Australian mobile advertising startup Unlockd recently secured $23 million in Series B funding led by new investor Axiata Digital. Even so, Unlockd COO Aliza Knox concurs that raising funds in Asia is a challenge when compared to other parts of the world.
“(Founder and CEO) Matt’s (Berriman) ability to articulate (Unlockd’s value) made it easier for him to raise money in this region as compared to others. But generally it is a challenge to raise money in this region than others,” Knox said in an interaction with DEALSTREETASIA recently.
Unlockd is an enterprise mobile platform that rewards users upon viewing targeted ads, content or offers when they unlock their devices. The adtech startup, which has entered the US, UK, Caribbean and the UAE by partnering with firms such as Sprint Telecom-subsidiary Boost Mobile, Tesco Mobile, Digicel Group and Etisalat, has now set its sights on Asia.
Talking on the sidelines of Wild Digital Conference in Kuala Lumpur recently, Knox said that Unlockd’s partnership with Axiata provides the former with a great gateway to telcos in Asia. “Unlockd had clear intentions to be global from the get-go. My coming on board and this Axiata investment mean you will see more focus on Asia from us,” she said.
As a veteran in the advertising space, Knox believes that true disruption in the telecom space would happen when users can own their own data and monetise it.
You have raised a reasonably large amount by Southeast Asian or even Asian standards. What are the challenges when it comes to raising bigger rounds in this region?
I cannot really comment as an outsider. I joined Unlockd only recently, and was therefore only partially involved with fund raising. I think there were challenges, but if I look at Matt Berriman, who is CEO and co-founder, he is very good in describing Unlockd’s unique approach and what it brings to companies. What Unlockd presents is amazing opportunities to telcos – a win-win-win. Telcos have been witnessing declining ARPUs (average revenue per user), and we are delivering a way, in a very competitive environment, for them to get more revenues. Matt’s ability to articulate that made it easier for him to raise money in this region as compared to others. Generally, it can be more of a challenge to raise money in this region than some other regions – but I think that is what conferences like these are trying to address. It shows that we are trying to building the infrastructure in the region and that there are great companies coming out of the region.
For years, telcos have been charging customers for basic data, but they have not been able to leverage the data growth to reflect on the ARPUs. Do you think your product is for telcos to partner with, and to address declining ARPUs?
The product works well from a customer point of view. They unlock their phone and they see an ad – that ad helps them pay for their phone bill if we are doing this with a telco. We are also partnering with streaming providers. We provide a “freemium model” for OTT streaming providers which is less interruptive than the current options available. We are only 15 months old and there are indications that this is also a good acquisition tool for telcos. People are attracted to this value proposition. You can see that from the (Reliance) Jio example in India – people are attracted to options where they can get help to pay for their data, or where they don’t have to pay for data at all.
Specifically with Axiata, what do they bring to the table apart from the capital ?
As a new company, we have to pitch to a variety of new partners and telcos. Axiata offers us a great gateway to their customer base, and a door opener to all of their telco companies. It is not a guarantee, but there is a strong relationship there and we will use that.
Does that put you in a spot where you cannot work with other telcos outside Axiata?
No, we can work with all telcos. We don’t have exclusive deals right now, and this is not something where one telco shares data with another, or it gives one telco an advantage that we can’t share the product with another. Different telcos may design this programme differently. We worked with Sprint in the US, and we work with Tesco Mobile in the UK – they call their program Tesco Extras. These relationships boosted our prospects for this round of funding. Each telco designs a programme around what it needs. We are an enterprise platform that each telco can adapt, so it is not really a product where one company says, ‘I have it, you can’t sell to others’. So, the Axiata funding and this deal do not put us in an awkward position in terms of talking to other telcos.
When you say telcos can design it the way they want, is there some AI involved, like say I would rather see an Apple iPhone ad instead of a say a top-up or recharge ad, because I happen to be a high-end customer ?
What happens when you sign up with Unlockd is you pick from 15 interest categories as a start, and over time, we learn more about you. We sell ads both directly and through programmatic exchanges. The data we have does not say who you are, but what your profile is. For somebody who has picked certain categories, you will see ads targeted towards that. You do not put in your income level so we won’t at this stage target you based on the income you have.
