Simon Khalaf, the CEO of mobile adtech company Flurry, tells Business Insider that an IPO is inevitable in the company’s future because his business has grown so big.
There has been gossip about a possible Flurry IPO for months now. Large adtech companies are often aimed specifically at IPO “exits,” so that their venture capital funders can get a payback on their investments. Millennial Media, Tremor Video, YuMe, Criteo and Marin Software have all gone public recently. Yet when CEOs are asked directly if they want the rich rewards of floating their companies on the public markets, they usually demur or hedge.
When we asked Khalaf about an IPO exit, however, he was refreshingly direct: “I consider an IPO an entrance,” he tells us. “We don’t have a choice, our volume is too high and our scale is too big for anyone to absorb us.”
Flurry has a net revenue run-rate of about $100 million. It has 150 employees and has taken $50.5 million in funding from investors. And although that doesn’t make Flurry the biggest player in mobile adtech — InMobi and Velti still have more employees, and Millennial has greater revenues — it is one of the biggest players in big data analytics and mobile app ad reach.
Here’s a slide on the number of mobile devices — 1.1 billion — Flurry reaches with ad impressions inside apps from Khalaf’s pitch deck:
It’s an alarming slide, because everyone knows that Google has the largest share of mobile ad revenue on the planet, which is in the billions of dollars. But the Flurry slide refers to reach on devices via ads in apps. Google’s mobile ad business is largely search. And the bulk of consumer time spent on mobile devices is in apps, not on the web, Khalaf says. Here’s the slide he uses to illustrate that point:
Flurry offers the full mobile ad stack, including a “supply side platform” for mobile app publishers who want to offers ad space for sale, a “demand side platform” for buyers who want to place ads, an analytics suite to measure the whole thing, and most recently a “real-time bidding” platform so that buyers can place ads on a live auction basis. That RTB marketplace, launched in April, already has 30 DSPs buying in it, Khalaf says. The Guardian and The BBC both use Flurry as publishers.
There is one more thing Khalaf is unusually direct about. Flurry is not yet profitable, he says. Usually when adtech CEOs are asked whether their businesses make money, they launch into an explanation of how they’re investing for growth or scale (or they say something impenetrably complicated about EBITDA). When asked whether the company is profitable, Khalaf says, “No. In 2014 we’re profitable maybe.”
The reason: Flurry is spending $28 million a year on data centers. “The cost of analytics is huge,” Khalaf says. Flurry wants to create the largest HBase cluster in the business, he says, referring to the gigantic — and gigantically expensive — database serving devices that can handle millions of lines of tabled information.
Too many brands and businesses still try a scattershot approach at social media. They try to be everywhere and spread their efforts too thin.
They also apply a one-size-fits-all approach. Whether it’s in-house or external social media marketing teams, they craft campaigns around a single communication style and a rigid set of formats — and expect them to drive the same results across platforms.
Particularly for smaller or niche players — or really, anyone on a constrained budget — it makes more sense to double-down on a single platform, learn its idiosyncrasies, and become an expert at cultivating its audience base.
In a new report from BI Intelligence, Business Insider’s paid research service, we dig into the reasons why platform-centric approaches make more sense, and explore how to make them work. Here are the benefits:
- Social media budgets become more manageable. Your organization will no lon! ger leak dollars with a half-hearted attempt to be, and post everywhere.
- Brands and businesses will gain a more authentic voice. It’s difficult to develop a genuine, humanized voice on every platform. Attention to a single network will help brands cultivate a more persuasive personality.
- Become more efficient. Many companies on social media see a great deal of success on one platform, but still grind away at others. Why not focus resources on where your engagement is deepest?
- Improve your chances at earned media and viral success. These grow out of a deep understanding of a social network’s idiosyncrasies, not by throwing everything at the wall to see what sticks.
- Develop a knack for avoiding social media gaffes and bloopers. Many of the social media foot-in-mouth moments of recent years grow out of a lack of comprehension for what makes each network tick.
- Users have developed sophisticated network-specific cultures. They can spot a poser from a mile a way.
- Creative freedom: This may sound counter-intuitive, since choosing to focus energies on a single platform would seem to close off options. But focus actually opens up opportunities. Ideas come more easily once a single primary platform is chosen.
- Avoid top-down strategies that try to fit round pegs into square holes. Ideas for posts and campaigns will be driven by a more bottom-up thought process. And not by the nebulous question, “What’s our social media strategy?”
