A major acquisition in the mobile advertising space seems only a matter of time as e-commerce players flex their financial muscle to bring in the next piece of their jigsaw puzzle. Sources indicate that the likes of Flipkart, Snapdeal, Amazon and ShopClues are all in the market for acquisition. The targets seem to be broadly divided in two categories—mobile tech and mobile banking/financial platforms.
Top of the list currently seems to be Komli Media. A person familiar with the situation told us that all four e-retailers have either had a look at the company’s technology platform or are currently in the process of doing so. It has also been learnt that Flipkart were interested in Komli Media as early as December before acquiring AdIQuity in March this year. Amazon is also said to have been in talks with the mobile advertising agency. Currently, reports indicate that both ShopClues and Snapdeal are in talks regarding a possible acquisition though it is difficult to verify the veracity of these rumours since all three parties are keeping silent on the issue.
The question to ask is what does Komli bring to the table for these e-retailers?
For one thing, Komli Media restructured its organization back in 2014 to focus on social media and remarketing. As a concept, remarketing is still relatively new in the Indian market and so Komli has the first mover advantage. Speaking to exchange4media back in February when it announced this realignment, Ashwin Puri, VP (Remarketing) , Komli Media said the key verticals would be online travel and e-commerce. In fact, Myntra (which was later acquired by Flipkart) was one of the first clients of the remarketing platform.
Komli Media restructures,to focus on remarketing demand side platform
The idea of remarketing; basically trying to convert customers who have left without making a transaction but expressed interest is of particular interest to e-retailers. For example, studies in the US market suggest that strategic marketing and remarketing techniques have led to 40-60 per cent better open rates than standard.
The company also has a number of diversified product offerings unlike other mobile advertising agencies in India that usually specialize in a particular vertical. Also, Komli boasts of an experienced leadership team. For example, CTO Apurva Dalal has worked with Google and eBay. Founder and CEO, Amar Goel is well known in start-up and mobile circles, while CFO Rakesh Malani has had earlier stints with Capgemini, Reliance Industries and Oracle.
But is Komli Media worth the money, especially since one media report pegged the size of a potential deal to be around $300 million. The agency was still struggling to turn profitable as of 2014, though sources say this has improved since the last quarter of 2014. It is also working as the official sales partner for Twitter in the country, but, with Twitter working on setting up its own sales team and operations, it seems this partnership might not last for long.
The biggest e-commerce-related deal in India so far was when Flipkart bought Myntra for reportedly in excess of $300-$330 million back in May 2014. With Amazon already having a strong in-house technology background, it seems highly unlikely that it will invest a lot of money in acquisitions, which leaves Snapdeal and Shopclues. Flipkart, also seems an unlikely suitor post the acquisition of AdIQuity.
Snapdeal is currently backed by investors including Kalaari Capital, Nexus Venture Partners, Bessemer Venture Partners, Intel Capital, SoftBank and Saama Capital. There have also been rumors that Alibaba could be another potential investor this year for an amount to the tune of $1 billion. If this is true then it definitely does not lack in funds for 2015. Snapdeal is also rumoured to be finalizing a Rs 2,800 crore deal for Freecharge, with reports suggesting that it has kept aside nearly $1 billion for 5-6 M&A’s this year.
Shopclues, on the other hand, recently raised $100 million in investment and counts Tiger Global, Helion Venture Partners and Nexus Venture partners as investors. Though not as huge as Flipkart or Snapdeal, Shopclues has forced its way into the top tier of e-commerce in the country in the last couple of years and it looks to want to keep the pedal to the floor. Whether an expensive acquisition is within its capability is anyone’s guess.