Welcome back to our Industry Exposed series! In this edition, we have an interview with Ragnar Kruse, the CEO and Co-Founder of Smaato, on how they are trying to consolidate the supply ecosystem through their ‘super auction’ model, as well as how markets like China will blow the US out of the water for smartphone penetration and app usage. Lastly, we also touch upon the strongest developments in the mobile programmatic ecosystem from RTB to IAB.
Ragnar Kruse is the Chief Executive Officer & Co-Founder of Smaato. As a serial entrepreneur with 30+ years experience in IT, Ragnar Kruse understands the unique challenges in bringing new technologies to market. He has built up several companies from inception to market launch in both the US and Europe.
Q: Can you briefly present Smaato and its business model?
Smaato operates the leading global mobile RTB ad exchange and Supply Side Platform helping increase ad revenue for those app developers and mobile web publishers worldwide who have created engaging apps or interesting content.
Through our proprietary super-auction process, we globally connect our over 80,000 mobile developers and publishers with 390+ Demand Partners (150+ Ad Networks and 240+ Demand Side Platforms and Trading Desks) that represent over 10,000 advertisers, including 91 of the Top 100 Ad Age brands. As an industry pioneer and leader, Smaato manages up to 6 billion ad impressions daily, across over 500 million mobile users per month.
Q: Which problems in the mobile industry are you trying to solve?
The monetization problem: app developers globally create helpful content and enjoyable apps, and we help them make money through advertising as compensation for their creativity and innovation. Today, consumers increasingly prefer not to be charged for their favorite apps or content, so we make it possible for consumers to get those apps and that content for free, while still allowing app developers and publishers to retain the financial incentive to create that content.
Q: What would be your first piece of advice for app publishers willing to monetize their traffic with advertising?
First, create a great app. Second, attract users. Then follow our best business practices for monetizing your app. If you are a new app developer and you want to advertise your app, you undoubtedly have all kinds of ideas. After 10 years in mobile advertising, I clearly can say that there are best business practices. Check out our website, follow those guidelines and get started successfully monetizing your app.
Q: While the supply landscape has majorly consolidated to a few large players such as yourselves, how do you differentiate to mobile publishers?
Mobile is still growing exponentially. More consumers than ever before are using smartphones, and more apps are continually getting downloaded. As that happens, app developers are also getting larger with more users, and they need different and more sophisticated ways to monetize, even within the advertising-based monetization model. They are looking for a platform that best helps them do this.
With the newest release of our platform, we actually combined three different platforms into one: 1) an ad server, which allows an app developer even to create direct campaign relationships with an advertiser, 2) an RTB exchange which runs mobile advertising auctions across thousands of advertisers who distribute their advertising through Demand Side Platforms and Trading Desks, and 3), an SSP that connects to those advertisers who use many different ad networks to distribute their campaigns.
We then run another super auction across all three of these channels, and that is what truly differentiates us – no one in the mobile advertising space conducts this super auction, which uniquely moves beyond the traditional waterfall model by allowing only the very highest-bidding advertising campaign across any mobile channel. That differentiation – the super auction – is what makes Smaato the best and most advanced choice for app developers and mobile web publishers looking to maximize their mobile advertising revenue today. While other platforms are still working only with a waterfall model, we have moved beyond the waterfall and now “super auction” every ad request to maximize ad revenue. We have found that this increases mobile advertising revenue for the app developer or mobile web publisher by 50-150%.
Q: Today, a lot of exchanges position themselves as “full stack” solutions, which claim to offer higher yields for publishers. What is your opinion on this?
We see “full stack” as meaning that an app developer or mobile web publisher can manage all of his advertising source channels on one platform to sell as much inventory as possible (the highest fill rate) at the highest price (highest ECPM), which together equate to the highest revenue. By channels, we mean both direct and indirect advertising channels, including ad networks, affiliate ad networks, programmatic, and relationships that the app developer or mobile web publisher has negotiated directly.
Many companies have either direct or indirect, or they have a waterfall. We combine all mobile advertising channels on one platform, and offer the publisher control over how he wants to prioritize his various channels – through the highest yield-generating super auction process or through the traditional waterfall. We give the publisher a choice and full control. Additionally and importantly, our platform was built for mobile advertising from the ground up. We did not strap a mobile advertising component onto what was essentially a desktop-optimized system that had been merely retrofitted for mobile. Our platform is exclusively our own proprietary mobile-first, mobile-only technology and is truly “full stack.”
Q: Where do you see the strongest growth in terms of publisher revenue, both geographically and per app vertical?
Gaming is probably the largest vertical globally. Everyone likes to do some gaming on their phones. Geographically, the US – with its 180 million smartphone users and with the high eCPMs advertisers are willing to pay there – is clearly the biggest market from a revenue standpoint. However, China has more than twice as many smartphone users compared with the US now, with over 400 million and growing very quickly.
Q: Traffic and ad quality seems to be something you’re very concerned about. How is this in the interest of a supply-side player and which actions have you taken in this regard?
We truly believe good businesses deserve to earn good revenue, and they need help in ensuring that happens cleanly. One of the problems we have in online, and also in mobile, is that there is a lot of fraud and fraudulent traffic. We believe that transparency assures a brand- and publisher-safe ecosystem in which advertisers can spend safely with confidence and publishers can earn money cleanly. Therefore, we invest many resources to ensure we do everything we can against fraud. Building and creating a high-quality marketplace with good publisher inventory will attract not only top-notch advertisers, it will also attract quality publishers to be part of that marketplace. Marketplace and ecosystem health is a top priority for us, and we invest heavily in real human oversight combined with sophisticated algorithm-based machine learning systems to fight fraud and maintain quality around the clock.
The universal adoption of programmatic in mobile, which came even faster than it did online. With this quick adoption, we are now seeing not only large advertisers and demand platforms targeting each mobile ad impression, but also smaller players with a laser-sharp focus on specific inventory within a vertical – a particular event with the sports vertical, for example – or very specific, local geography, such as around particular stores. That targeting ability also makes advertising more relevant for the consumer, so I think in mobile we are on the best path to have much more relevant advertising for everyone.
Q: As one of the leading mobile exchanges, how are you contributing to the open RTB specs?
Early on we were part of the open RTB committee, which then got rolled into the IAB. Now, both through our partners and through our own resources, we help drive standards. We believe in clear standards for APIs, for example, which actually help standardize the whole advertising stack instead of having black boxes. Standardization in any market results in faster scaling. We not only provide input and guidance, but also help enforce those standards to ensure the continued growth, accessibility and health of the mobile ecosystem.
Q: What do you believe should be the next evolution in RTB?
Higher automation. Mobile is a 24/7 global business. There is still room for significant automation, even in RTB, to those processes that are currently manual.