Israeli mobile ad analytics company AppsFlyer has raised $56 million, increasing the total capital it has raised since it was founded to $84 million. "We're the world's biggest company in our field," says AppsFlyer cofounder and CEO Oren Kaniel.
The round was led by new investors Qumra Capital, as well as Goldman Sachs Private Capital Investing (PCI), Deutsche Telekom Capital Partners (DTCP) and Pitango Growth. AppsFlyer enables app developers (such as Gett) to economically analyze the effectiveness of their campaigns on mobile. The company does not sell or buy media; it measures the return on investment (ROI) for buying media. According to the company, this market had a $6 billion turnover last year just for its platform; in other words, the market is bigger than that.
The current financing round follows substantial growth in the company, which asserts that its revenue has grown six times over during the past two years, but does not disclose how much that revenue is. AppsFlyer measures 250 billion actions using over 10,000 apps each month. Its important customers include Samsung, HBO, Waze, Playtika, Alibaba, Baidu, Trivago, Macy's, and others. It is an official analytics partner of Google, Facebook, Yahoo, Adobe, Twitter, and more than 2,000 others.
The company plans to use the capital it raised mainly for expanding its business in China, which includes Chinese partners Tencent, Social Ads, and Baidu. It will also consider acquisitions in the Israeli and global markets.
"Globes": Explain what your company does.
Kaniel: "We measure actions, and not just advertising, by app developers. In professional language, what we're doing is called mobile attribution analytics. In other words, we examine the connection of all sorts of information points that were not previously connected. 'Attribution' means if the user sees something on Facebook and later sees something on Google, and this makes him perform a certain action, such as downloading or operating an app, or buying something. We're able to attribute this action to what he saw on Facebook or Google. For example, social games giant Playtika installs our systems in its app, and from then on, it can begin its marketing efforts, such as advertising on Facebook and other social networks. Then it checks how many users came from each place, and what each user did. If we assume that the cost of recruiting one user is $1, and within two weeks, he spent $10 on an app, then there is no doubt that this user is very profitable for Playtika, and it wants as many users as possible like him. Based on the information we provide, which is precise information, not estimates, Playtika can bring more users from the same channels using the same marketing strategies.
"Actually, without our system, Playtika and others wouldn't have this information. They would spend a lot of money, but most of that money would go to waste. The advertisers and their advertising agencies hope that every dollar they spend has a positive ROI, but they don't really know whether it's true. Only when you put in a measuring tool can you know what each dollar does. You can even check what the dollars you invested six months ago and a year ago did."
Haven't you gone too far? Effective economic measurement of marketing on digital media is not a new industry.
"I'm referring to mobile, but I haven't gone too far at all. The entire advertising industry is based on agencies that tell the client, 'Listen, you need $10 million here and $50 million there. Just believe me that it's worth your while.' When we entered the market in 2012, no one welcomed us with open arms. Everyone liked getting money without guaranteeing anything, except for the advertisers themselves, and it's their money. Actually, to this day, most of the industry works that way, both on the web and of course on television. There's no measurement. So we didn't go so far. It just didn't exist, and in the specific case of mobile, the technology didn't exist. You can go deeper on the web and get all sorts of information points, but it still requires a lot of hard work by every one of the advertisers. We created this technology for mobile."
What is the company's business model?
"SaaS - every client pays us licensing fees for our software, and we don't have performance-based revenue sharing. Advertising agencies themselves are our clients.
"The market of advertising platforms like Facebook and Google is a market that competes for every dollar, and this is not a software market," says Kaniel. "There's no loyalty in it. One day, you can buy media from one platform, and the next day from a different one. From a market of 'give me money, and I'll bombard the Internet with your messages,' this market has become a market of 'You have to generate real value from each message.' That's the change that the industry has undergone. The advertiser no longer wants to pester half the world with his message. The consumer is not allergic to messages; he's allergic to advertisements that don't interest him. In the end, this industry has forgotten that there are people on the other side of the screen: you and me."
The Goldman Sachs investment arm has invested in the company. Does that mean that it will push hard for an IPO in the future?
"In the distant future. We still have a lot to do and a lot of value to reveal as a private company."
Qumra Capital managing partner Boaz Dinte who joins AppsFlyer's board said, "AppsFlyer has proven its ability to provide mission critical tools and data-driven innovations for measurement that marketers and developers need for success. As mobile and marketing converge, it’s clear that AppsFlyer is primed for further growth and we are thrilled to provide more resources for the company to expand its capabilities as a data powerhouse for marketers that’s in a league of its own."
Published by Globes [online], Israel Business News - www.globes-online.com - on January 17, 2017
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