- Drive better recruiting and contracting decisions. If a single platform is prioritized, the search for social media talent becomes clearer. Different kinds of expertise are required for each network.
- Finally, a deliberate platform-centric approach allows for more straightforward testing and tracking of results. If one platform focus doesn’t work, another emphasis can be tried. But data will be cleaner and priorities will be easier to rearrange.
Victoria’s Secret is facing a deluge of competition from lingerie start-ups that seek to challenge the brand.
Brands like AdoreMe, Intimint, and True & Co. are trying to seduce Victoria’s Secret customers with lower prices and more tailored selections.
AdoreMe offers direct-to-consumer lingerie at about half of Victoria’s Secret prices.
Intimint asks customers to take a quiz and sends them new lingerie selections every month, based on their preferences. True & Co. sends women five bras a month, giving them the option of keeping what they like and sending back what they don’t.
While these brands are consumer-friendly and creative, their business models ignore exactly what makes Victoria’s Secret so successful.
In the ’90s, Victoria’s Secret used to focus on value. But the brand floundered because there was nothing to set it apart from other price-friendly brands like Hanes and Maidenform.
Victoria’s Secret didn’t start dominating lingerie until it stopped being cheap and began focusing on the customer experience.
Stores were redesigned with soft, pink wallpaper and inviting fitting rooms. Friendly, attractive associates were trained to greet customers and measure their bra sizes.
Women were willing to pay $50 for bras because the luxury experience made their lingerie purchases feel like investments.
This attention to customer service helped Victoria’s Secret overtake competitors like Frederick’s of Hollywood and ! post rec ord sales even during an economic downturn.
AdoreMe CEO Morgan Hermand-Waiche told Business Insider that “people are so tired of high prices and slow-fashion from Victoria’s Secret.”
But Victoria’s Secret’s sales suggest differently: The brand recently reported a 6% increase in the second quarter, on top of a 10% increase last year. That’s among the best in the retail industry.
Women don’t line up at Victoria’s Secret because it’s cheap or has an ever-changing assortment of merchandise.
They trust the brand and feel like a trip to a Victoria’s Secret store is a treat.
Victoria’s Secret offers an experience that e-commerce retailers simply can’t compete with.
drag2share: How 4 Major Companies Revitalized Their Brands By Being Great To Their Customers On Social Media
Most brands offer dreadful customer service on social media. A study from Socialbakers, a social media analytics company, found that response times have actually worsened recently, instead of improving, as the chart shows. But a few companies are doing great things with social media, and helping to recast their companies as customer-centric organizations.
In several cases, companies facing crises or PR disasters actually came out looking better after using social media to tackle problems head-on.
In a new report from BI Intelligence, Business Insider’s paid research service, we explore how companies are interacting more effectively and serving customers better with a focus on social media, and recreating themselves in the process.
Here are a few examples of great social media customer focus that has created value for companies across industries:
- Dell: The computer technology corporation was an early adopter of social customer relationship management and in 2010, Dell opened up its soci! al media command center to all employees, regardless of their function. By 2011, Dell had trained over 25,000 employees of its employees in “social listening.” These employees now monitor over 25,000 social mentions of the company daily in 11 different languages. This means insights gleaned from social media are spread throughout the organization rather than being “hoarded,” or remaining undigested in one department.
- Domino’s: A disastrous YouTube video posted in 2009 showed two Domino’s employees mishandling a pizza. After the video went viral, the company launched a massive campaign to analyze public opinion across all social media. After receiving negative feedback, Domino’s made company-wide changes including altering their pizza recipe, aggressively reaching out to customers on social media, and launching a marketing campaign acknowledging mistakes and promising a better product. Domino’s saw a 14% increase in sales the quarter immediately following the campaign. The stock price took off, and Domino’s has never looked back.
- Best Buy: The electronics retailer unrolled a Twitter-focused marketing and customer service strategy built around “Twelpforce,” a system the company created to allow thousands of employees across departments to receive and respond to customer queries via Twitter. While Twelpforce has been a hit with customers, it also gave employees a channel and an incentive to collaborate internally and operate outside of silos (in order to handle customer requests it was often necessary to gather information from other employees.)
