Lunch with Harald Neidhardt CMO Smaato on patents, the recession and mobile advertising

I had a delightful lunch looking over the Alster with the CMO of Smaato Harald Neidhardt. The great view and atmosphere made for an exciting interview focusing around some gossip in the market. I had some contentious issues that I wanted to address and I wasn’t sure how the interview would go.

The issues surround patents, being sold and competition. The summary is below.

Bena: Hi Harald, lovely to see you again! So, how is Smaato going?

Harald: Splendid!

Bena: Why?

Harald: We have hit a nerve in the industry with our optimisation platform. We have been in the market four years now and our unique position as a “glocal” advertising business is starting to shine.

Bena: Are you global or just Europe and the US?

Harald: We have employees all over the world and new markets are also vital for us. China, for example, has huge potential and it is our strategy to move and expand into new territories.

Bena: What is Smaato’s global reach?

Harald: As a company with a global reach we now serve 250 countries and 20 ad network partners – we try to fill local adverts and local applications.

Mobile is a very local experience, as you connect where ever you go. The promise of mobile advertising is making it hyper local. This means that as a global business we can broker the ads from the local firms making the experience and quality better.

Bena: Is that the core to success in mobile advertising; having local arms?

Harald: I think focusing on the hyper local is our business and asset. We promise our publishers fill rates and this is what they demand. As an aggregator global reach is vital, but local content is extremely necessary to deliver relevancy.

Bena: OK. So I understand the business model but I heard some rumours in the market and want to hit you up with some tougher questions. But before we get to the tough ones – I would like to ask your opinion on the mobile advertising space. Is it “open”?

Harald: Open is a word in itself that can be defined in many ways. Smaato is open in that we open our API and make it easy for publishers and networks to partner with this. In the past it took six weeks to integrate and now it only takes one or two days. So for us we are open and an open player in the mobile advertising market.

Bena: What about as a whole? Is there enough collaborative effort and intra-mobile support?

Herald: Mobile advertising is still a young market and very new. We strive to make the best collaboration for our publishers and work with all ad networks regardless of if they compete with each other. The main focus in our industry is “selling mobile”. There might be more that needs to be done to support this.

Bena: OK. So, sorry if I am going off-track slightly; but if I was a publisher how do I get Smaato and its aggregators?

Harald: We focus on a large account strategy. We open and make ourselves easier and self-service. We offer a wide selection of ad tags and codes for anyone to integrate in the application or mobile site. It’s extremely simple.

Bena: Do you have guidelines for how many ads per page or anything like that?

Harald: No. We only offer suggestions.

Bena: So if I am a small player with 20 applications or sites targeting different niche markets – how can you help me?

Harald: When we sign up new publishers everyone gets a unique ID and we do category targeting. We try to educate publishers and get more information on the adverts, because the more information we receive (out of what we have) the better the results. For example, one publisher gave us 15 entry points of data on subscribers which means they can guarantee the best ads and the best success rate or CTR for their ads.

In all honesty we broker the best ads for the right time. But sometimes if inventory is low the space has to be filled and that is what publishers want.

Bena: Is mobile a tough sell?

Harald: The mobile industry is in a recession. It still needs a year or two to live up to its promise. 2008 was a great year for us. It is slighter harder in 2009 as everyone’s budget has been reduced but that is why advertising on mobile is becoming more critical. Publishers need to make money. To do this they need to fill their sites and applications on mobile with adverts.

Bena: What types of patents does Smaato have?

Harald: We filed for patents about 3 years ago. We have some mobile advertising patents that we are extremely positive about.

Bena: OK. So is Smaato up for sale in the recession. As an example there’s the recent purchase of AdInfuse by Velti. Is that something Smaato is looking for?

Harald: No. We think we can build a very strong company and have a great foothold. We have a strong management team and we have just added several new “Smarties” (Smaato employees).

Bena: Do you predict more consolidation in the market?

Harald: Consolidation is likely but only for businesses that are successful or need to survive. The whole mobile industry needs more inventory and more sales people to make the business survive.

Bena: OK. That is why I asked about acquisition.

Harald: We are not for sale! In fact we are looking to acquire. We want to strengthen our local sales teams and are looking for niche new companies to buy.

Bena: OK, last question – what is the BBQ about this evening?

Harald: We are celebrating our 4th anniversary on August 18th and because we are a US and a German business a BBQ on the Alster outside the American Embassy is just a great idea!