Moloco India’s Siddharth Jhawar on unlocking the potential of ML in Indian advertising

In this exclusive interview, Siddharth Jhawar, General Manager, Moloco India, delves into the transformative power of machine learning in the Indian advertising industry. With a focus on democratizing access to cutting-edge technology, optimizing performance marketing, and redefining creativity, Jhawar discusses Moloco’s unique role in the burgeoning AdTech landscape of India and its aspirations for the future.

How do you see Machine Learning changing the advertising industry in India?

The Indian digital advertising industry has rapidly grown to ₹75,000 crore, or over $9 billion. Over two-thirds of the industry revenue is driven by three tech players who have access to world-class machine learning. We at Moloco believe that all tech companies, irrespective of size, should have access to machine learning to drive their growth.

In today's data-driven era, ML has changed advertising by making it far more precise and effective in reaching the right target audience at the right time, and at an astronomical scale. One of ML’s key benefits lies in its ability to sift through the digital haystack, leveraging millions of data points and terabytes of data to pinpoint precisely what signals are both useful and impactful. In this era where data is called the new oil, machine learning acts as a refinery, giving us more intelligent insights than ever before. Another important aspect that ML brings is customization, since each advertiser is treated as a unique entity, shaping tailor-made models to suit their needs. Thanks to operational ML's huge processing capabilities, advertisers can run thousands of mini experiments which help them select the most impactful campaigns and creatives, helping them reach the desired audience and ultimately maximizing return on advertising spend (ROAS).

While Big Tech players have created tremendous value for themselves with operational ML, it has largely been confined in their own environments, and as a result, access to these technologies was limited. In today’s open internet environment, we believe that everyone deserves the opportunity to leverage cutting-edge ML to succeed in business, regardless of their size. As a machine learning-powered advertising platform that helps businesses of all sizes grow through operational ML, we are committed to democratizing the advertising landscape and making it possible for Indian businesses to scale globally, achieve profitability, and intelligently use their own data.

Could you elaborate on the unique advantages that Machine Learning brings to the advertising landscape, distinguishing it from broader AI applications?

In the early days of digital advertising, impression-based media buying (frequency x reach) was the name of the game. Effective ad spending was all about casting a wide net to gain as many audience impressions as possible. However, this approach proved effective only for brand awareness and not necessarily for revenue growth. Today, the industry is shifting its focus towards outcomes, as marketing leaders become even more accountable for measurable business impact and Return On Advertising Spend (ROAS). Today, marketers are adopting data-driven solutions and prioritizing performance marketing, inspired by the success of big tech and advanced machine learning technology — this marks a shift away from traditional brand marketing.

The paradigm shift lies in transforming marketing from a company’s cost function into a revenue-driving function. Instead of considering advertising an expense, ML has helped change its capability to directly generate revenue by finding and acquiring high-value users.

By harnessing the predictive capabilities of ML, advertisers can allocate resources more effectively, target the right audience, and refine their campaigns to generate incremental returns. In an ever changing landscape where companies are trying to balance growth with profitability, an outcome-oriented metric such as ROAS takes center stage, serving as the North Star metric for every advertiser.

You have tailor-made solutions for advertisers, agencies, enterprises, and commerce platforms – where do you see growth in India coming from?

There are two avenues that Moloco has identified as growth drivers. Firstly, making performance marketing more effective for any app advertiser by helping them acquire high value users on the open internet. Secondly, enabling streaming and e-commerce companies to grow their ad revenue and achieve profitability through the latest global innovations in advertising technology.

Let’s talk about the first use case - performance marketers across various industries have realized that while the walled gardens have one-third of all user impressions, they drive two-thirds of performance marketing dollars. The open internet (think of the smaller apps that you use on your phone) is accessible through exchanges and contributes to two-thirds of user impressions, but typically does not have world-class technology for decisioning and finding the right users. Advertisers are unable to find efficient ways to acquire users on the open internet. This is where Moloco comes in - we have built deep neural networks to identify and acquire the best users, but instead of being restricted to the walled gardens, we can find the user anywhere on the open internet. In fact, we are the world’s third largest performance DSP with access to over 2.5 million apps through 35 exchanges, processing 600 billion bid requests per day. Even within India, we have rapidly scaled to become among the top five performance DSPs, with a reach of over 715 million mobile devices in India alone.

The second opportunity is for streaming and e-commerce platforms to serve relevant ads on their platforms and generate high returns on ad spend for their advertisers. Given the recent push towards solving for growth and profitability together, growing ad revenue is a powerful way for these companies to become profitable while also scaling their user base. Here again, we use operational machine learning to understand user behavior using first-party data, target them at the right moment, place an intelligent bid on each impression, and improve user experience. This strategic shift can have a compounding effect over time, as increased ad revenue not only boosts immediate profitability but also fuels sustainable growth.

In today's digital ecosystem, where competition is fierce and user acquisition costs can be substantial, the ability to find and engage both new and high-value users while maximizing ad revenue is a critical factor in the success of advertisers and agencies.

