Way2SMS Launches Social Ad Exchange, Eyeing IPO [Founder’s Interview]

Way2SMS, the largest P2P SMS sending website, may not be a popular amongst media, popular bloggers and VCs as they rarely make any big announcements, nor did they raise any funds. The big news about 160by2 acquisition also did not find much attention from offline media. This is a typical example of how media is driven by exorbitant sounding numbers and VC driven sound bytes, but that is a post for another day. Another interesting fact is that according to the Google’s Zeitgeist 2011 for India, Way2SMS is amongst the Top 10 most searched brands. For the past 2-3 years it has been consistently amongst the top 30 sites of India according to Alexa. Add to that the fact that they have never advertised.

Now I get your attention I believe. So let me make a statement: “Way2sms is the largest Indian Internet brand that has never spent on advertising.”[Correct me if I am wrong] When I say largest it is not only in terms of traffic. A little arithmetic from their publicly available data will tell you their net revenue is about Rs.30Crs. Comparing to ecommerce players would be wrong as their net revenue isn’t available and the gross revenue wouldn’t make sense. To give you an idea of what that number means, MakeMyTrip’s profit for FY ending March’11 was about Rs.21.5Crs. Way2SMS’s sms sending cost would be less than Rs.6Cr. You are left with fixed costs of servers, salaries and rent etc. I know it is still apples vs. oranges but you get the point.

We never acknowledge enough of Indian startups I guess. We always wait for the VCs/media to give their seal of assurance first.

In the past few years, way2SMS has made various attempts to come out of the vertical play of being a pure SMS sending website. From Games to Movies, Free Email Alerts on SMS to an IM aggregator, way2SMS has attempted various application but free P2P SMS is what worked for them. They even tried to get into mobile recharge business but that may be killed soon. Ofcourse the story of various attempts and 1 success is true to them as well. Only in an inverted manner. From my experience of using Way2sms and earlier competitor, now subsidiary, 160by2 for past 4-5yrs, the one thing I can relate to is the SMS delivery consistency in way2sms. Their basic offering worked and that is all that mattered. You can see an ever increasing gap in the two sites which might be due to this one feature.

So what do you do with so many users visiting your site daily for free stuff? Well you make them do some more stuff and give away more free stuff. That is what Way2SMS is now attempting with their Social Exchange product. For the users, this a share to earn program or a referral program. As a user you can choose from amongst the advertisers and share their ad with your Facebook/Twitter followers. You get free mobile recharge based on the number of unique visitors you drive to the advertiser’s site. Is it not encouraging spam? Well celebrities do it, Facebook officially does it, so I guess not.

As an advertiser you could either be driving socially qualified leads to your site or pay your way to getting a viral campaign or get that initial boost to your potentially viral campaign. After all 6Million monthly unique visitors means a lot. So even if these guys see your message while selecting amongst the advertisers list, your purpose is served.

Not that the program is very new, as versions of it has existed from time to time but no one with such large user base, I can recall, has attempted it.

Here’s a quick QnA with the Founder of Way2Online Venture – Raju Vanapala.

1. What kind of incentives is user being offered to share the ads? Typical monetary value per click?

It’s not possible to say how much users will earn for a certain number of Unique visitors or leads, because earnings will depend on the actual Cost per Visitor or cost-per-lead (CPL) or cost per sale (CPS) paid by advertisers for each ad that appears to them. Some ads have higher CPVs or CPLs than others, so earnings will vary depending on the specific ads displayed to users.typically, users earn any where between 60 paise to Rs.2 CPV . Also, users revenue share will be determined based on their Trust score.Trust score protects advertisers from spam activity and drives good quality traffic. Also this raises advertiser confidence in our advertising platform, which in turn can lead to higher budgets on our advertising platform.

2. How do you plan to control spam clicks on these links?

We have 4 ways of handling Click Spam
1) Automatic Filter:- Automated algorithms analyzes every click and filters out all invalid clicks in realtime.
2) Click Analysis:- We Analyse every click that enters in to our database with the previous history and various other parameters to detect whether the click is valid or invalid.
3) Alert Based Investigation:- We have built an alert based system to detect unusual activity. We will carry out manual investigation on alert based activity.
4) Regular Investigation:-  we screen all our top earning users or top click generating users regularly.

We have observed, great accuracy in identifying invalid clicks with the above process. Right now, we are on top of click spam.

3. On the recharge.way2sms.com  – what advantage do you think you are offering as compared to other players?

We released beta version of recharge service as a value addition to our users.But, we are facing lot of operational challenges here. We are seriously evaluating to kill this feature inorder to focus on the core service.

4. On the TRAI regulation. How has it impacted the traffic on site?

Of course, we have lost close to 15% traffic post NCPR implementation. But, We are happy to operate under stable regulatory environment.

5. Is there anything special you are doing to work around this regulation?

We did multiple things

1) We have evaluated nature of messaging activity and consumer behaviour on our platform. We have made the platform purely person to person. We have cut our group SMS limits heavily to discourage commercial nature of messages from way2sms.
2) We have created lot of awareness among the users about the impact of these regulations on their regular activity. This made us to retain users to certain extent.
3) we are slowly moving towards optin delivery model.

6. Is there any plans for way2SMS get in to enterprise play, like selling bulk SMS etc. ?

No.  We are a consumer centric internet company. Our focus is on consumer focused internet businesses and niche verticals. We look for vertical defining business models for way2online’s growth.

7. What is the long term goal with way2sms? What part of the ecosystem are you looking at? SMS >> Content/Email aggregator >> Recharge >> Adnetwork – are all these natural extensions?

Our Objective is to grow as India’s largest consumer centric internet company. Our strategy is to create new verticals and innovative business models with product first mindset. Thats what we did with way2sms too.

8. We believe way2sms is a cash rich company so definitely you aren’t looking to raise funds. Are you looking to acquire companies that fit your over all strategy? If yes, what kind of companies make sense to you?

We are not looking to raise funds at this moment. We are happy with the pace at which we are growing right now. But, going for an IPO in 30 months from now is a great possibility for us. We prefer growing organically, but we look at consumer internet companies with strong vertical presence as a great fit for us.

[Naman is a startup enthusiast and has worked with couple of Indian startups as Product Manager. He is the founder of FindYogi]

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