Germany’s Gruner + Jahr Acquires Majority Stake in NetworkPlay

Gruner + Jahr, a Bertelsmann company headquartered in Hamburg, has acquired a majority stake in digital advertising network NetworkPlay. Following the acquisition, Kuldip Singh, CEO of Gruner + Jahr India, will join the board and will also be the CFO of NetworkPlay. The NetworkPlay team will now become a part of Gruner + Jahr.

Executive Board Member and President of Gruner + Jahr International, Torsten-Jörn Klein, comments: “The expansion of our activities in India is clearly in line with the strategic priorities of Gruner + Jahr. After the acquisition of MaXposure in the print space, G+J is now acquiring Networkplay, one of the fastest growing digital companies in India and follows its strategy to build a combined portfolio of print and digital media activities.”

Gruner + Jahr is one of the world’s leading media groups and its Electronic Media Sales (EMS) division is a leader in the digital advertising space in Europe. G+J recently acquired the majority of MaXposure Media and this is their second strategic investment in India. Bertelsmann AG holds 74.9 per cent stake and the Jahr family owns 25.1 per cent shares in G+J.

NetworkPlay was incubated in 2008 by digital advertising agency Webchutney and was funded by Capital18, the venture capital arm of the Network18 Group. Over the last three and a half years, the company has grown to reach an execution capability of over 4 billion impressions per month across 500 publishers and 350 advertisers.

Co-Founder and CEO of Webchutney, Sidharth Rao, comments: “Ram and his team have built an amazing business from an idea a few years ago. We are very proud and delighted to have believed in Networkplay’s vision from the first day. A partnership with a leading global company, Gruner + Jahr, will propel Networkplay on a stronger, higher growth path.”

NetworkPlay has also brought global event franchises such as ad:tech and iMedia Summits to India, in partnership with Dmg::Events, an international events company that manages over 80 events in over 25 countries.

Co-Founder and CEO of Networkplay, Rammohan Sundaram, comments: “This is an exciting phase in our journey and we are delighted to partner with a global company that shares our ambition and vision. We believe this partnership is a testimony to our unique proposition, strong execution capabilities and the extraordinary team we have built over the last few years. This is a positive outcome for all our stakeholders, especially our customers as we now aim to enhance our innovative and execution capabilities in line with the world class standards and experience that Gruner + Jahr brings to this partnership.”

Globespan's Venky Ganesan On the Indian Mobile Ad Market

Venture capital firm Globespan Capital Partners was an early investor in mobile advertising players like Amobee and Quattro Wireless. Earlier this month, Temasek-backed Singapore Telecommunications Ltd or SingTel struck a deal to buy California-based mobile advertising solution provider Amobee for $321m. The seven-year-old firm has raised $54m till date from venture capital firms like Accel and Sequoia besides investors like Vodafone, Motorola and Cisco. This latest deal marks an interesting turn for mobile advertising business with carriers like SingTel (which holds 32.5 per cent in India's largest telco Bharti Airtel) directly entering this space. In addition to Amobee, Globespan bet on another mobile advertising player, Quattro Wireless (which was acquired by Apple in 2010 for $275m).

VCCircle’s Madhav A. Chanchani chats with Globespan's Managing Director and Amobee board member Venky Ganesan on his take on mobile trends and the recent Amobee acquisition:

How are you reading the mobile internet market?

We are at the cusp of a very early revolution. Think about where internet was in 1996. That is where mobile internet is right now. The first 1 billion to 1.5 billion users on the internet came through the PC and the next 3 billion are going to come in through the mobile phone. That is a life changing experience that happens only once in a thousand years. That might seem bombastic, but there has been no other time in the history when half or two-thirds of the planet reached out on the same device. The opportunity presented by this is still very early.

In this context, how do you see the mobile ad market developing?

The first thing about the mobile ad market is that it’s going to be global in nature and different. The majority of people accessing internet only through mobile will be outside America. The market will be global and may vary according to geography, but online advertising will drive and support a lot of services. What is happening is carriers used to charge you for the calls, texts and data usage. But the problem is that you can't do that on a variable basis and data services will go at a flat rate.

But how do you make money when you are capped at a flat subscription rate? The way to do that will be through mobile advertising which will be a critical part of every carrier's strategy going ahead in the world. It is already so in the USA and it will be so soon in India.

Carriers need different value streams which are variable - mobile advertisements and payments will be the way to go. In India, RBI has already said that the carriers cannot do payments. So, mobile advertisement is going to be a big portion of how carriers make money in India in the future.

So do we see carriers, especially from emerging markets, continuing to hunt for ad solution providers?

Absolutely. Every carrier is thinking about what their strategy will be, and in 5-7 years carriers are going to become technology companies. Carriers will end up going after cloud, which is perfect for mobile and big data.

Coming to Amobee, what do you think attracted SingTel particularly to the firm?

