How are things going with one of the brightest mediators of mobile advertising – Appodeal? How much does he earn? How does it work? Why did you buy Corona? How much is estimated by potential buyers? Answers to these questions in an interview with the founder and CEO of the company Pavel Golubev.
Alexey Pisarevsky, CEO of Getloyal, interviewed Pavel at the White Nights Conference Moscow 2017 as part of the Mobio Talks program.
About the team
Alexey Pisarevsky, CEO of Getloyal: Did you say that 20 people flew you to White Nights?
Pavel Golubev, CEO of Appodeal: Yes. We had a strategic meeting for the whole team two days before the conference, and the management came from different regions. And we sat on Sunday from seven in the morning.
Where did the people come from?
PAVEL: We had guys from Barcelona, from Barnaul, from San Francisco, and there were Muscovites. More from Ukraine. All our key employees from different regions gathered to determine our strategy for the next quarter and summarize what we have done.
Why do you have an office in Barcelona? In Moscow it is more or less clear, in San Francisco too. I won’t ask about Barnaul. Why Barcelona?
Pavel: I built my business not around a place, but around people. I was lucky enough to work together with Anna – she is the head of our European department. She lived in Barcelona, and therefore our European office is also formed in Barcelona.
Did you suggest she move to San Francisco or Moscow?
Pavel: I think that the European region needs to be developed while being in Europe. The issue of local mentality is of great importance, it is an opportunity to communicate with local sellers in the market, to grow local sellers. To take a person from his native region, from his native environment, and drag him to a completely different region, in my opinion, is not very effective, because a person has to learn everything again, face problems that he has not faced before, and so on.
Appodeal at the White Night Conference in Moscow
Do you have any rituals in your company that allow you to work effectively in such a distributed team?
Pavel: The most important driver of the effectiveness of a distributed team is the presence of trust in your team. It is very important to move away from micro-management and it is very important to trust your team as much as possible, develop your team, help them develop, and not try to make all decisions in the company yourself. As I said, I was very lucky with my team. The guys make very cool decisions. And even if sometimes some mistakes happen, I understand that this is part of the growth, part of the process. It seems to me that this is the most important thing in the effectiveness of a distributed team.
In addition, Slack helps us a lot, we have the whole team in Slack. We have channels like #DailySummary, where every day every employee unsubscribes what he did (in short), what he plans to do tomorrow, and what problems he has. Accordingly, all these reports are public – any employee can read them.
In what language?
Pavel: In English.
Do you all communicate in English?
Pavel: Not all, but most of the communication on general topics in the company takes place in English. Russian Russian, but, for example, when we come to Moscow and are engaged in local discussions here, and there are no people with us who do not speak Russian, we always switch to Russian.
About Appodeal
What is the most important thing in your company, if you single out one thing? Sales or technology? I understand that it is always in the complex. But if you choose one thing?
Pavel: Technologies.
There is huge competition in the app monetization market, especially in the USA. There are a lot of companies, and the competition for the publisher is even stronger than the competition for the advertiser. How do you not just survive, how do you also survive successfully?
Pavel: I would say that the competition for an advertiser is just a kindergarten, compared to the competition for a publisher, when it is necessary to integrate the SDK, when the sales cycle takes more than a year, when the integration itself requires a huge amount of resources from the publisher. Yes, you’re right – the competition is very high.
Three qualities that help your company to be among the leaders?
Pavel: The most important thing that helped us grow so much is that initially we were focused on publishers.
But you are not alone. There are a bunch of companies that are focused on publishers.
Pavel: In principle, most of the companies that are currently operating in the market, they are, in essence, advertising networks and operate – they work simultaneously with both the advertiser and the publisher. There is a very strong conflict here. On the one hand, you want to buy the show as cheaply as possible. On the other hand, you want to sell it as much as possible. This is a conflict that is not being resolved.
So the mediation business model only works for the publisher?
