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Basics

Founded: 01.04.2012

WEB: www.k50project.ru


Interests: Software development

Region: Moscow


A service for automatic bidding in Yandex and Google by ROI and margin.

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Investors

$ 300,000

Type of investment

N/A
MediaNation Agency
01.04.2012
$ 300,000
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K50

EXECUTIVE SUMMARY

Our service

K50 is automated service for:

  • Creation and management of ads (for SEM, RTB);

  • Conversion forecast and bids calculation based on external inputs and current ads performance.

  • Complex reporting and smart alarms for advertisers.

Our service potentially support SEA systems, ppc (including social ppc), Banner, RTB and even Offline advertising.

Advertising Agency Medianation has been developing K50 for internal use for 2 years. The development costs are about $300k.

Today K50 - is absolutely separate company independent of MediaNation.

Website

http://k50project.ru/

Demand for the project and our market analysis

All the big advertisers (Agencies and clients) cannot cope with increasing number of ads, bids and their actuality. It is not possible to manage digital advertising manually amy more.

Russian market of digital advertising is going to reach $2 billion in 2013. (source: e-Marketer 2012).

Average commission of Online Advertising Management Platforms is about 3% that equals to $60 million.

These numbers are going to double in coming 4 years.

We are planning to reach 20% of Online Advertising Management Platforms market share in 2017.

In terms of commission it will be around $20 million in 2017.

K50 is not a shot in the dark for investors. Our business model has been tested by western companies. The price of acquisition of Efficient Frontier for Adobe was $400 million. Marin Software has IPO with $500 million price.

Our clients are agencies and advertisers.

From the very beginning K50 is being planned as a product for Global Market. Russia as a home country is a place for earning money and creating base for international expansion. We believe that it is time market for such a systems for Russia as well for the whole world.

We are planning to start international sales in 2014. We are expecting that turnover of the market will be about $135 billion. (Source: e-Marketer, Sep. 2012) We see lots of opportunities to grow. We are going to focus on expansion to developing markets of Latin America, Asia, Africa.

Our main promotion method abroad - is having contracts with advertising agencies all over the world and giving commission to them.

Today the market is ready to try and use ads optimizers and our global competitors have done a hard work for us - getting the market ready for our service.

It is important to enter Russian market this year, as the main competitors Garpun and Alytics have just received their first round. If we don’t start expansion in 2013, we could lose the edge and our competitive advantages,

Competitors

International AdLens and Marin are already in Russian market through advertising agencies. But they have difficulties with integration with Yandex.Direct and Vkontakte.

In Russian market there are several startups in their 1st year. Alytics, Garpun, Searchberry, Digly, Autopilot. All of them are just starting. Alytics and Garpun have just received first investments.

Our main competitive advantage

Algorithm of calculating conversion - is the main feature of our platform.

Our clients have thousands of people on their websites. Each client has his/her unique characteristics - for contextual advertising (source, keyword, category, goods...), for RTB (sex, age, interests..).

Basing on this statistics of conversion and margin, our platform calculates optimum rates for contextual advertising and RTB.

We use intellectual algorithm similar to neural network.

Monetization

We earn money though taking a percentage of advertising budget (from 2 to 5 percent depending on a size of budget; progressive scale)

Loyalty program for agencies - we will have a loyalty system for advertising agencies giving them back a percent of our commission. (system Yandex.Direct used to have in Russian market)

We will also earn money through offering consulting services and cross-sales of other marketing services.

It is important to point out that we do not place advertising by ourselves. We only work with advertising agencies and clients who have advertising inhouse professionals. Thus we form a unique environment in the market that allow us to grow as fast as possible through agencies.

Current Traction

Our current clients: LitRes, Voyanga, HAUSDORF, ESGN, Miele, HOFF, Amargo, Korablik, IKNOW.TRAVEL, Vigoda.ru, Svyaznoy (we have them through MediaNation agency)

Total of 30 clients use our system, who generate more than 700 000 advertisements

Total turnover: 1 500 000 Rubles per month

Commission (Gross Profit) = 5% = 75 000 Rubles per month

Now we have several clients who wait in line to be integrated with our system.

Return on investments

By the end of 2017 we plan to have 23% of Russian Digital Ad market and 0,5% of International market.

Estimation of company capitalization in 2017 - $200 mln. (Today Marin Software and Adobe AdLens cost $400 mln. each.

Return on investments - 200*0.2/1 mln  = 4000% in 4 years.

Promotion

  • MediaNation agency for fast start

  • Russian market for easy start. We have advantages in market knowledge, advanced handling of russian language morphology, smart integration with Yandex and Vkontakte.

  • No strong competitors. Low entry barriers in this market

  • Giving some services by freemium model - gaining fast market penetration as a result

  • Fast growing through integration with popular global and Russian CMS and ERP systems

  • Global market penetration

Our team

  1. Ivan Krasnikov - ingenious engineer

  2. Stanislav Branovitskiy - created Digital Agency MediaNation from scratch without investments

  3. Maxim Uvarov - top-class analyst from Wikimart

What will we spend investments on?

  • Speeding up development process/new features

  • Brand awareness

  • Increasing market share



THANK YOU FOR YOUR ATTENTION!

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