Amobee is probably the only company in the world which has built its strategy around working with carriers. The company has built its technology at carrier grade, which have high requirements. When SingTel decided on their partners, they wanted Amobee or nobody.

Finally, what about Globespan’s view on investing in India market?

We think India is going to be an interesting opportunity but it is still early. Currently it’s a great opportunity if you want to invest in non-technology business and private investments in public equities (PIPEs). Traditional venture capital, what we do, will still be around for a couple of years. I think Indian entrepreneurs like to build more service companies than product companies but that is in the early stages of changing. In three to five years India will be a very interesting venture market to be in since the quality of talent in the country is very high.

Is Google Copying Baidu Search?

In an article published recently in the Wall Street Journal, “Google Gives Search a Refresh”, WSJ discusses the ways in which Google is reinventing their technology to utilise a more sophisticated “semantic search”, which aims to better understand the meaning of words to deliver more accurate results. Google Search executive, Amit Singhal, said Google search will look more like “how humans understand the world”. The articles author, Amir Efrati noted that “The changes to search are among the biggest in the company’s history.”

Now Director of International Communications of Baidu, Kaiser Kuo says “What they’re doing is essentially what Baidu has been doing since it launched its Aladdin open data platform in late 2009. Aladdin has evolved to become part of a grander strategy in search–a concept we call “Box Computing.”

So is Google copying Baidu?

China has long been notorious for using a C2C (Copy to China) Model by taking ideas and just making it Chinese, in a very unoriginal way. Baidu is often called “China’s Google”. Kuo says Baidu has just been seen as “derivative and incapable of real innovation” but “it is now out ahead of the most famously innovative company, Google, and ahead in the very core area of search itself.”

Kuo explains: “People go to a search engine to find three basic categories of things: data, content, and applications. The idea behind Box Computing (the “box” refers to the search box) is that Baidu seeks to deliver directly into search results whatever users enter into the box. We semantically interpret the query and give the user what he or she is looking for.

“For example, if someone sitting in Beijing types “weather” (天气) into Baidu, they’re probably looking for the weather in Beijing: current conditions and a forecast for the next few days. So that’s what we give them, courtesy of a partnership with Weather.com.cn. If they type in “Beijing Shanghai” (北京上海), we can safely infer that they’re looking for travel information – train schedules and ticketing info, plane flights and fares. That’s what we give them, and more, through structured data provided by Qunar, which we acquired last year. Type in 87,989 euros (欧元) and you’re almost certainly looking for a conversion to RMB if you’re in China, so that’s what we give you.

“For apps, we’ve built out a network comprising thousands of third-party developers who’ve built tens of thousands of apps. Try typing “Angry Birds” or for more games, 小游戏 into the Baidu search bar. Or try 计算器 (calculator), or 日历 (calendar). There are many, many ways in which partners – or Baidu – could monetize these in-search apps, but for the time being we’re really focused on popularizing Box Computing and acclimating people to seeing these types of results.”

Google and Baidu may or may not be exactly the same in terms of search, but both are moving towards leveraging their massive indexation of data to cross-check information, then present it in a way that avoids users having to click on links to get to what they want.

In China, Baidu clearly dominates the market with 78.3% in the fourth quarter, compared to Google’s 16.7% according to Beijing-based research firm Analysys International.

Oz Digital Subscriber Numbers Exceed Target

The Australian has successfully launched its new online digital model, attracting 40,000 subscribers to its digital platforms in just a few months.

Chief operating officer of The Australian, John Allan, said the number included about 10,000 print subscribers who had taken up the offer of a complimentary 12-month digital subscription.

"Clearly we are still in very early days, and we are learning every day, but this is an extremely encouraging start," Mr Allan said.

"Critically, with print circulation remaining steady, we are growing overall paid sales of The Australian and we are earning more digital revenue under the new subscription model than we were under the advertising-only model."

The digital launch has been closely watched as newspapers look to grow new revenue streams to support journalism amid technological disruption and weak advertising markets.

Mr Allan said the subscriber numbers comfortably exceeded expectations.

The Australian editor-in-chief Chris Mitchell said: "If it were ever needed, this is more proof of how valued The Australian's journalism is by its readers. In digital, just as in print, The Australian is peerless in its news breaking, analysis and opinion."

The 30,000 paying digital subscriber total includes those who have taken up The Australian's Digital Pass, bought new print and digital bundles, individual tablet application sales and sales of replica copies through Newspaper Direct.

The Australian is not detailing breakdown between these channels at this stage, but will do so when expected changes to Audit Bureau of Circulations reporting comes into effect in the coming months.

The Australian has a Monday to Friday print circulation of 133,701 and 295,000 at the weekend, according to the latest figures from the Audit Bureau of Circulations.

Mr Allan said the subscription model had allowed the newspaper to develop new, sophisticated customer data metrics, and this was a "great story for our advertisers".

"In short, we are very happy with the way things are going," Mr Allan said.