Pavel: Yes. We initially started as a publisher, not as an advertising network, and for this reason we do not have our own advertising demand. This helps us to focus our algorithms, our products for publishers as much as possible, and not to look for this compromise between the two – aha, if we do this to a publisher here, it may become unprofitable for our advertisers. This all translates into a large number of details that make our product much more convenient and suitable for the publisher, and not for the advertiser.
Which is your key market – the USA or Russia?
Pavel: In general, we have three key markets – Russia, Western Europe and the USA. At the same time, it should be understood that we work exclusively with publishers. We have a lot of Russian publishers, but many of these publishers produce global products, which are then featured in the American App Store. Therefore, most of the trading companies are American.
But most of the publishers are Russian?
Pavel: I would say this: 40% of publishers are Russia, another 40% are Western Europe and 20% are the USA.
I think the competition in the American market is much higher… I noticed such a thing while living in America – Americans are less open to some new things. This applies not only to advertising. This applies to everyday things.
Seriously? Are Americans less open?
Pavel: For example, if you look at the banking sector, then American banks are a huge legacy.
But this is easily explained by the fact that there has simply been an industry for a very long time. The most advanced banks are in Africa, because they appeared recently and immediately on new modern systems. And in the banks of America, the legacy is really huge.
Pavel: Well, yes. And, perhaps, the same story is with advertising – advertising has appeared for a long time, and a lot of infrastructure has already been built around advertising. That’s still noticeable. People prefer to take fewer risks, and are less open to trying something new.
Americans take less risks!? Wait, that’s contrary to everything we know about Americans.
Pavel: Give me an example when Americans have been taking a lot of risks lately.
It seems to me that many Americans initially, being emigrants, come there. Yes, they come for a new life, they are open to some new things, and so on.
But when you are already in the second, third generation, you have a stable pay-check. You know exactly how you will spend your next day, what time you will get married or get married, how many children you will have, what house you will live in, what mortgage you will pay for this house, and how you will spend your pension, that is, they are planning it all.
I agree.
Pavel: It becomes more difficult for you to allow: “Oh, I’ll quit my job and go traveling somewhere.” Or: “Oh, I’ll quit my job and go do my startup.” Because life is already planned out.
And that’s why it’s harder for you to defend your decision, including publishers?
Pavel: Yes. I think this is one of the reasons – in general, Americans are more closed.
You bought the company “Corona Labs”. What was that? Was it buying a team in the first place, either buying technology or buying inventory?
Pavel: It was, first of all, the purchase of the brand. Corona is a fairly strong brand.
Inventory, in fact?
Pavel: What do you mean?Connected publishers?
Pavel: Publishers – yes, to some extent it has also increased our recognition in the American market. We bought Corona – this does not mean that all the inventory that was developed on Corona immediately went to be monetized with Appodeal. Conversely. When we bought Corona, Corona was a fairly closed product. There was a dechman business model, where the framework was initially positioned as free, but then, as your project developed, you began to stumble upon all sorts of royalties, incomprehensible reversers, and so on. And the first thing we did was unscrew all the nuts, made an enterprising free version, and released alternative paid plugins in order not to make the reverser opaque to our users. And we have no task to make our mediation any exclusive. On the contrary: we are open to having as many partners working there as possible.
Plus, I believe that Sogopa is a very cool framework for creating 2D games. I believe that casual games are easier to do on Sogop than on anything else, so this is a very good synergy for us.
I think all our viewers are interested in numbers. Can you share what turns you are currently passing in traffic through yourself?
Pavel: Yes. Appodeal is currently rolling out about 300 million impressions every day. That’s about $5 million every month. Accordingly, our margin is somewhere around 10%. We earn about $0.5 million every month and spend about the same amount.
And how many publishers do approximately?
Pavel: At the moment, we have several thousand publishers – unfortunately, I don’t remember the exact number, 3-4 thousand publishers, but I don’t remember exactly.
