Axonix CEO: “Mobile Will Appear Out Of Nowhere in LatAm”

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simon birkenhead axonixThe sad tale of mobile ad exchange Mobclix, which was forced to declare bankruptcy in 2013 after being acquired — and mismanaged — by mobile agency Velti, seems like it could have a happy ending.

In November, Mobclix was acquired yet again, re-emerging several months ago as Axonix, a programmatic mobile exchange underpinned by the Mobclix technology. Axonix started life in a partnership with Spanish carrier Telefonica, whose demographic data is being pumped into the exchange.

“What we’ve found, generally, in talking to both supply side and demand side, is that Mobclix has a very good reputation from a technology point of view,” said Axonix CEO and former Telefonica ad exec Simon Birkenhead. “There was a lot of frustration that it collapsed and there were debts that were owed to people because it collapsed, but once we explained that we’re a new company with a new management team and that all we want to do is scale the Mobclix technology back up, people actually get quite excited to work with us.”

Although it only officially turned on the tech about three months ago, Axonix already has relationships with about 14,000 app developers and publishers, a business Birkenhead said he’s hoping to grow in Latin America especially, where he sees greater opportunity than in the crowded US market.

“I’d like to take our knowledge and contacts in LatAm and invest in that market in advance of anything we might do in the US,” he said. “There’s a lot of competition in this area and we prefer to go somewhere where, though it might be a smaller market, there’s also greater potential.”

Birkenhead sat down with AdExchanger.

AdExchanger: What’s been happening with Axonix since you last checked in with us?

SIMON BIRKENHEAD: Although as a business we’re only three months old, we’re actually four years old because the technology we’re selling has a long history with Mobclix. We’ve been focused over the last few months on building up our team, because we’re operating a business that used to have 150 people with a team of 15 people.

What exactly went down after Mobclix was acquired the first time?

Mobclix launched in 2009 and it was acquired by Velti in 2011. Velti had a big cash injection from various VC and private equity sources, but, for whatever reason, they managed to spend all of that money. They just overextended themselves.

It got to the situation where Mobclix was the one healthy part of the business that was generating a lot of revenue, a lot of good profitability for them. But Velti had to take all the profit out of Mobclix to sustain all the other businesses that were around it. And as soon as they did that, Mobclix found that it couldn’t pay the publishers. And as soon as you can’t pay your publishers, the whole business collapses.

But the technology was still there?

The technology was very good. That’s why we thought relaunching the Mobclix platform as Axonix was a great opportunity because we knew the technology was one of the best in the industry.

And now you’re up and running?

We actually switched the platform back on about six weeks ago and we’re serving between about 3 [billion] and 4 billion ads a month at the moment, so it’s a good scale. Mobclix at its peak was serving about 22 billion ads per month, so we’re quite a long way behind where Mobclix was. My hope is to get that scale back up, but at least we know that the technology, the service, and the platform can handle that level of volume.

How has the client base expanded so far?

We've put a big focus on working with a lot of the Telefonica businesses, like Terra, for example, which is Telefonica’s Yahoo equivalent in Latin America. We’re onboarding their inventory this week. We've also been speaking to a lot of the Latin American ad networks and we’re onboarding a lot of their inventory at the moment. On top of that, we've been talking to a lot of the big app developers and the big games companies there, and quite a few of those are coming on board.

How else does the Telefonica data come into play?

One of the reasons why Telefonica wanted to invest in Axonix is to use it as a channel for getting its data into the advertising ecosystem as way to enrich the experience for consumers and advertisers. Consumers will get ads that are more relevant to their interests, and for advertisers there will be less wastage. Ultimately it’ll also create a better experience for us, because we’ll be able to make money from it.

It seems like fairly rich data since it’s mostly first-party.

Exactly. And that’s why the mobile operators for several years have been trying to work out how to create value from this data. That was one of the big issues we were working on when I was running the advertising business at Telefonica in my previous job. But operators move quite slowly because everybody wants to make sure that they cover all the privacy concerns.

How would you compare Axonix to a Verizon PrecisionID or an Amobee?

We’re not a mobile carrier exchange. We’re an exchange that will hopefully have many partnerships with mobile operators. Telefonica will be a partner and a customer of ours, but that’s it. We’re being run completely independently of Telefonica, so we can work with other operators around the world or we can choose not to work with any at all. It’s about whatever’s right for Axonix.

What about native? Will it play any part on the Axonix exchange?

Possibly. I’m not ruling it in and I’m not ruling it out. My view is that there’s a lot of buzz in the media right now about native ads. It’s the hot topic of May and June and July. There are also a lot of questions about whether that buzz is deserved or not. I’d say there are vested interests in driving the native ads discussion, primarily coming from those companies that provide native ads.

Are you making making inroads into the US?

At the moment, about a third of our inventory is US, about a third is Europe and about a third is elsewhere around the world. Strategically, we’re probably not going to focus on the US market too much. Our competitors are all US-based exchanges. But we think there’s a gap in the market for a European exchange that’s focused on the European and Latin America markets that’s a bit closer in terms of time zone and physical location to where the clients are based.

How big of a focus will Latin America be for you?

At the moment, no one is really focused there strategically. Mobile will appear out of nowhere in LatAm because it’s a very large region of people who are quickly upgrading from feature phones to smartphones as they become more affordable. And unlike in Europe and the US, there’s no legacy of desktop computers and broadband. We’re talking about a population that’s going to go from no Internet access at all to mobile Internet access in one leap — and they’re going to bypass the whole desktop advertising revolution.

How do you approach newly minted Latin American smartphone users from an advertising perspective?

They’re actually more open to advertising than consumers in Western Europe and USA who are used to advertising, who know how to get rid of advertising, and who are quite savvy in that respect. What we find is that Latin Americans are actually very engaged with mobile ads because it’s a whole new experience for them. They’re coming across brands and experiences that they’d not seen before because they haven’t had the mobile phones.

Is that an opportunity to be smarter from the get-go? Latin America is a fresh slate. If advertisers get very targeted from the beginning, maybe LatAm consumers won’t become as cynical?

I’d hope so. The agency people based in places like Brazil and Colombia are very well-connected to their colleagues in New York and London. Take programmatic as an example. It’s been around in USA and UK for three or four years now and it’s starting to get to a fairly large scale. Agency teams in LatAm are getting pressure to do programmatic. Even though mobile advertising is very small in Brazil, not only is mobile going to grow exponentially as people move from feature phones to smartphones, but it’s going to be programmatic from day one.

Will you be focusing on any specific countries in LatAm?

Brazil as a country is as big as the USA in terms of land mass and it has a population of about 200 million, so that’s naturally a big market. It’s generally a bit more ahead of the other countries in terms of advertising and adoption of new technologies and smartphone penetration. Other than Brazil, I’d say Argentina and Colombia are the next countries in terms of priorities. But then you have countries like Peru that might be small but are actually quite wealthy with an economy that’s growing really quite well.

Where do you see Axonix in a year from now?

We’ll have a strong position as an exchange in the LatAm market working very closely with publishers and ad networks in that region, and hopefully we’ll have established a position as one of the stronger independent exchanges in the market. Our main competitors are owned by big tech companies: the Googles, the Facebooks, the Twitters. We’re independent of those big companies. That might put us at a disadvantage because we haven’t necessarily got the scale and reach of a Facebook or a Google, but there are a lot of publishers that don’t want to partner with those big tech companies. We want to be regarded as the leading independent exchange for those types of publishers that don’t want to work with big tech companies.

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