- American Airlines: Socialbakers recently began ranking industries and brands according to “social devotion,” or how attentive they are to customers on Twitter. Surprisingly, troubled America! n Airlin es ranks ninth among all U.S. brands (American has a response rate of 94%). Jan Reza, CEO of Socialbakers, believes this has to do with a lesson learned from Superstorm Sandy. Finding they had to deal with a system-wide near shutdown, American Airlines turned to social media to manage the crisis. They’ve remained faithful to social media channels ever since.
Paying to stream: Pandora’s free-rider problem
Not a single respondent giving a definitive answer who uses Pandora said they pay for the service’s premium version, which cuts out ads, allows for offline listening through a Desktop app, and ostensibly provides higher-quality audio.
On the flip side, among Spotify users, more said they pay for the premium version — which allows you to listen offline, on any device, and without ads — than said they stay with the free version.
And some color:
“I no longer buy music . Spotify has everything I need, and I’m just fine ‘renting’ it all for $10 per month.”
“Today, I think Spotify makes sense, but I’m too cheap to pay for it on my phone. I like iTunes Match because it’s all of my music on my phone. If I want to test something out, I use free Spotify on desktop and if I love it, I buy it.”
I stream, mostly using Spotify. I pay the $10 a month for the premium, so I can listen on the computer at work and iPad/phone at home. ”
“I’m using premium most of the time these days. I stream exclusively. You Tube is a close-second.”
Paying to download: End of an era?
The advent of the iPod, and with it iTunes, is generally credited with ushering in a new era of music consumption, as well as pulling the music industry out of its Napster-induced tailspin.
But our survey suggests that era may already be waning: the majority of BI’ers say they hardly ever, or never, pay to download music anymore.
drag2share: Why Millionaires Are Lining Up To Help Students Pay Off DebtHow does it work?What’s in it for the backers?
Upstart, a company aimed at helping college students-turned-entrepreneurs raise funds for business endeavors (and pay off lingering student debt), is barely a year old and already has wealthy entrepreneurs lining up to give young people a leg up.
They must be doing something right. Since launching in November 2012, more than 200 backers have made 1,000 unique investments in Upstart projects. Of the 120 Upstarts on the site now, about half have been successfully funded.
L.A.-based entrepreneur Tony Safoian was an early supporter of the site. He’s run his own successful cloud computing and IT consulting firm, SADA Systems, for over a decade, working closely with Upstart’s founders back in their Google days.
“It took me a while to understand the business model, but I definitely feel like [Upstart] is potentially groundbreaking,” Safoian told Business Insider. “I always like being on the ground floor, not taking a massive risk but … literally being a customer or a member and getting integrated that way.”
How does it work?
After passing a rigorous background check, would-be entrepreneurs build a fundraising page with their business proposal and credentials laid out, just like an artist might raise funds on Kickstarter. Then, the site’s cache of “backers” (i.e. investors) have their pick of the litter. Investments start at $100, and backers can fund however much or! little they’d like. On the flip side, Upstarts can also deny investments from backers if they choose.
What sets Upstart apart from other crowdfunding sites is the option backers have to also offer themselves up as a mentor.
People have predicted that technology would destroy Jason Cohen’s family’s company for decades. Document management does sound pretty old-fashioned. But Cohen, recently named Virginia’s Small Business Administration Small Business Person of the Year, has managed not just to keep his company alive, but also to turn technology into an opportunity.
ILM Corporation was started in 1976 with technology for converting hardcopy materials into electronic files and manage them. As more companies started keeping their own digital files, however, business started drying up.
Soon after Cohen joined ILM in 1992, the staff had shrunk from hundreds to only six people. It was a rough period.
“You don’t avoid the pitfalls,” Cohen told Business Insider. “We all go through them and a good friend of mine once said, ‘tell me what change isn’t bloody, ugly, and messy.’”
Cohen started turning things around after buying the company from his parents in 2001. While technology had killed some jobs, like picking up The Washington Post at 2 A.M. to digitize it, technology also opened new opportunities.
“Our love affair with paper has diminished somewhat in terms of how we’re using it,” Cohen says, “but the amount of information has expanded exponentially.”
These days people expect that information to be accessible faster than ever.
Dr. Augustine Fou is Digital Consigliere to marketing executives, advising them on digital strategy and Unified Marketing(tm). Dr Fou has over 17 years of in-the-trenches, hands-on experience, which enables him to provide objective, in-depth assessments of their current marketing programs and recommendations for improving business impact and ROI using digital insights.
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