What is the next level then. Can we make it local ?
We can. We have geo tracking to place a person approximately. We are not serving local–specific ads at this stage, though.
But can telcos do that – based on the location of the customer, can the telco ensure he/she gets to see a local ad?
What you are talking about is the difference between display or brand advertising and direct response advertising. Right now, we are more geared towards brand advertising and awareness. On the other hand, our ads have a 4 per cent click-through rate which is very high in the advertising industry. That is a good signal that we could eventually provide direct response advertising. It could be click here to download something or click here to get a coupon right now. We have done some couponing and deals with Boost in the US. Expect more of this going forward.
With a product like Unlockd, it does not really matter whether you are in emerging markets or mature markets like the US and Europe. How does that change the DNA of the company? As a startup, you are already operating in a wide variety of markets and each has different needs. It is like you are global from day one.
It is interesting. It is a challenge for us as a startup because we already have to be distributed globally even though we are small. We have about 50 people and we have offices in Melbourne, London, New York and now Singapore because we have to serve our global telco and streaming partners. Yes, it is an interesting challenge for startups when they have multiple locations at an early stage, rather than a single hub from which to scale over time.
Does this funding round provide runway to scale globally, or rather, how long can this round last?
Unlockd had clear intentions to be global from the get-go. My coming on board and this Axiata investment mean you will see more focus on Asia from us, but we are not neglecting the rest of the world. There will be a huge increase of momentum in this region. In terms of runway, it is really hard to say. This round is helping us to staff up. We are adding up to 40 per cent more people next year, and the runway really depends on how we monetize. It could provide runway for a long time given our success to date.
In terms of monetization where are you?
We have a quite a bit of revenue coming in, but we are still burning cash. For a startup, in terms of revenue generation, we are actually doing well and growing fast.
In terms of revenue growth, how has been the uptake?
The ramp-up has been quite significant. Our investors and the shareholders are quite happy. The best way I could describe is that this series is heavily funded by existing investors. Most of the earlier investors put in more money, and then Axiata was new. Even as I was coming on board, seeing that these people who had seeded and done Series A wanted to put in more money was quite inspiring. It gives us more confidence as the revenue numbers ramp up.
Was the ability of the company to raise substantial amount of funding a factor that got you on board? You were leaving a much bigger brand (Twitter) to a company which is much smaller, and a startup.
I have set up businesses from scratch in Asia for multinationals a number of times, including for Boston Consulting Group, Google and Twitter. It was kind of like running a startup, but with serious support infrastructure on another continent. I always wanted to see if I could achieve the same success growing something from an even smaller base. Unlockd definitely has a bit of infrastructure, but not as much as Twitter or Google did when I joined. One of the things that appealed to me, when I was approached by Matt Berriman, was to help a smaller company reach hyper-growth. I can contribute to Unlockd in various ways – be it from the media experience, deep knowledge of emerging markets, or management know-how. I also get a chance to learn. There is a huge opportunity in this market, I really believe in mobile, and in emerging markets and I believe in the Unlockd proposition. We are making money, but we are also giving it back to the community – giving it to the people so they can spend it on data or other things they need.
The advertising space has not seen much of a disruption as much as some of the other sectors. You are one of the companies that is attempting to do something new in the advertising space but big picture, where do you see major disruption coming from when you talk of advertising?
I think we will continue to move to programmatic and more demanding KPIs and ROIs. That is what most brand advertisers want, so they can see the brand dollars are not being wasted. There is this very long-term possible disruption, which is, we all own our own data.The reason that some media companies make so much money is that we give away our data on Twitter and Pinterest and they use that data to target ads towards us. I see a scenario where I own my data and also get an income on it. I don’t hear many people talk about this possibility, but I think over the long term, people might want to reclaim that value. I think a couple of startups have tried to do that, and have not quite made it up there. I think there are other things that are predictable like more and more video and VR being involved, more location tailored and personalised ads. But I think those are evolutionary, and not revolutionary.