We want to turn into an omni channel in next 5 years: Anuj Khanna Sohum, Affle India

Digital economy overall is growing much faster than the traditional sectors. We are in the right spot there and the focus on mobile and smartphone based consumption in consumers is increasing steadily, says Anuj Khanna Sohum, CMD & CEO, Affle India. Excerpts from an interview with ETNOW.

Your company is the leading digital ad tech player in India. What are the interesting trends that you are seeing across some of the top customers?
The digital economy overall is basically growing much faster than the traditional sectors that we have all been talking about when we look at the economy. Thankfully, we are in the right spot there and the focus on mobile and smart phone based consumption in the consumers is increasing steadily in a healthy predictable fashion. When we look at the consumers using their smartphones for various lifestyle consumption services -- be it e-commerce, travel or transport or entertainment, OTT and gaming or even fintech or financial services -- there is a steady increase in the comfort with which people who are smartphone users are transacting with various industry verticals. Affle is right in the centre of this as the consumer intelligence platform enabling these conversions based on our business model. We can actually see the trend quite clearly.

Having said that, while the growth has been pretty steady, this particular quarter -- the festive season of October-November-December -- has been relatively muted. The consumers are not transacting quite as much as one would have thought they would in this particular quarter. That is largely because of the micro factors -- the consumers are just being a little more conscious and, maybe not spending as much. Let us see how the holiday season goes in December when the school holidays and Christmas New Year break happens. We are watchful. We are waiting but last year, Q3 was much stronger from a consumption perspective on the digital economy side.

The consumer platform accounted for almost 97% of revenue in the first half and the enterprise platform. How do you see the segmental revenue mix evolving over the next few years?
For us, the consumer platform business is our biggest business segment. Within that, over 90% of our revenue comes when consumers do deep funnel conversions with our advertisers across these industry verticals. We expect that to be the fastest growing segment. Even in H1, we grew our CPC or the cost per converted use in business over 45% versus the same period last year.

In H2, we expected that compared to H1, we will do an incrementally better performance but last year in H2, the growth stands due to the festive season were much stronger. But even then if we look at the serialised H1 to H2, I would expect the contribution of the consumer platform business to be significantly more and the growth rate would be much better than the enterprise business.

But from H1 to H2 perspective, we hope to deliver better financial performance on a relative basis. But when we compare year on year, last year the festive season was a blockbuster; this year, the consumers have been a bit more cautious and we are seeing not as many conversions in terms of the peak that we usually see in Q3. That peak is more balanced in terms of Q3 and Q4. So H2 should still be a positive growth for the consumer platform business. I just wanted to say that we could have done much better had the economy been in a stronger position.

How do you address the issues related to ad fraud and consumer privacy to ensure that it does not impact your business?
We are really focussed. More than 90% of our business is focussed on emerging markets. India constitutes about 50% of our revenue and another 40% of our revenue comes from other emerging markets. We are in emerging markets like South East Asia, Middle East, Africa and now we are increasingly testing our capabilities in markets like LatAM. When you look at these markets, there is no government based regulation in these markets. But our company was fundamentally a Singapore headquartered company previously, where the personal data protection act precedes GDPR which came in Europe last year. In the US market, we will actually see the regulation coming in January 2020. Our company is pre-emptively ready because the regulations have come in the developed geographies even though these are not our focus areas.

What kind of revenue as well as profit growth are you seeing over the next two to three years, underpinned by the strong macros? Despite the slowdown, smartphone sales have been rising undeterred. Data speeds are faster and the demographic is very young as well.
Look, I think all the points are well covered in what you have said but the key message here is that the consumers are transacting more on smartphone devices and the average value of these transactions are also going up. When I look at these macro trends across the emerging markets, India, Southeast Asia, Middle East, Africa or even LatAm, increasingly we are seeing that there should be a clear predictable path of growing this business and the industry at large at about 25% revenue growth in terms of CAGR terms.

If we look at not just two to three years, I would even say looking at 2025 like a five-year window and a 25% revenue growth in terms of CAGR terms is sensible. It is the right way to model this segment but in terms of any particular short term guidance, there will be factors related to how consumers are feeling at a particular time.

Our business is directly linked to consumer sentiment, consumer conversions and consumer data. We are not completely immune but in terms of the digital ecosystem, it is a large growth trend which will continue over the next five years.

What are the areas that you are looking to expand and tap into -- online travel, fintech, BSFI segment?
We are already serving these segments and we are working with most of the large players in these segments. But we are looking at getting deeper into these verticals. We have a four Vs strategy. Here, the greater focus is on video, voice, vernacular and verticalisation.

The fourth V -- verticalisation -- is about serving these industry verticals in a deeper way, looking at deeper data integrations with these customers and giving them deeper funnel conversions and going more broad-based in terms of not just new user acquisitions but also repeat user conversions on smartphones for these customers.

The most exciting part would be when omni channel appears as a real possibility where the consumers can transact with these channels both online through their smartphones and also online to offline integration. We are ready with the right technologies, the patents, the strategy and over the next five years we hope to deliver a lot more new innovations and capabilities as from an online channel, we become more of an omni channel with both online and offline access for these verticals.