‘PubMatic is serving close to 63,000 individual domains and apps worldwide’
Mukul Kumar, Co-founder, PubMatic, speaks to exchange4media.com about the company’s journey so far and the opportunities in the digital advertising market
Ad-tech company PubMatic, which has its genesis in Pune, has made it big globally particularly in the US market. Co-founded by Rajeev Goel, Amar Goel, Anand Das, and Mukul Kumar, the company recently went public by listing on Nasdaq Global Market. It raised $118 million from the IPO in the US.
PubMatic allows app developers and publishers to maximise their ad revenue. At the same time, it helps advertisers to get the maximum return on investment (ROI) for their advertising spends.
The company accomplishes these twin tasks through a suite of solutions and products like OpenWrap, OpenWrap SDK, and OpenWrap OTT on the publisher side. For buyers, it offers quality ad inventory in addition to Real-Time Bidding (RTB) programmatic technologies. The marketplace has rewarded the company for its services as can be seen from its revenue growth.
In Q3 2020, the company generated $127 million in revenue with a 33% growth on a year-on-year basis. The fiscal year 2019 was the sixth consecutive year of positive cash flow from operations. PubMatic co-founder Mukul Kumar spoke to exchange4media.com about the company’s journey so far and the opportunities in the digital advertising market.
How has PubMatic evolved as a company since its inception in 2006?
PubMatic was founded with the vision that data-driven decisions would be the future of advertising. In the last 16 years, we have had success as a sell-side platform (SSP) and we have been working with a lot of buyers. We have been integrating with demand-side platforms (DSPs) such as the Trade Desk and Google DV 360. At the same time, we have been innovating at a very significant pace going from RTB (Real-Time Bidding) in our early years to video platforms to header bidding to Connected TV (CTV). We launched CTV and OTT solution last year which is doing well last year in terms of picking up great customers. We have done this to improve the transparency for the platforms, for the buyers, as well as for the sellers and we have also been providing high-quality solutions to both the sellers and the buyers.
For buyers, we provide high-quality inventory. We make sure that if there is a low-quality inventory it is weeded out from the platform. At the same time, publishers are happy that we provide high-quality ads to them. We don't show ads that the publishers do not like. A real-time creative scanning solution that we developed in-house by our Pune team scans these creatives in real-time. We have scaled that solution well in the past 14 years from a few creatives to several million creatives that we are scanning on this platform.
What are the products and services that you offer to clients?
We have solutions for both publishers and buyers. For publishers, we maximise their revenue through programmatic ads built for today's omnichannel ecosystem. For buyers, we are increasing their ROI. By buyers, I mean the DSPs, advertisers, and large agencies. We have different products to solve this problem. We have a full suite of products that are aimed towards that. For example, for omnichannel wrapper solutions, we have a pre-bid powered solution to give publishers and buyers control efficiency and ROI. The product we have is Open Wrap along with variants like OpenWrap for OTT platforms. OTT is picking up well in the past 18-20 months across the industry. We have another variant called OpenWrap Software Development Kit (SDK), which is basically for in-app mobile inventory. We provide an advanced SDK that is easy to integrate, is light, and provides all the benefits of pre-bid. Then we have private marketplaces that allow publishers to connect with buyers in a somewhat private connection thereby allowing a very high level of control for both the buyers and the sellers.
Then we have a couple of products for audience addressability. We have a product called identity hub that provides a great amount of control and integrates with several third parties that are providing what is called Alternative IDs. Then we have a product called Audience Encore which is focussing on providing high-value audience addressability for buyers where they can buy the right kind of audiences to maximise their ROI. That is just the top of our products. We do have a great amount of quality control. We have ad quality products such as Real-Time Ad Scanning.
Then we have an analytics platform that has kind of a horizontal base which provides analytics reports and it handles these billions of ad impressions coming in every day. We had 134 billion ad impressions coming every day in September 2020. At the same time, we have about one trillion bids coming in. Our analytics platform can ingest all that data and then process it by applying machine learning algorithms, learn out of that data and then provide reports to publishers and buyers. We have a 360-degree product offering that provides a great deal of control and value to our customers.
