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Interview on Competition from Google in SMS Space

October 3rd, 2008 · 61 Comments

Rajiv Dingra from WATBlog emailed me some questions following the launch of Google’s SMS Channels (as part of Google Labs). I have reproduced my answers here.

Google has launched sms channels what are your initial thoughts? Do you feel threatened?

SMS is being percieved as the critical medium for mobile subscribers, something we had initiated two years ago. We pioneered permission-based services, and others are realising the power now. Mobile advertising will grow. The mobile subscriber base will be 500 million in two years; it is a big opportunity, more players are welcome. Where is the need to be threatened! In fact it is about growing the opportunity.

When one is first in a market, there is bound to be competition sooner or later. In fact, in the coming months, I expect many more companies to enter this space. In the Internet too, IndiaWorld was the first portal (which I had launched in March 1995), and in the subsequent years we had various players enter the market. Over the subsequent years, many dropped out. IndiaWorld thrived, consolidated its market leadership position, and won.

So, a launch of a product by itself in no way guarantees its success – even for us, there are many things that have not worked in the past two years. What is needed to win long-term is a combination of multiple things: vision, understanding consumer needs deeply, strong focus, constant innovation, money and an ability to invest for the long-term, and an organisation completely aligned to the mission (which in our case is to “be the Genie that makes the Mobile Phone into a Magic Lamp” for people), and of course, some luck!

There are nearly 4 million MyToday subscribers with 11+ million subscriptions today for whom the service has become a habit with its excellent content and timely delivery. This is supported by a technology platform that can prioritise and customise each of the 12 million SMSes that we send out daily. And this is just the start. Competition helps bring out the best in all who are there in the marketplace hastening the pace of innovation, adoption and revenue growth. This is therefore good for everyone who has an intention of being a long-term player in the market.

Why would Mytoday continue to do well? Given stiff competition from someone like google?

There is a critical difference in the two services. One is a user-generated and ad hoc content, while we believe in offering editorial content with specific deliverables which help in creating habit in consumption as our recent Nielsen study (covering 5,000 users) had shown. The study says 76% of our subscribers read every message, 84% say they receive the information first from MyToday before any other medium and 98% say they will continue with the service and recommend it to others.

Google already has a huge database of advertisers who would surely be introduced to sms channels once it matures how do you think that would affect mytoday?

It will certainly help grow the advertising pie and then it is upto the individual service to offer best value back to the advertiser. I also think that every medium is different — and the mobile is not going to the same as the Internet. Monetisation streams on the mobile will need to be thought of very differently from the Internet.

Unlike the Internet where the cost of each page view is negligible, there is a significant cost for sending out each SMS. While advertising is going to be one of the most important revenue streams, it alone is definitely not going to be enough to create revenue breakthroughs. This is where one needs to think of the concepts of “VAS Operator” and “Mobile Computing Operator“.

Google has in the west acquired products after their own version’s didn’t work (think google video youtube story) Are you open to acquisition if its Google at a later date?

This is highly speculative and we are right now focussed only on building the service further. We have no such intentions.

How many smses do you send per day and what would be cost of sending those smses?

We send more than 12 million sms per day and because of our innovative initiatives we have been able to tremendously reduce costs.

Lets say you are growing at the same rate for the next 2 years what would be the cost of supporting that growth?

We would have broken even much sooner than the next two years and the service will be returning value back to us.

What is your strategy on the advertiser acquisition front? How do plan to build scale?

The only way to acquire advertisers is to offer innovative solutions based on the native features and strengths of the medium, and return back a good value for their spend. We are building a large sales force in multiple cities across the country as well as working with partners to target specific verticals.

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