global average or a very high-level average. The more unique content you have, the more targeted, better audiences you have and we can talk about at point... Data allows advertisers to buy that inventory more aggressively and pay higher prices. Examples of data are age, gender and location. Let's assume you're able to pass all three of those. If you're able to pass all three of those, you can probably generate somewhere around $2 CPM. Again, for this conversation's sake I'll keep it very simple: $1 CPM on average is what you're able to generate, and you have around 15 million ad impressions, so you're looking at generating somewhere in the ballpark of approximately $15,000 a month as an app developer. Then obviously, if you're running [unintelligible 00:11:22] that's a decent amount of revenue.
Paul: That is great and inspiring to know because we have an audience that are really eager to try and carve out a lifestyle as an app entrepreneur. So in terms of the monetization strategies you mentioned a lot of different figures there. What can we sort of target in terms of the best monetization strategies, from your perspective? You know, video, banner ads, that kind of stuff.
Ajitpal: Sure. Yes, I think it's a great question and the reason I was thinking a little bit about it is because I'm also thinking about ad-blockers that are being introduced, and I'm sure that's a pretty hot topic if you haven't talked about it. I'm assuming you had to talk about that as a topic...
Paul: Yes, it's obviously a very hot topic for us. What do you think to ad-blockers?
Ajitpal: Well, obviously no one is doing this for free, so I think anyone who is introducing anything that allows you to do ad-blocking, they're looking for a way to make money. And if they're looking for a way to make money, usually they're not driven by cleaning up the ecosystem; they're more driven by generating revenue for themselves. However, I think as an app developer the most important thing for you to monetize your audiences - and I think anytime someone is building an app, if they focus on the content and they focus on the context, their content is being presented in, and they also incorporate advertising with those two themes in mind, and I think the easiest or one of the best ways you will hear about advertising being content and context-relevant is anytime somebody speaks on native ads. Because a native ad is nothing other than a custom ad unit; a custom ad unit where multiple assets are being communicated and you can plug-in the advertiser's assets there, that allow you to have a very soft message delivered in the form of advertising that does not overtake the content, and definitely does not overtake the context when somebody is using that app. So if all of that is kept in mind, I think that's the best approach a given app developer can take. What this also does is it does not make advertising more intrusive, it actually makes advertising more acceptable, but at the same time it also allows you to monetize your app while you're giving away free content to users that are coming to your app for the real reason you developed that app for. So I think that's the overall theme an app developer should think about: they have full control of their app. They have full control of the content, they have full control of the context. If that is the case, they also have complete control of how the advertising should be presented. And I think if all of that is done, ad-blocking probably will not be as big of a topic.
Paul: Actually it just comes on the back of a few episodes before you - episode 375 for anyone listening - we did talk about ad-blocking with the editor at large at The Next Web, and it was his view that actually even though we expected this huge uptake of ad-blocking and all the users will be using ad-blocking, he didn't think that there was this big wave of people switching it on. It just seems like that's not a big issue. Would you agree with that?
Ajitpal: A hundred ten percent. And the reason I say this is the amount of inventory and amount of apps has exploded, and I think even if people start blocking a certain percentage, it will have a very minimal effect on the entire ecosystem. I think more importantly ad-blocking only plays a role when someone is annoyed, and I think if someone is annoyed from a given app and from a given experience, that basically means whoever developed that app, they did not focus on user experience, they did not focus on their audience, and I think they deserve to be blocked. So I agree, I don't think ad-blocking will have any negative impact. If it does, it will have an impact towards more cleaning up the ecosystem as a whole.
Paul: We were going to talk about the types of monetization, differences between video ads and all the other stuff... Maybe we can go through that, because there are developers who are listening to this show and would expect to know what would be the best to put into their apps, to cause least frustration.
Ajitpal: Sure. I'm a big fan of all the different formats, and I think the way we look at the ecosystem is we look at a box. You have a box within your app, and the goal here is to present that audience when they're reading the content with the most relevant advertisement that is tied to the content, context and all other parameters where the advertising message is getting delivered to that given audience. I think that's really what advertisers look for. So with that in mind, I don't think there's one or the other format that's better. I think if you have the ability to incorporate video, obviously there's more value for video, but also at the same time if video volume grows significantly you'll face a supply and demand problem, where basically there will be too much supply of video available; that drives down the price and obviously increases a lot of ad quality issues, increases problems. So I think it really comes down to someone looking at the content and someone evaluating what's the best format I should be presenting the message in. I think - and this is where I mentioned the word "native" - within a native ad unit, you can display a content, a message, you can control an image inside a message but at the same time you can also serve something of a format which is a video inside that same ad unit, and I think that's really where it's going. I wish I had a simple answer for you, to say "Yes, everybody should do video ads because they generate a lot of CPM." However, if that video ad - or the box - is not relevant to the context of that given app, or the content of that given app, then obviously you'll have a bad audience or user experience, and eventually you'll lose someone who is using your app. So I would say more to think about is you have a box and think about all different options of presenting whichever is the right format that fits into the message you're trying to deliver as a whole.
