Having seen Digital Marketing life cycle and spends briefly - there are below key players broadly speaking
- Agencies - content, creative, campaign etc.- more of services characterized
- Publishers, Exchanges etc - ad inventories etc - more of sell side - Times group, Google and FBs of world( one facet as their biz is humongous)
- platforms with Ad Tech/Mar tech - Again google And FB as well as Affles of the world.
Now, we all can observe that money flows from brands to above 3 in some mix and configuration. In india 2010 onwards there is decent mktg budget growth with digital pie growing at higher pace( noteworthy that mobile initially was smaller share in digital but should be lion share as we go forward).
Coming to Affle, positioning aspects they got two solid tailwinds -firts thing is to be specialist in Mobile focused advertising( smart move, though they may have started as generalist), with timing in their favor( mobile usage boom, cheap data and thus low spend cost) and an outcome based pitch of CPCU which sounds disruptive( most Agencies preferred clicks/impressions as well as omni channel campaigns).
Technicalities aside, Brands and Agencies love outcome based pricing and Affle just did that at a scale and profiling engine and ML/algo claims( still to get convinced here).
Lion share of Affle comes from Agencies and per latest concall tech savvy brands increasingly turning their direct customers.
This is a very fragile space - as in if campaigns dont deliver - Agencies or Ad tech partner will not get enough spend allocation- so must give that Affle doing well and delivering to clients must be happening effectively else numbers wont simply come the way they have.
For Short to low mid term - There doesn’t seem a comparable competition to Affle, aided by network effect of higher usage delivering more profiles which in turn helping outcome quality for clients and non linear co relation with expenses( platform aspects), they seem to be only sizable contender with scale.( lack of research here on their profile engine)
Coming to google and facebook, they have larger challenges/opportunities to focus - Affle in no way seems a threat - infact it could be an acquisition target should they want to be closer to agencies and brands.
For sure being a Tech platform, it is bound to have disruptions( content moving to Video, subscription based usage, VR and AR catching up…), this is where it is imp to nibble relevant skills as Affle grows- and they seem to be on path.
Party is there to last for some time given mobile usage growth ( few quarters or longer is anyone’s guess) given tail winds but dont see this as secular story yet.
One key thing to observe would be any sizable uptick in floor prices for telco leading to higher data prices may play spoiler as it may affect mobile data consumption growth to some extent( hence price dynamics which is skewed to digital mobile ad performance). Probably a risk for entire sector.
Discl: Tracking position and interested.