InMobi: An Indian Startup with a global ambition

InMobi – an introduction:

InMobi is one of the world’s largest player in mobile advertising – an industry in which it competes with the likes of Facebook and Google. Although the startup is headquartered in India, almost all its revenues come from outside India. InMobi has been successful not just because of its excellent technology and products but also due to its focus on operations.

 

 

 

 

 

 

 

 

Exhibit 1: Examples of mobile ads. The first screenshot shows an “app install ad” for Open Table. The second screenshot shows a “native interstitial” ad. Both the ads blends in with the content of the app – a format called native ads

Business Model of InMobi – a primer on Mobile advertising industry:

Mobile ad networks are marketplaces that connects publishers (mobile apps, websites where ads are displayed) with advertisers. They provide scale to both publishers and advertisers (for e.g. an advertiser can reach thousands of publishers through InMobi). More importantly, through their technology matching algorithm they ensure that only relevant ads are shown for different publishers (for e.g. a Nike male shoe ad should be shown to only male sports enthusiasts). Through this they ensure that the return on investment for the advertiser is the highest while also maintaining the user experience.

Exhibit 2: Structure of the Mobile Ad Ecosystem. InMobi operates both as an ad network and ad exchange in the schematic

Alignment between Operating and Business model:

Some of InMobi’s key operating decisions demonstrate the value that it has created and that it has managed to capture. Some of these are given below:

1) Established data centers across the world and outsourced their management to 3rd party service providers:

InMobi had the choice between having a single data center based in India and having multiple data centers spread all over the world. It decided to go with the latter model for the following:

• Reduced response time: Ad tech companies have to respond to ad requests (from mobile devices) in milliseconds. Having a data center/ server closer to the customer reduces the response time
• Greater flexibility: Splitting servers among multiple data centers provided redundancy and greater control over the traffic. For e.g. if the data center in US was down for maintenance, then InMobi could just redirect the traffic to India (where the load on the data center was low as it was night time in India)

In addition, InMobi also handed over the day to day maintenance of the data centers to 3rd party service providers who specialized in these services, thereby, reducing costs.

Business model implications:

• Better customer experience as the ads could be delivered faster
• No maintenance downtime
• Lower operational costs

2) Well aligned organisation:

There are 3 key teams in most technology companies – (1) Business/ sales, (2) Product and (3) Engineering. InMobi established an organisation structure that ensured the incentives of the teams were perfectly aligned. For e.g. “Native ads” was a key product line at InMobi. There was a dedicated team in each of the above teams for this product.

Business model implications:

• Dedicated development capacity prevented delays in product launch
• Clear accountability and ownership 

3) Engineering team at a single location:

InMobi had a large engineering team of 300+ engineers. InMobi consolidated almost all its engineering function in its headquarter in Bangalore, India for the following reasons:

• Lower salaries of coders in India
• High availability of coders
• Improved collaboration between engineers

Business model implications:

• Lower employee cost
• Faster development time due to increased collaboration

4) Software development process using open source technologies:

InMobi decided to use freely available open source technologies for its software development. Doing this ensured that there was an active community of dedicated coders working towards resolving any bugs in the software platform.

Business model implications:

• Low cost (no licensing fees, maintenance fees)

5) Innovation process:

To ensure constant focus on innovation, InMobi focused on 3 types of products:

• Core/ stable products (70% of resources like engineering time, capital etc.)
• Potential opportunities (20% of resources)
• Moonshots (10% of resources)

In addition, InMobi organises frequent “hackathons”, where engineers code continuously for 24 hrs to come up with demonstrable versions of their ideas. If the idea seems promising to the senior management, they convert it into one of the potential opportunities/ moonshots mentioned above and provide the necessary funding/resources for the execution. Many of InMobi’s products came up in this manner.

Exhibit 3: An InMobi hackathon in action

For e.g. the video below talks about development process for InMobi’s native ad product.

Business model implications:

• Deliver on customers’ increasing expectations
• Identified future sources of revenue. For e.g. through this “innovation funnel” process, InMobi was able to identify future successful products

Future of InMobi:

Through its focus on innovation and operations, InMobi has become the largest independent ad network in the world. It has been the recipient of multiple awards (was among MIT Technology Review’s 50 most disruptive companies in 2013; Forbes’s Outstanding Startup of the year in India in 2014) . The mobile ad industry is currently dominated by the likes of Facebook and Google but InMobi has an opportunity to create a “third front” and break the dominance of the larger tech. companies.

Sources:

Forbes Magazine article on InMobi

MIT Technology Review’s identification of InMobi as one of the 50 most disruptive companies of 2013

Overview of Mobile Ad Ecosystem

InMobi’s Hackathon video