"The Core of Mobile Advertising is Demand Estimation"
Tapjoy, the company that recently acquired 5Rocks talked with a beSUCCESS editor about their first jointly produced product.
In August this year mobile game analytics company 5Rocks from Korea was acquired by USA-based mobile advertisement platform Tapjoy. With 14 overseas branches and 600 million users per month Tapjoy is the world's largest mobile advertisement company. Complimenting this portfolio, '5Rocks' is an exemplary mobile game management solutions company that has expertise in analyzing data and foreseeing user behavior, in real time. Tapjoy is now aimed at becoming the world’s top App-tech and Ad-tech platform in partnership with 5Rocks.
Tapjoy launches frist 5Rocks integrated product
Since the merger in August, a demo version of Tapjoy and 5Rocks' integrated product was unveiled during G-STAR 2014 in Busan Korea.
Using Tapjoy's Ad platform 'nGen' and 5Rocks' analytics tool, the new platform has provided a new suite of solutions for promotion and Ads, based on the assessment of users’ predicted future behaviors. This product is preparing for full launch in beginning of 2015.
The priority of advertising is showing the right contents to the right people. Jeff Drobick, the CPO of Tapjoy, stated that "people searching for TV on Google will click on an Ad banner first. Google is the first company to show that people don't like advertisements." To deliver effective personalized ads, it is necessary to analyze users' behaviors.
Demand estimation is the next step and 5Rocks has focused on this issue. Vice-president of Tapjoy Chang-soo Lee explained that "it is possible to have very accurate estimation of users' future spending using 'big data.' He believes that this will maximize profits by showing promotions only to consumers with a high potential to engage, and showing Ads to others.
Because traffic across the content spectrum is moving from web and TV to mobile, the mobile market is now in the spotlight of advertisers. Tapjoy MD, Charles Rim, stated that there are concerns among players in the Ad space, since device screens are getting smaller. In addition there has been a massive increase in the number of pages viewed, meaning many more options for advertising, but also challenges in reaching target audience effectively.
Mobile ads are also currently transitioning to full screen format. Instead of banner Ads (and similar) on a portion of the screen, new Ads are using the full screen video/game format to entice users to 'interact' with the advertising.
Working as a group means creating a culture together.
With the merger 5Rocks has been completely absorbed by Tapjoy. Chang-soo Lee, previously CEO of 5Rocks, is now a vice-president of Tapjoy. He is in charge of all data analysis performed by the company.
It was not so easy for the two companies to create an integrated product together. CPO of Tapjoy, Drobick, noted that "there are many challenges to overcome, such as culture and technological boundaries. But we were able to do so because we both had a similar vision to make the best possible service, within our scope, for the industry."
A first practical issue was language. Initially 5Rocks worked entirely in Korean, but now they need to translate everything into English. "5Rocks employees are mostly (outstanding) engineers, who haven’t needed to use English in the past. But now many conference calls are held with Tapjoy HQ in English. We are studying together to solve these issues," Stated Tapjoy Managing Director Rim.
Tapjoy is even working on an "exchange program" to promote faster and more effective integration. The internal program is funding volunteers who are interested in working in Tapjoy’s other branch offices for around three months. Drobick believes that this is a great opportunity for staff from both sides to gain insight and knowledge. He believes that it is a crucial part of their integration strategy.
The key to success is technology
5Rocks' acquisition is one of the biggest success stories for a Korean startup in the last few years. Most domestic venture capitals recover investments through IPO, so acquisition is a rare case in Korea. In fact, Korean VCs venture investment recovery rate is only 1.8%. Experts close to the deal believe that the success of 5Rocks is thanks to their core technology. Rim explained; "We needed a company that shares the same vision and truly understands data. 5Rocks was the perfect candidate. We spoke with a number of other candidates but few in Korea were prepared to work with a global company like Tapjoy. "Most Korean startups focus their energy too much on the local market. This could cause major scalability issues if they were to work with companies with a global remit.