G&R, the oldest digital ad network in Bangladesh, has been going through a transformation over the past few years. The company, founded in 2009, is finally arriving somewhere after all these years, thanks to the growing digital dominance in Dhaka’s advertising industry.
We recently spoke to Co-founder and CEO of G&R, Muhammad Nazimuddaula about what’s going on at G&R, its product strategy going forward, changing digital advertising landscape, his take on growing competition and challenges in the digital advertising space and major digital advertising trends in Bangladesh.
The advertising industry is going through a major shift globally. We are seeing, for the first time in decades, the great unbundling of TV, thanks to Netflix and relentless pursuit of TV ad dollars by major social media networks, slow death of advertising as we knew it, a handful of alternatives to banner ads and more. The interview, while largely sheds light on G&R's future strategy, will also help you to develop a deeper understanding about some of these changes in the context of Bangladesh.
Future Startup
To start with, can you please give us an overview of G&R as well as of major things that are going on at the company?
Muhammad Nazimuddaula
G&R has consistently been growing as a business over the past few years. We currently serve over a billion ads per month and the number is growing daily. On an average, 50 brands work with us at any given point of time. We have over 6000 publisher partners on our platform. Business-wise, we have reached operational break-even almost one and a half years ago. We hope we will be in an even better shape by the end of this year.
At the same time, we are investing in building a bigger and better team. We started 2017 with a team of 22 people and our goal is to become a 40 people team by the end of this year. Team growth is an important metric for us this year.
Strategically, we are diversifying and looking at a multi-product strategy. We have already launched a few products independent of Ad network. Although they all have a connecting thread, most of these new products are independent efforts.
We have launched a beta version of GoromCha, an email and office management tool, last year. A complete version of the service will be launched soon. It is not a mere email service rather something more useful that can help in managing your entire office. The service is currently free for up to 25 users. That said, we understand the challenges of building an email service from scratch and don’t plan to rush to monetization anytime soon.
There is Toongtaang, a sound platform like Soundcloud, that we beta launched recently. We think this is an interesting space and are trying to understand the business and intricacies of the space before investing ourselves heavily.
We are working on a digital payment product. We are almost done with the technical interface and currently testing an internal beta. Once regulatory paper works are done, we plan to launch it as another independent product.
While working on all these products, we have also continuously been improving our advertising technology. We have significantly improved our ad manager technology over the past years and are offering a more professional version to agencies so that they can manage large scale digital ad buying in-house.
Trends in digital display advertising are changing fast. Once brands were reluctant to advertise with less known or unknown publishers but things are changing now. There are brands who don’t care much about publishers instead prefer reach and ROI regardless.
Our approach to doing business is relatively different. We are not interested in making money alone rather we are into building lasting relationships with people we work with. We have partnered with a pool of new customers over the past months. Many of these customers don’t have a big budget but we are working together and we see that as something important. We are not running after revenue rather we are looking at the number of clients we can serve and the number of friends we can make.
We have been arranging free training programs for our partners and want to do more in the coming years. We want to contribute to the overall development of the industry as well as help our partners to make informed decisions.
Our team has evolved significantly. We have added many new faces to the team. Unlike many other companies, we provide a lot of space to our new hires and help them to learn and grow. Our company culture is more mature today. We have streamlined processes and systems to measure performance and collaborate as a team.
We are way more open and transparent as a company now than we were before. There is a clear understanding about the ownership and responsibility in the team. Everyone knows what they are meant to do. We have recently introduced a culture where if you can’t describe your job role in 3 sentences then you are not doing something important and should find something important to work on. Which means everyone knows their goal and target. And we have also become more realistic about our targets and goals.
We are a learning organization. Over the years, we have been able to cultivate the culture of finding the right answer through trial and error which is a big strength for us.
We have learned how to settle for a KPI mechanism that works for us. Our KPI measuring system is quite complex. It is nonlinear and incorporates many data points starting from sales to personal development of the person to meetings he did in a particular month.
We are now more confident as a company and passionate and sure about our mission.
G&R has consistently been growing as a business over the past few years. We currently serve over a billion ads per month and the number is growing daily. On an average, 50 brands work with us at any given point of time. We have over 6000 publisher partners on our platform. Business-wise, we have reached operational break-even almost one and a half years ago. We hope we will be in an even better shape by the end of this year.
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Future Startup
When you started there was not much competition in the market and digital advertising budget was also relatively slim. Over the years, things have changed. Brands are now increasing their digital budget and at the same time, we are seeing new ad tech companies entering the market including global giants like Google and Facebook. How do you think about the competition?
Muhammad Nazimuddaula
We always welcome local competition because it pushes the entire market forward. We understand that there is technology aspect to it on which we have been working for a long time and improving consistently.
The major challenge, however, in our market is not tech rather sales. Despite all the talk about digital marketing, it is still a hard call to get a consistent budget for digital advertising from a client.
When new competitions enter they definitely help in creating awareness in the market which ultimately benefits everyone. Moreover, the market is relatively big and there is still untapped areas where you can play.
In terms of international competition, naturally, there are questions about payment mechanism, taxes and all other aspects of running a business in a country. Government has already started talking about it. We believe there will be positive changes to ensure level playing field for everyone.
There is no doubt that Facebook gobbles up a significant portion of our entire digital marketing budget. However, the hype is now winding down. Once everyone was spending like crazy on Facebook without much understanding about ROI but brands are now waking up to a new reality that Facebook is not everything and that there are fake likes and expensive likes and a pervasive lack of control despite the fact that the platform promises to allow more control. Brands are now allocating their marketing budget more thoughtfully. I believe this will be the case in the future as well. Moreover, our market is a difficult one for major international players. It is largely informal and still at its early stage.
