Rewards and discounts are effective for companies like Facebook, Alibaba, Flipkart, etc., but not for small companies
MoMagic has been at the forefront of a silent revolution of sorts in the mobile internet space. The Noida-based company, which is headed by Founder and CEO Arun Gupta, has been helping a number of businesses — small, medium, and large — to acquire and retain customers using its cutting-edge solutions.
MoMagic, which is backed by FIH Mobile (a subsidiary of Taiwanese electronics giant Foxconn), is now eyeing the Southeast Asian market, and it has already started operations in Taiwan and Vietnam. It has also backed a handful of startups, including mChamp and Pickaboo (an e-commerce venture in Bangladesh).
The firm is now venturing into the adtech space and has an ambitious goal to become one of the Top 5 players in Southeast Asia by 2020.
Gupta recently talked to e27 about the mobile internet and adtech market in Southeast Asia. Edited excerpts are below:
For any apps, customer acquisition is the most difficult part. How does MoMagic help companies tackle this challenge?
In India, smartphone penetration started in 2012-13. Until 2015, most of the people buying smartphones were the first time users. First-time smartphone users did not know what app to download. So, there was a need for influencers to influence the market.
However, things have changed for the better. Now you can see that users are aware of the app, and the whole market is getting stagnant. So, we educate the consumer about apps when the phone is in their hand, and it’s the right time to influence them. This is where mobile advertising or adtech comes into place. MoMagic is quickly moving towards mobile advertising or adtech.
In the old ways of acquiring customers, the retailer, as well as the handset maker, played a role in influencing the market. But this practice has become stagnant and is slowly diminishing. The smartphone buyer or consumer is not the first time buyer anymore. Consumers do not need input from anybody and are capable of buying a smartphone. So, MoMagic penetrates in the ecosystem to help app companies to retain their consumers.
After the initial excitement, most users uninstall apps, seriously bleeding the business. How does MoMagic help enterprises address this?
In the early years, in 2014-15, VCs invested in app companies based on the app installation rather than usage. But things have changed. Now, the funding or success of the app is based on the usage, not installation.
MoMagic Founder and CEO Arun Gupta
Suppose a specific app was installed by 10,000 people, but only half of them are using it. Then the business should rethink its strategy. Today, the success parameter for apps has changed.
We need to understand that nobody can increase the app retention beyond a certain point. There is a term called ‘retargeting’ where people like MoMagic are playing a role to get that customer back into the system. MoMagic helps client to do the retargeting.
For instance, if you open a news site, say NDTV.com, on a browser. MoMagic’s already knows that you are a Flipkart user. So I can tell NDTV to run a Flipkart ad on your site when the use visits it. That’s how retargeting works. It’s just one of the multiple ways of retargeting.
What are the different techniques used to acquire customers? Do companies indulge in fraudulent activities to exaggerate their userbase?
Honestly, beyond a point nobody can exaggerate. They don’t exaggerate in system but, maybe, to the media. But still if they manipulate it will be just 5-10 per cent only, and not too much. I have not seen companies technically manipulating their data. It’s more manipulated when they speak.
Do you think the strategy of gamification/rewards really helps companies acquire customers? Brands also offer huge discounts to retain customers. Is it an effective way?
Strategies like discounts offerings, rewards etc., will help you only beyond a threshold level. It is an effective way for companies like Facebook, Alibaba in China, and Flipkart in India. This practice is effective only when you crossed a threshold. There’s a term called LTV (life-time value). If your LTV of customer is higher than your user acquisition cost, then your business is sustainable. If your LTV of is lower than your user acquisition cost, then your business is not sustainable. This happens only when you cross a threshold.
You aim to be among the top 5 players in Southeast Asia by 2020. How are you going to achieve this?
We are constantly preparing ourselves. We are moving and learning and making strategy. We are adoptive to accept the change in the industry. In adtech, there are three major components — publisher, advertiser and system or data management platform (DMP). All our investment have helped us. Our product Adgyde helped us secure good data analytics, mChamp-provided us a space for publishing in mobile, and e-commerce platform Pickaboo will be the biggest advertiser in future.
The Pickaboo experience will help us understand the intricacies of the e-commerce market and provide better services to our clients and consumers. We hired Jason Wu for Southeast Asia; it is our strategy and slowly, it can shorten our journey to become among the top 5 players by 2020.
What opportunities are you seeing in Southeast Asia, especially Taiwan? How is the market dynamics in this region different from India?
In India, smartphone penetration is still 30 per cent. But in Taiwan, its almost 80-90 per cent. So in India, you may see first-time internet users, but not in Taiwan. So consumer behaviour is totally different, economic conditions are different, purchasing power is different, and lots of things are different.
In Taiwan, the market is much more developed. The culture is different from India. So, the whole AI, DMP has to be tuned, planned and designed accordingly.
You have already made two acquisitions. Are you looking for more? Anything in the offing yet?
We are open to acquire companies, but haven’t yet identified any company yet.
We are looking for a company whether based out of India or anywhere around to help us achieve our goal. Being an Indian, it’s a preference to potentially invest in an Indian company; otherwise there’s no restriction.
You have already invested in a handful of startups. Have you ever thought of launching a proper VC fund to nurture and support startups in the mobile internet space?
Honestly, we have incubated a lot companies like AdGyde, mChamp and Pickaboo. We have not thought of forming a VC fund yet. Probably, it won’t happen in the next three years, also.
Why are you so upbeat about adtech space? What opportunities are you seeing there? What’s the future of adtech industry?
Now, all this advertisement revenue and expense from ad slowly moving from electronic print media to digital. That has happened in developed countries already, and the same will happen in developing countries also. Currently, it is 15 per cent to 20 per cent.
There are two ways to run an advertisement. One is intrusive way and other is non-intrusive way..Industry has to find a non-intrusive way.
The post Discounts and rewards can only go so far unless you are a big company, says Arun Gupta of MoMagic appeared first on e27.