Commentary

Div Turakhia Talks About Programmatic's Rise In Asia

Is programmatic advertising in Asia much different than it is here?

This week, a group of Chinese investors spearheaded by Miteno, the Chinese tech powerhouse, bought ad tech startup Media.net for $900 million. Two brothers from Mumbai, India, Divyank and Bhavin Turakhia, started the business in 2005.

"Div" borrowed $500 from his dad two decades ago, a recent profile on Backchanneltells us. He “just became a billionaire.” And he’s only 34.

“For Media.net, we received a lot of interest — seven bidders in the final round from the U.S., EU and China,” Turakhia tells Programmatic Insider in an email interview. “China is a large market, in fact the second largest and faster growing than the U.S. for online advertising. It provides incredible opportunities. As this deal would provide us a natural partner that is aligned to our interest, it was a huge consideration as we evaluated our options.”

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Turakhia sounds undaunted by the maze of Chinese regulations.

“I personally don't think it is more challenging in comparison [with the U.S. market]. It is just very different. It requires investments and customizations. A foreign company cannot expect to simply come in and use the same set of products with the same set of rules that they followed in their country. Without a strong local partner that has a deep understanding of the local market and has material local relationships, the likelihood of succeeding in China is extremely low.

“While there have been companies that have had to pull out, there are also many large foreign corporations that continue to make lots of revenues from China across various industries (including ones where large local competitors exist). One may not agree with some of the rules and regulations for a variety of reasons, and while you can privately choose to disagree, it doesn't mean that they can be ignored.

“[For example], weed is illegal in various states, and while many may disagree, there would be consequences in those states. When you go to China, ensure that you have invested adequately to understand all the local regulations and then play within the box that is provided. In almost all parts of Asia everything is not necessarily spelled out or documented, and hence you need local experts to help you navigate and understand the rules that are both documented and yet to be documented.”

Programmatic: $8-10 Billion Business In China
However difficult it may be to navigate, programmatic advertising in China is a huge and fast-accelerating market, Turakhia says.

“Programmatic in China is currently about a $8 to $10 billion. It is also fast growing. There is a strong market in China for our programmatic solutions and specifically our header bidding product suite. These have already proven to be very popular amongst large publishers in the U.S. where the market is so competitive. Our play in China is similar whereby we will provide our solution that centralizes private deals and programmatic guaranteed deal management across any SSP, DSP or ATD (integrated directly or indirectly) with a consolidated dashboard for reporting, workflow, trafficking and inventory restrictions.

“Also, just like we do in the U.S, we plan to license our technology stack and product portfolio to various publishers, SSPs, DSPs and other ad tech providers. We will invest in the localizations and customizations needed specific to this market, which should be about 30% different from our U.S.-focused products — i.e., programmatic is big, however there are differences in comparison to the U.S. that need to be take care of.”

Apparently, Yahoo! tried to buy media.net numerous times before being bought itself. Media.net “powers” the Yahoo! Bing Network Contextual Ads program, which promotional copy tells us “enables Web publishers easily and effectively earn advertising revenue. Publishers can now use the Media.net self-serve platform to create and customize ad units that display relevant text ads consisting of sponsored links and ad topics from the Yahoo! Bing Network.” This network works with such media entities as Elle, Good Housekeeping, Forbes, Reuters, The Street, Woman’s Day, Seventeen, Marie Claire, Esquire, the NY Daily News and lots more.

Three huge players — Alibaba, Baidu and Tencent — dominate Chinese programmatic advertising, similar to the situation in the U.S.

“Google and Facebook dominate on O&O supply in the U.S., which is what allows them to dominate on programmatic,” Div observes. “It doesn't mean that they have the best tech for it. Quality supply is always more concentrated in every region. To get to scale, our plans in China are to replicate our U.S. strategy, whereby we will get incredible volumes of high quality supply that is sourced via direct publisher partnerships with direct JavaScript ad code.”

Mobile Is Where The Action Is
Like the U.S., the China market is moving heavily toward mobile, with research from programmatic buying platform iPinYou indicating mobile’s share of programmatic digital display impressions moved to 39.2% by the last quarter of 2015.

“Asia is pre-dominantly mobile and mostly Android (all flavors),” Div comments. “Another large consideration as we evaluated our deal options as more than half of our revenue is mobile and this is only increasing (as a percentage of overall revenues).”

Given the size and scope of the Miteno conglomerate, and Media.net’s extensive U.S. ties, might we see an acquisition here soon?

“We can’t make specific forward-looking statements, Div replies. “We will explore all options, and all deal sizes across all locations. In this second phase of our journey, we want to multiply the size of our business and this will mean that we will double-down in the U.S. and Western EU, and will be adding China as a material market.”

According to deal announcement, “by market cap, Media.net is one of the Top 5 largest ad tech companies worldwide and, by revenue, the second largest contextual advertising business worldwide.”

Div expects to burn up a lot of frequent flyer miles in the years ahead.

“Similar to many large company CEOs, I am on a plane a lot; wherever I am needed. Currently, over 90% of our revenues are generated from U.S. customers, so I do spend a fair bit of time in San Francisco.”

We expect to hear a lot more about Media.net in the near future. Given the sizable number of attractive acquisitions in this space right now, another M&A announcement wouldn’t be surprising either.

1 comment about "Div Turakhia Talks About Programmatic's Rise In Asia".
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  1. John Motavalli from Freelance, August 25, 2016 at 9:10 a.m.

    I would be interested in comments about doing programmatic business in China.

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