Having said that, we are minimally consumed with the thought of competition. We have an edge being the oldest in the industry. We have been building relationships with our customers all these years. We work hard to make sure that our clients get the best of us. That is our strongest competitive advantage and that’s where we are investing our energy and efforts rather than worrying about competition.
Strategically, we are diversifying and looking at a multi-product strategy. We have already launched a few products independent of Ad network. Although they all have a connecting thread but most of these new products are independent efforts.
Future Startup
What are the major challenges for G&R now that you are entering a different phase of digital advertising and also looking at a multiproduct strategy?
Muhammad Nazimuddaula
There is an inconsistency in the market which is true for almost everyone in the digital advertising business. Budget often fluctuates for digital. It’s hard to predict what will happen in the next month. For instance, everyone probably has a huge budget for digital this month but you can’t be sure that the same will happen in the next month. This has implications. If you can’t effectively predict what will happen next, you can’t plan either.
The second challenge, the most critical one though, is the scarcity of skilled human resource. At GR, we give a lot of space to our people to learn and grow which is not the case for many companies where everyone needs to deliver immediately.
There is an overall degradation of the quality of graduates that our universities are producing. There are young people with good credentials but lack basic skills. Moreover, a lot of young people are simply not willing to apply themselves and work hard. This is a strange thing that we come across every time during our recruitment process. If this continues, we are going to face a serious problem in a few years.
There are other issues like fraud and the likes but we have become used to it and now have developed strategies and skills to manage it.
Future Startup
How big is the digital advertising industry in Dhaka? How much has the market for digital advertising grown over the past years?
Muhammad Nazimuddaula
The market is no bigger than BDT 5 crore a month. A significant portion of that goes to content planning and creation. After content, media buying takes up a part of it. In media buying, you have Facebook and Google which probably gobble up the biggest share and then G&R spends a portion of it and there are other small players. There is direct buying although this is limited to only a few top players.
We saw a digital advertising hype in 2014-2015 when people suddenly rushed to digital space and spent a lot of money. And then things took a nose dive sort in the late 2015 and 2016.
However, we are seeing consistent growth in digital spending since the beginning of 2017. From our experience, in the last one-quarter of the year, we have seen over 17-18% growth compared to the same period last year.
The significant difference, however, is that this growth is happening with a considerable better understanding about the industry and solid awareness about the market.
The most significant growth happened in terms of market maturity. Market maturity wise, this is an important year and we are seeing a lot of brands are now joining the industry.
The market is no bigger than BDT 5 crore a month. From this budget, a significant portion goes to content planning and production. After content, media buying takes a portion of it. In media buying, you have Facebook and Google which probably gobble up the biggest shares and then G&R spends a portion of it and there are other small players. There is direct buying although this is limited to only a few top players.
Future Startup
What are the major predicaments and where do you see the industry is going down the live five-six years?
Muhammad Nazimuddaula
One of the major challenges is content. There is a serious dearth of quality local content in our market. For instance, say our digital marketing budget grew by four times in the next few years what would happen, would we be able to spend the budget? The likely answer is no.
Facebook is there along with a few other options but that is not enough. There is a huge gap in terms of quality local platforms where you can spend. You can’t spend just by overspending because it would not benefit any party involved. Simply put, the scope of digital spending is limited in Bangladesh. We can’t talk to many advertisers for a big budget because we don’t have quality spaces to burn it.
There are content producers and news sites that are trying to survive producing contents that are clickbait, in many instances, and are not of high quality. While it makes short-term survival easier, but it will have unintended long-term consequences.
I’m not overly optimistic that this will change overnight. Material improvement will take both time and effort. We are trying to contribute to solving this problem. For instance, we have solid plan to add some content aspects to GoromCha. We are considering more rigorous plans to support publishers community that we work with in different forms.
Another challenge is, of course, the informal nature and the lack of overall transparency in the industry. The industry is not open. There are gatekeepers who sometimes don’t make decisions for the best interest of the companies.
One of the major challenges is content. There is a serious dearth of quality local content in our market. For instance, say our digital marketing budget grew by four times in the next few years what would happen, would we be able to spend the budget? The likely answer is no.
Future Startup
What major trends do you see in the digital advertising space going big in the next few years?
Nazimuddaula Milon
I think banner ads will remain relevant for a long time despite all the talks around it. Technology might change, which is a very common thing and we have been doing it ourselves, but the medium should remain relevant for a long time. There will be changes and advancement in how we approach banner advertising as the industry mature but we see a rather better future for banner advertising.
Content is something we may look at in the long run. Ultimately, whatever you do content is what drives attention. That said, there are questions about how do you plan to do it and at what extent.
Video is now a major trend. Everyone is talking about video but I think this is a fad than a trend and it will subside soon.
We are seeing a slow but growing interest in native ad format but there is a lack of understanding about the format. In fact, it is a new format globally and there are doubts about the effectiveness of the format. But there are still enough reasons to take it seriously.
Future Startup
What are the plans for 2017?
Nazimuddaula Milon
Thematically, we have three major plans for this year. Grow our revenue at least by 20% compared to the last year. Launch GoromCha as a functional product. And we have some regulatory works left related to our payment product that we want to complete.
Going forward, diversification is a priority. In fact, we are looking at possibilities other than our existing products.