What is PubMatic’s expansion strategy?
PubMatic now operates globally for the last several years with a major presence in North America, Asia Pacific, and Europe, the Middle East, and Africa (EMEA). We are headquartered in Red Wood City, California, with 13 additional offices worldwide. We decide to enter each advertising market around the world based on their size, growth rate, and other characteristics. In 2018, we entered Indonesia and in 2019 we entered South Korea. We are constantly evaluating new markets. One aspect of our expansion is how we can grow our business and the other aspect is how we can expand our technology footprint to those areas. We will continue to expand our international presence by making investments in sales, marketing, and infrastructure to support our long-term growth.
What kind of clients do you have on both publisher as well as buyer sides?
In the third quarter of 2020, we served 1100 publishers and app developers that included many leading digital media companies such as Verizon Media Group and News Corp. In India, we work with some of the large publishing houses such as Times Internet, HT Media, and Network18 besides OTT players such as ZEE5, MX Player, and Voot and apps such as Truecaller, Dailyhunt, and Sportskeeda. We have demonstrated that we can retain and grow revenues for our publisher customers as evidenced by our net dollar retention rate of 110% for the 12-months ending 30th September 2020 and at 109% for 2019. We are serving close to 63,000 individual domains and apps worldwide spanning a diverse group of content verticals and consumer devices.
On the buyer's side, we have deep integrations with some of the large media buyers. Media agencies are consolidating spends with fewer, larger technology platforms and I am happy to say that some of the world's largest media buyers are consolidated with PubMatic. Some of the agencies that we work with include Dentsu, Havas, Interpublic Group (IPG), Omnicom, Publicis, and WPP. In terms of the scale of advertisers, we reached over 68,000 advertisers per month in 2020.
What are the trends in the digital ad industry both globally and in India?
The size of the market is large and the growth is also pretty significant. The Indian digital advertising market is growing at a CAGR of 27% and it is expected to touch Rs 50,000 crore by 2024. It is growing so fast that there is enough money for publishers to make outside the walled gardens of Google, Facebook, and Twitter.
In terms of trends, consumers are spending much more time on the internet. In 2020, a lot of us did things for the first time on the internet that we have never done before. For example, we are doing a lot more buying online, we are doing a lot more telemedicine, we are watching twice or thrice more video. That trend is very significant and we expect large growth in video, CTV, OTT, and mobile. As far as buyers are concerned, they want to work with fewer high-quality omnichannel Supply-Side Platforms (SSPs) such as us. By omnichannel I mean, we work with multiple channels in a very seamless fashion. We provide our reporting, our controls in a very seamless way across different types of media such as display, mobile, OTT, and video.
The other thing we see in the industry is how cookies are being used for targeting users. There have been discussions that third-party cookies will go and a lot of browsers have already done that while some like Chrome will also follow suit. There is a lot of movement happening there. There are a lot of companies that are working on alternative ways of targeting users. PubMatic is very well positioned to take great advantage of this. We are very deeply embedded with several alternative ID providers too and we are constantly working on doing that.
OTT platforms witnessed a massive spike in 2020? Do you see digital ad monies shifting to OTT in 2021 in a big way?
We expect the OTT ad market to grow both in India and globally. 2020 laid the foundation for OTT's future growth. We built a very strong product for OTT and we have customers like Voot, MX Player, and ZEE5 which are pretty large players. In 2021, a lot of these players and people who are connecting these pipes would come out with much better products and much better ways of monetising. I have seen this industry grow in the past 14 years from ad network days to RTB to header bidding to now with OTT. In 2020, it was more about retrofitting the mobile ad display and some of the video technologies to the OTT but in 2021 the market will innovate a lot more. A case in point is Ad Pod in which a group of ads is played back-to-back.
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