Paul: Yes, what I'm learning from you there is just keep it relevant to the user experience; that tends to cause less frustration and more monetization.
Ajitpal: Yes, exactly. Really when it comes to the format and you supporting those formats, that is very simple and there is a lot of content that's available around it. We've just recently released a monetization guide inside of our blog post area for app developers [unintelligible 00:18:51] and I think the decision should be that you leave yourself open to all the different formats; then you can accept and you also maintain control through an ad-serving platform where you essentially are able to plug-in the right format that fits into the content and the context.
Paul: There are two more things, Ajitpal, before we say goodbye to you we'd like to cover with you. One is that we love to try and identify problems and pain points that our guests are experiencing, and I wondered, in your role there as chief business officer at Smaato, what are the real pain points you see in trying to do your role, and maybe we could flash out some kind of solution, or even an app idea.
Ajitpal: Sure, so what is the problem in my role... Thinking out loud...
Paul: What's causing you a real frustration?
Ajitpal: Sure. I think there are a lot of apps out there that allow you to manage your day and manage all the different things you do during the day, so, for example you can take notes, you can do a number of those things; however, the biggest challenge I think any individual faces is how exactly do you use that content and then that content automatically prioritizes itself based on... So I guess I'm talking a little bit about machine learning here, and the ability to not only just read that content, but based on the content it prioritizes the given tasks that you should be focusing on. I think all of that kind of comes back to being very efficient with your time and with the opportunity you have in front of you within a given day, in order to address the most important items. I think that's a challenge we all face - efficiencies around getting things done.
Paul: I love that, yes. Machine learning as well, for things coming into us, the way we choose time even if it's just a few minutes here and there, trying to focus time. I definitely think time is one of the hardest things to manage. Ajitpal, this is a show about apps, this is the last thing we'll ask you... We love to talk about apps, we'd love to know... Do you have one or two apps you could recommend to us? Maybe ones that we may not have come across before.
Ajitpal: Sure, so let's see... What are one or two apps that I use on a regular basis? I think there's a Pocket app - I really like using Pocket app because I'm able to cut and paste and put things in there that I want to come back and revisit on a daily basis. Frankly speaking, I think app discovery is much easier and I think the goal is how do you minimize the number of apps, but more importantly is... Actually yes, two additional ones that are my favorites come to mind. I think when you're having an extremely busy schedule with family and with work, how do you relax yourself? So I have two apps that I use to take a break from everything else, and you'll laugh at the first one. Because the first one is an app my daughter installed and I end up using it quite a bit just to kind of play the game, and it's the Frozen app. It's by Disney, and it's themed around the Frozen Movie and it's called Free Fall. It's just a game. Frankly speaking - I hate to admit it - I end up playing this quite a bit, partially to get my mind off everything else; that's one. The second one is Buddhify, it's actually a paid app and it's a very good relaxation and meditation app.
Paul: Those are actually two apps that we've never heard before, so congratulations: 377 episodes and they're the first two we've ever heard, Frozen and Buddhify. I will make sure, for everyone listening, you have links to those apps and the things we've discussed on episode 377 of The App Guy Podcast. Just go to theappguy.co and you'll be able to also get links to Ajitpal. How best can people reach out to Smaato or yourself, Ajitpal? What's the best of getting in touch?
Ajitpal: Sure, if you're an app developer, I highly recommend you go to Smaato.com and you sign up for the SPX Platform. It's free, you literally have the ability to integrate your app within three steps, and you can start generating revenue. The end result is if you can help someone make money they will always like you, so I would say that's one that they can reach out to. If they have any questions for me personally, happy to be contacted, it's my first name @smaato.com
Paul: Wonderful. Well, thank you so much for coming on The App Guy Podcast and all the best with growing over the next ten years.
Ajitpal: Thank you, Paul. Looking forward to it.