Is there a lot of branded media among the traffic that you miss, show?
Pavel: It depends very much on the format. For example, if you take banner strips, there are a lot of branded advertising there, and I don’t see it leaving there.
Rather the opposite – even more will come.
Pavel: Yes. It’s just that they often say that – “here, a banner is a dead format that doesn’t work for anyone.” It doesn’t work for performance, but for the media, for which performance is less important, for which coverage is more important, banners from the position of monetization are perfect. Fullscreen, the display is a format on which brand advertising is often seen, but playable advertising still prevails.
Source: Appodeal.com
You spend quite aggressively on your own marketing, you are a top sponsor of conferences, including White Nights. Do you think these expenses are paying off or is it an investment in the future, in your brand?
Pavel: First, we need to understand that everything we spend, we earn ourselves. We have long since reached the stage of self-sufficiency and do not spend the money that we do not have. This is certainly a good growth driver for us. Over the past year, we have grown almost 3 times as a company.
There is an opinion that you spend so aggressively on marketing because you want to make an exit in the near future. How true is it?
Pavel: We receive some offers regularly. And this was just one of the topics that we were discussing now with our team. When I came to my team and said, “Guys! Here is an offer, they want to buy us for $ 50 million. What do we want to do?”. The guys said that: “Pasha! What are you? We still have so many different cool things that we want to do that we haven’t released yet, let’s do it again.” And the team is really excited about what we are doing. And me, too, rushing.
You understand that it’s always a question of price. It’s always a question of what will be offered. But in general, my team and I are determined that we need to develop even further. We see a lot of potential in RTB, in the blockchain.
Blockchain. What are you doing with blockchain?
Pavel: We are going to launch a decentralized RTB exchange in the very near future, which will be based on the blockchain. And our idea is to completely exclude intermediaries from the RTB advertising market and ensure that for every dollar that the advertiser spends, the publisher receives a dollar without commission. And this blockchain that we will roll out, it will be fully supported by large publishers and with large advertisers in the person of DSPs. We think that this is a real opportunity to finally remove intermediaries from this chain.
And where will your earnings be?
Pavel: As in any crypto business, transactions inside the RTB exchange take place using some kind of cryptocurrency, for example, an Appodeal token. And it is clear that at the start of this project we issue a certain number of coins, the issue of which is limited. We immediately take a part for ourselves as the founders of this project. These tokens that we keep for ourselves, their capitalization is growing, as the volume of traffic processed by the exchange is also growing.
Waiting for the Appodeal ICO soon?
Pavel: Yes.
What is the company’s goal for three years ahead anyway?
Pavel: We are developing several directions. Our mediation is now a very strong product, and we will continue to hold our positions, invest and continue to grow.
We are rolling out a large number of new products now that will allow us to make better cross promos, it is more interesting to segment users. We analyze advertising revenue by user cohorts in partnership with attribution partners. This is all about mediation – it can be disrupted and disrupted, developed and developed. In addition, we have a history with a decentralized exchange that we are going to develop.
One of our other areas is the traditional RTB exchange, which we built this year. Now we have 15 DSPs working with us, and we plan to increase this number to at least 200 in the next couple of years.
About personal
Three entrepreneurs who inspire you?
Pavel: Elon Musk, Tinkov and Steve Jobs come to mind.
Can you name the main disadvantage of living in the Valley relative to living in Moscow? The pros are clear – there are probably a lot of pros.
Pavel: It seems to me that Moscow has a very cool service. You can order any certificate, and the courier will bring it to your house in just a couple of hours.
It’s true.Pavel: It seems to me that Moscow has a great nightlife. There’s a cool entertainment here. And it also seems to me that people outside the Valley are more versatile.
Is everyone there too turned on IT?
Pavel: Well, not only on IT – IT, yoga, Burning man and a dozen other interests.
But sometimes I want some kind of carefree youth, communication about nothing. This is a little lacking in the Valley.
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