Madhouse has headquarters in Shanghai and offices in Beijing and Guangzhou, and it expanded to India in 2012. The team includes about 200 employees in China and 30 in India. AdExchanger spoke to Maa about working in both China and India, the growth and challenges of mobile advertising in China and his goals for the company.
JOSHUA MAA: At Madhouse, we believe that to be a successful ad tech company, you cannot work in just one market. That is especially true for China, which is not the largest mobile ad spend market, but is the largest mobile consumer market and publisher market, I believe. Since we are from China, the platform and technology we built in China should be competitive internationally.
So why India? While the environment is different, it's similar to China on a high level. It's in Asia and there is a lot of smartphone growth and mobile Internet user growth. Globally, except for Eastern Europe, North America, Japan and Korea, every other market's mobile ad landscape, I would say, is more similar China than it is to the United States.
Who do you consider your competitors?
We mainly do two things right now. One is a mobile ad network called SmartMad that we have in China and India. The other thing is, in 2012, we launched a mobile DSP called OptiMad. In China and India, local mobile DSPs or local mobile ad networks are our direct competitors. There are also global ad networks. A couple years back, after Google acquired AdMob, there were about 200 mobile ad networks emerging in China. But right now, there are probably only five or 10, so those are our local mobile ad network competitors. However, when we work as a mobile DSP, especially to help advertisers overseas promote their apps, those global international SSPs and ad networks become our DSP partners.
When we first started talking to companies from China, they said video programmatic was more mature than mobile programmatic, but now mobile seems to have taken over. Is that the case? Why?
In terms of the ad spend volume, I don't think mobile has taken over online video yet. But in terms of the momentum, yes. Everyone is talking about mobile. All the big brands have mobile budgets this year, but they didn't last year. In past years, if they wanted to do a mobile campaign, they had to reallocate from elsewhere. But since last year, the bigger brands – global and multinational – they want to do a lot more with mobile.
Do you think that the Chinese mobile audience is embracing mobile and mobile advertising?
This question has come up a lot in the past eight years. I don't think that any user really embraces advertising, but they see it on every other screen and media every day. With the not-as-intrusive ad units and the way we serve ads, mobile ads can work pretty well, compared to other buys or Internet or traditional TV or even online video. From that angle, I wouldn't say consumers embrace it, so as a mobile company, you always want to keep the balance between what consumers, advertisers and publishers need.
For the brand advertisers, they don't want to be intrusive with annoying ads. They understand it wouldn't work, as do the premium advertisers. With advertising on mobile apps, advertisers care a lot more [about the consumer experience] than advertising on mobile Web or Internet because people will not only stop using the app, but they can delete it. We're finding that line with premium and the major publishers.
That's the key: always serving the nonintrusive ads, the ads that are more relevant and more targeted, with more engaging ad formats.
What are the challenges of mobile programmatic and the mobile RTB space in China now?
Right now, talking about Chinese mobile inventory, programmatic buying and RTB, most of the inventory in China on mobile right now is not RTB-ready. The only exchange with Chinese mobile RTB inventory, I think, is DoubleClick and they work with local Chinese ad exchanges, like Tanx or Alibaba. They are still mainly on the Internet now, even though the big agencies are talking about how they will cover mobile. That's the current challenge.
However, for those advertisers who are promoting outside of China, most of them are promoting their apps instead of mobile websites. And when you're promoting apps, there are different ways that are probably, currently, more effective. What I'm trying to say is that programmatic buying, so far, is not guaranteed to perform better compared with other solutions. But, in the future, the whole ecosystem will evolve for advertisers, ad exchanges and SSPs toward programmatic optimization. That will take another year to 18 months.
And in that time – the next year to 18 months – what goals do you have for the company?
We definitely want to continue to show our scalability and further international expansion. We have plans to go to Southeast Asia, after India, so that’s one direction. On the product and technology side, we will still focus on two ad software models: the DSP and the ad network. For the DSP, it's about two-thirds of our revenue and one-third is from the ad network. That's the model we'll focus on instead of further diversifying into other ad business models, like SSPs or DMPs.
In China, you will see that ad tech companies tend to do everything, overdiversify. It's become clear to us at Madhouse that you need to focus on a couple things only. On the product and technology side, RTB and programmatic buying and optimization are really important and are definitely our focus of investment for people and technology.