In a significant development, Bengaluru-based mobile ads firm InMobi said it would be acquiring California-based startup AerServ for $90 million. AerServ helps mobile publishers increase revenue through its online platform where they can manage several ad networks at the same time. This is InMobi’s fifth and biggest acquisition till date and comes at a time when it is struggling with lower-than-expected revenue growth.
“Their key offering is very specifically header bidding in the app space,” said Abhay Singhal, co-founder and chief revenue officer at InMobi. “The second offering is very strong video solutions, and video is the highest-growing format worldwide today.” After this acquisition, InMobi’s video ads and programmatic ads businesses will account for 35% of the firm’s total revenue. And within the next four years, InMobi is aiming to earn at least half a billion dollars in revenue, riding on AerServ’s platform.
Video is another opportunity that has InMobi all charged up. “Look at the overall OTT (over the top services) space, connected TV space,” Singhal said. “It feels like 2009-10 of the app economy. When it was coming up, people didn’t understand how it would work, but look at it today.” OTT allows content providers to bypass cable or television service providers and sell content directly to consumers. In India, the OTT video content market is currently valued at $280 million, with nearly 100 million subscribers.
Need for growth
Founded in 2007 by four IIT friends - Naveen Tewari, Mohit Saxena, Abhay Singhal, and Amit Gupta - InMobi is far off the $1 billion revenue mark that its CEO Tewari had set back in 2011. Tewari had expected to reach that target by 2014.
Perhaps that’s why InMobi chose profit-making AerServ over the other firms it evaluated. “Not many companies have been able to scale because their tech becomes very expensive,” Singhal said. The acquisition is also in line with InMobi’s pivot away from nurturing tech talent in just Bengaluru. Over the last year, InMobi has worked to house critical tech functions in North America.