KUALA LUMPUR: Axiata Group Bhd (fundamental: 0.85; valuation: 0.9)’s subsidiary Axiata Digital Advertising Sdn Bhd (ADA) is hoping to get a slice of the billion dollar digital advertising market in Asia Pacific via a joint venture (JV) with US-based advertising technology company Adknowledge Inc.
The JV company, Adknowledge Asia Pacific Pte Ltd (Adknowledge Asia), will work with businesses, advertising agencies and mobile application developers in the region to provide data-driven advertising strategies to raise brand awareness and drive sales and app installs through digital video, mobile, and social media marketing.
ADA has an 80% stake in the JV company, in which it has invested US$9 million (RM31.01 million).
Axiata Digital Services Sdn Bhd chief executive officer Mohd Khairil Abdullah, who also oversees Axiata’s companies and joint ventures in digital advertising, believes that Axiata could leverage on Adknowledge’s technology to offer a better proposition to larger advertisers in the fast growing digital advertising market in the the region.
Khairil said he is expecting the JV to start generating revenue this year, but didn’t specify a target. The revenue, he added, would be reinvested to scale up the company.
The new venture comes at a time when Axiata’s earnings had slipped 11.75% to RM631.03 million in its third quarter ended Sept 30, 2014 (3QFY14), compared with RM769.78 million in 3QFY13.
Khairil, however, said contribution from digital advertising to the group’s earnings will still be relatively small in the foreseeable future.
Digital advertisement spending worldwide is expected to reach US$154.29 billion this year and Asia-Pacific is anticipated to be the second-largest region for the sector. The region accounted for 28.2% of total spending last year, after North America, due to the rapid adoption of smart devices and changing video viewership patterns, according to emarket.com.
Adknowledge Asia managing director Krishna Krovi said the company plans to be the market leader in the region in three years.
“Adknowledge [Asia] has been in social media marketing since 2008. On Youtube, it has a patent-pending technology. I don’t think anyone is providing this service. So, this is one of the reasons why the JV is a good partnership. We can leverage on Axiata’s market, brand, knowledge, and footprint to go for a leadership position in the market,” said Krishna.
The technology is one that customies advertisements to targeted viewers.
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This article first appeared in The Edge Financial Daily, on January 28, 2015.