It was April 2008, the economic boom had not dropped off the world map, and the two veterans of digital advertising decided to launch the next big thing: a full service advertising network that takes brands to every online audience they want. The result: Ad Magnet.
Ratish Nair and Sunil Miranda were two of the team that had set up Interactive Avenues, a digital agency, in 2006. Digital agencies merely aggregate or buy inventories across publishers, and repackage and resell them. But Ad Magnet does not own inventory: it helps clients publish their ads across the world's top websites.
"I guess the timing couldn't have been worse, since the global recession hit us within months," smiles Nair, a mechanical engineer who is also an alumnus of the Indian Institute of Management, Calcutta. Their only comfort: Sequoia Capital had backed them. (Nair would not give the figure, but it is believed to be $2 million).
The first eight months was torture: the unexpected slowdown combined with a botch-up by the software firm to which they had outsourced their core product. "In the first year, we had fewer than 50 clients and just 4.5 million unique users," recalls Nair.
By April 2010, it was a different story: 18.5 million unique users, over 350 publishers and five times the advertisers. Today, Ad Magnet is the #1 Indian Internet property and the fourth-largest doing business in India, after Google, Yahoo and Tribal Fusion, according to Internet traffic tracker comScore.
"Companies have realised the immense reach of the Internet. So we do get new clients all the time who want to reach out to either a mass audience or a select audience," he explains. Ad Magnet then creates a package, with its fees depending on what the client wants, since the rates are higher per unit. "They are lower per unit if a client goes for a mass market presence," explains Nair. Ad Magnet pays the publisher.
Nair claims Ad Magnet is perhaps the only Indian ad network to have its own technology. "The Internet audience is highly fragmented compared to the print or television audience, so having our own tech is a big plus. We spent a year building our own tech. It's something most other Indian ad networks do not have," he says.
So clients who want some tweaking do not have to depend on the technology of the site on which they want to advertise.
Some of Ad Magnet's big publisher clients are Shaadi.com, Cleartrip.com, Indian Railways and the India Today Group (which also publishes Business Today). The best part about an online business is that it can scale up without increasing manpower or overheads too much.
For instance, since 2008 April to date, Ad Magnet's manpower has gone up from 24 to 30, while revenues have increased by a staggering 400 per cent over the figures for 2008-09, and Nair is confident of breaking even and even showing a tidy little profit by end 2010-11. Ad Magnet's logo is a cute horseshoe magnet. And it seems to be doing a good job attracting clients.
FOCUS: Digital media and advertising
FUNDING: Sequoia Capital
ADDRESSABLE MARKET SIZE: Rs 1,000 crore
COMPETITION: Komli, Tyro
BUSINESS: Over 400 customers
BREAK EVEN BY: 2010-11
THE BEST ADVICE I GOT: Never pick up more money than you require
BIGGEST MISTAKE: We outsourced the product development job to a reputed software firm, which messed it up. I realised then that one should never outsource the core when you are trying to create a product.