Please share insights into your service proposition and the growth plan for India.

India’s digital economy has grown 10 fold with over 100 unicorns and 90,000 start-ups. Online industries such as gaming, streaming and e-commerce are large drivers of this growth. India’s streaming market is pegged at $3 billion, gaming at $3 billion, and e-commerce at a whopping $70 billion, as per reports by Bain & Co, Ernst & Young, and Media Partners Asia.

These platforms, whether they are gaming, streaming, or e-commerce apps, are exploring strategies to monetize their apps and optimize revenue generation. Globally, these platforms often monetize through subscription fees (where users pay for premium access to exclusive content and features) or transactions (such as fee per transaction or purchasing individual titles), besides advertising. However, in India, the trend leans away from subscription and transaction fees, with consumers preferring free services and ready to watch advertisements in return. In this context, advertising on these platforms presents a more appealing avenue for revenue generation. To be successful, platforms need to cater to a variety of advertisers with diverse goals, making it easy for the advertisers to get started and delivering ROI that keeps ad budgets growing.

Additionally, streaming platforms so far were limited to tapping brand budgets of advertisers, and a single platform has a lion’s share of performance marketing budgets over video. We are now entering an era where streaming companies will also be able to get performance budgets from advertisers, thanks to advances in Machine Learning outside the walled gardens. As streaming services and platforms continue to evolve, they will leverage diverse revenue streams to remain competitive and profitable, catering to both brand and performance-driven advertising budgets.

What are your thoughts on mobile campaigns? What kind of intervention do you offer for your clients?

Through our advanced Machine Learning capabilities, Moloco is addressing a few gaps in the way mobile campaigns are presently run.

Outcome based Advertising: First is the move from purely brand building advertising model by serving impressions to a more outcome or performance based model - where advertisers pay for installs, actions, engagement, or revenue. It stands apart from traditional advertising because marketers don’t pay for impressions (displaying an advertisement) but for activities that drive a campaign goal. This approach lets marketers optimize campaigns around revenue-generating metrics, target narrow audience segments, and measure the efficacy of their money spent, which is why it is increasingly preferred by app marketers today. It also requires the advertiser and advertising channel to show the best possible creative to a user, so that the user is most likely to take an action after seeing that creative.

Second challenge that we solve for our clients is transparency: Unfortunately, ad fraud has been accepted as a way of life and part of the cost of doing business, but few are aware of just how serious that cost can be. Advertisers need a transparent solution that offers granular-level reporting and where they pay for genuine users. Our solutions provide businesses access to the same quality of algorithms as the tech giants, without any of the industry challenges around data opaqueness, low visibility and difficulties in measurement – we are putting the power back into the hands of the advertiser and helping them make their own informed decisions.

Our solutions provide advertisers with a unified channel for consolidating ad budgets and accessing inventory from all available exchanges - that is two-thirds of the internet, remaining being controlled by the walled gardens. This eliminates the necessity of dealing with multiple ad networks, agencies, and various partnerships, all while harnessing the potential of their own first-party data.

Could you share some client names that you are engaged with in India? Could you elaborate on the kind of work that you are involved in with them? What are your observations on working with Indian businesses?

Some of the companies we work with include - Zupee, Gameskraft, Adda52, MPL, Rush by Hike, Octro - our portfolio includes 20 of the largest gaming companies in India. These advertisers see high return on investment when they use Moloco’s advanced decisioning abilities for performance advertising. We’ve also helped a popular streaming app and an e-commerce player monetize their platforms better using our ad-tech stack.

In my interactions with senior advertising and marketing leaders, getting ROAS (return on advertising spend), remains a huge challenge in India. Most ad-tech companies have tried to improve the number of installs or building brand awareness. But how does an app benefit from branding or installs if those users don't engage or spend? There is a need to optimize marketing campaigns to acquire users who generate a large amount of revenue for the app. These high-quality users are a long-term asset and make the business model sustainable for apps. App developers need to be strategic about how they acquire users in order to ensure that they are getting a good return on their investment.

Another industry that we're trying to help is the e-commerce industry. Currently, e-commerce companies sell platform ads to their merchants based on the number of impressions or clicks that get delivered. But merchants would ask, "How do I benefit from a click if the user doesn't buy anything from me?" With Moloco's solutions, sellers can run ads on marketplaces that are optimized to bring in a large number of orders or sales to the merchant. Small and medium sized merchants care about outcomes (e.g. orders, sales) instead of branding, so they prefer advertising on e-commerce platforms that can give them a direct return on ad spend. This positive spiral for the platform and their advertisers, whereby advertisers continue to spend more on marketing and get even better sales, has the potential to change the profitability of the e-commerce industry in India.

In a similar way, streaming companies in India are also looking for ways to grow their advertising revenue. They are restricted to the brand ads market, whereas over 4.5 billion dollars of performance ads are restricted to big tech players. If streaming companies can start tapping into performance budgets of advertisers, they will effectively double the market opportunity and move towards profitability.

