Here's what US$12m in Series A funding means for AdAsia

It is so far the largest Series A funding in the advertising technology space in Southeast Asia.

In an exclusive interview with Singapore Business Review, AdAsia Holdings CEO and co-founder Kosuke Sogo shared where the startup is heading after closing its Series A round with US$12m in funding.

With its first year seeing US$12.9m in generated revenue, the Singapore-founded ad tech firm is already setting its sights on an initial public offering in two years' time.

SBR: What made you and fellow Japanese co-founder Otohiko Kozutsumi decide to put up AdAsia Holdings in Singapore and not in Japan?

I was CEO of Southeast Asia and managing director for Asia Pacific for my previous company, and the both of us have a good deal of industry experience in this region. Understanding how individual markets function is vital, and we had to come up with a micro and macro strategy based on that. When we first started the business, Singapore was our main choice due to the country’s accessibility to the region and strong business infrastructure.

Moreover, we founded the company wanting to enable marketers and publishers to leverage on intelligent tools and increase their returns. That’s why Southeast Asia was perfect for us at the time, as the region was on the cusp of fast digital growth.

Japan will be on our agenda for this quarter – we’ll be launching an office in Roppongi, Tokyo soon. This will allow us to obtain Japanese ad inventory and provide businesses in Southeast Asia greater accessibility to reach Japanese audiences. At the same time, Japanese businesses looking to expand into Southeast Asia can leverage on our ad networks to reach the right audience.

SBR: What particular problem does AdAsia seek to address?

Modern marketing has more than 3,874 vendors, each specialising in a different function. What this means is that marketers have to spend time and money to sift out the vendors that best suit their needs at a particular time.

In addition, even though programmatic advertising has been around for almost a decade, it has only reached our shores more than five years ago, and gained traction in the past two to three years. What this means is marketers of global businesses here are pressured to adopt this technology whilst local businesses are starting to adopt these tools. There is a knowledge gap in understanding the capabilities and opportunities available to them.

Online property owners in this region are also now finding the best way to monetise their content. That is why we’re committed to not only raise the standard of digital advertising, but also the properties these advertisements are shown on.

Some other issues that have been plaguing this space include whether the site is “brand-safe”, and whether these ads are seen by actual humans. This is something we’re actively looking to address, and is also where the AdAsia Digital Platform comes in.

SBR: What makes AdAsia’s platform unique?

Our flagship product, the AdAsia Digital Platform, allows marketers to perform multiple marketing functions through a single, easy-to-use platform. This allows for consolidated management and reporting of activities including display, video, and native advertising across desktop and mobile devices. The AdAsia Digital Platform also provides access to multiple ad exchanges, ensuring marketers can get the best value for their dollars.

All activities will be reflected on our real-time and transparent reporting dashboard, allowing businesses and marketers to track where exactly their marketing dollars are being spent.

At the same time, we’ve also included CastingAsia, a data-driven influencer marketing platform, in our arsenal. CastingAsia, coupled with our in-house production team, means clients have an end-to-end solution for their video marketing needs – from the hiring of actors and video production to the placement of ads.

That’s not all though, as we have consultants who can guide clients in their adoption of these tools.

SBR: How did AdAsia start the business in 2016 without external investment, and expand into six countries in less than a year?

Otohiko and I have extensive experience in this industry and region – allowing us insight into which fast-emerging markets to target, and strategies to get a running start in each country. At the same time, these moves were driven by client demand.

However, moving into six countries is the easy part – it is growing the business in each country that is the challenge.

A good amount of credit goes to our staff. We currently employ about 90 staff globally, compared to 30 in our first quarter of operations last year. This is why we prioritise localisation. Locals make up 90% of our staff in each country, providing us with on-the-ground expertise, and provide better support to our clients. We also localise our products to suit the needs of each unique market.

SBR: With AdAsia closing its Series A round with US$12m in funding, where do you plan to use the funds?

We plan to use the funds across footprint expansion, headcount growth, and product development.

In terms of footprint expansion, we’re in the process of opening up offices in Shanghai, China and Tokyo, Japan, and this funding will help us enter these markets. Hong Kong, Malaysia, and the Philippines will then follow by the end of this year, along with India, UAE, and North Asia next year.

We’re also expanding our workforce, growing it from the current 90 to 200 by the end of this year, and 400 by the end of next year. This is to ensure that each country has enough frontline and support staff.

Being in this fast-evolving space, we have to ensure we are at the top of the competition by continuously innovating. We will be setting up a product development centre in Vietnam, and look to beef up our product team.

We’re looking to drive further research into the use of artificial intelligence (AI) in marketing, add AI capabilities across our existing product arsenal, and develop more intelligent products. For instance, we will add AI capabilities to CastingAsia, allowing for greater precision to match the right influencer to the right brand.

SBR: Is there anything else you would like to highlight?

Our aim is to IPO towards the end of 2018 or at the start of 2019 – with revenue targets of US$28m this year and US$80m in 2018.

We’re confident of achieving this goal – we developed a roadmap when we first started the business – and have been on course for our targets. 2016 saw US$12.9m in generated revenue and the company is already profitable. This is also in part due to our focus on localisation – from products to service.

Also, I would like to add a piece of advice for Singaporean business owners looking to grow regionally. It is very important to understand each market, especially in one as diverse as Asia. Understanding local nuances and best practices will allow you to better position your company to enter the market, or even whether entering a certain market would be profitable.