What are your near- and long-term aspirations for your involvement in the Indian advertising industry?

I believe that the Indian advertising industry is poised for tremendous growth in the coming years. At $10.5 ad spend per capita, we are one of the lowest in the world; to put it in perspective, China is 6x and USA is 80x of us on a per capita basis. While macro factors such as rising disposable incomes and move towards digital will play a key role, I am confident that world-class technology built by Moloco will catalyze this growth in the next few years.

Moloco has a unique advantage in this large and growing industry - we operate on both the demand and supply side, but we do not own inventory. This prevents us from being conflicted unlike others who have built sophisticated technology but also own ad inventory.

I personally want to spread a few important messages in the Indian advertising industry - (1) being objective and scientific about advertising spends using technology (2) avoiding losses because of ad fraud (3) tech companies should not think whether they should choose “growth or profitability” when they choose “growth and profitability.”

Could you explain how Moloco is pioneering advertising performance solutions that contribute to increased ROI or ROAS for global companies?

Machine Learning is our core. Moloco, the company name, comes from the words “machine learning company - mo-lo-co”. Operational machine learning is at the core of our technology which is autonomous and self-learns over time, it makes real-time decisions, it operates at scale, and also requires deep expertise in an industry to help solve a specific problem.

This is extremely hard to do – but done right, it unlocks enormous value as advertising in the open internet requires massive computational power to be able to make accurate predictions.

ML models, including Deep Neural Networks (DNNs), play a critical role in processing and making sense of the vast volumes of data generated in the digital advertising ecosystem. The effectiveness of any ML model is indeed contingent upon the volume and quality of data available. Moloco, being a leading performance DSP, leverages its vast data resources and computational abilities to process large amounts of data at an impressive scale. For instance, in the context of open internet impressions, Moloco manages an astonishing 600 billion requests per day, with the capability to handle up to 7 million requests per second. This computational prowess enables Moloco's ML models to not only process massive datasets but also to extract valuable insights and patterns that drive advertising performance.

Moloco's ML-powered algorithms use this data to optimize ad delivery, targeting, and personalization in real-time. These algorithms continuously learn and adapt based on user behavior, helping global companies achieve higher ROI and ROAS. By fine-tuning ad campaigns with precision and efficiency, Moloco's technology empowers advertisers to maximize the impact of their digital advertising efforts, ultimately leading to increased returns and success in the highly competitive global marketplace.

Are there specific examples or success stories you can share to showcase the effectiveness of these solutions?

Through our advanced decisioning abilities and data-driven approach we helped India's leading online gaming company Zuppe, saw remarkable success in its user acquisition, engagement metrics, and customer lifetime value.

• Zupee saw a rise in its Average Revenue Per User (ARPU) and achieved 3x ROAScompared to initial targets
• This lead to consistent growth, improving Lifetime Value (LTV), and reducing Customer Acquisition Cost (CAC)
• Zupee also achieved a 5X surge in first transactions within 3-4 months

From your perspective, what factors have contributed to India's remarkable growth within the Ad Tech industry in recent years?

India's Ad Tech industry has experienced notable growth in recent years, fueled by a digital transformation, a rising middle class with growing disposable incomes, a thriving start-up ecosystem on the back of cheap smartphones and data, and government initiatives promoting digital adoption such as the India stack.

However, it is essential to recognize that we have barely scratched the surface, with India's ad spend per capita significantly lower than more mature markets like China and the United States. The industry's journey in India is still in its nascent stages, marked by challenges like ad fraud, limitations in measurement, and data privacy concerns. While progress is evident, it's crucial to view the glass as half full, with ample untapped potential for further expansion and development in the Indian Ad Tech landscape.

How has Moloco strategically positioned itself to capitalize on the AdTech boom in India?

While the anticipated Ad Tech boom has not fully materialized, Moloco's advanced technology stack, diverse data sources, adaptability, and global experience make it well-prepared to capitalize on the market's potential growth. In a landscape where balancing profitability and sustainable growth is crucial, Moloco offers data-driven advertising solutions that align with the industry's evolving needs, making it a valuable partner for advertisers seeking to navigate the dynamic Indian market.

As AI and new technologies continue to shape the advertising landscape, how do you perceive their impact on creativity?

The integration of AI and new technologies in the advertising landscape has fundamentally transformed the way creativity is harnessed and applied. Traditionally reliant on human intuition, the decision of what ad to show and to whom is now increasingly data-driven. AI conducts extensive analyses, running numerous experiments to determine which creative content resonates most effectively with specific target audiences. This data-driven approach reduces guesswork and enhances the likelihood of creating content that truly engages viewers. Moreover, AI empowers advertisers to personalize ad content in real-time, optimizing elements like format, duration, and even celebrity endorsements based on individual user preferences and behaviors. In this synergy between human intuition and data-backed insights, AI is redefining creativity in advertising, fostering a dynamic and informed approach to content creation and audience targeting.