IDG Ventures invests $3 million into Vserv; first mob-ad investment since recession

In the first VC investment in mobile advertising in India since the global downturn, IDG Ventures has invested $3 million (Rs 13.5 crore) into Vserv, an Indian tech start-up that specializes in serving ads within mobile phone applications.

Vserv is one of the few Indian start ups in the mobile eco-system to make an impact on a global scale and is a fairly large player in the In-app ad market. It also has a presence in the WAP (mobile web page) ad business and is extending its advertising solutions into Android Apps.

IDG Ventures is the investment arm sponsored by the International Data Group (IDG), the world’s largest IT media company, which also owns the IDC market research agency.

It said the investment is partly the result of the research activity of the IDC group over the past several months.

“Having researched this dynamic market for the last year, we found Vserv taking a leadership role from India and starting to expand to emerging markets abroad,” said Manik Arora, Founder and Managing Director, IDG Ventures India

According to a recent projection by IDC, the global In-App advertising market will grow from US$900 million this year to roughly $5 Billion in 2015 according to IDC. Globally, the worldwide mobile advertising revenue is expected to exceed $3 billion in 2011 with Asia-Pacific being half the market.

It is estimated that out of the 100 million plus Internet users in India, around 40 million log in from mobile phones and a large part of them access the Net only through their phones. Due to the prevalence of low-end and mid-range phones in the country, it is also the World’s largest consumer of Java applications — an inordinately large part of which are cricket games.

Vserv too is primarily focused on Java apps, which in India means mostly games downloaded onto the phones and played on trains, buses and in queues, though it is now eager to tap the Android market.

It now handles over 6 billion mobile ad requests every month and is serving mobile ads in over 200 countries, Vserv said.

Developers and content companies who target mobile users have long been worried about monetizing (creating revenue from) their products. For example, while it is easy to give film trailers or bollywood songs for download, it is much for difficult to get the Indian mobile user to pay for the same. So too, was the case with games.

As a result, In-app ads, in which the advertising is woven into the application (for example, by having the client’s bill-boards in a cricket game), is seen as the most promising route to develop a healthy mobile market.

Vserv was founded in January 2010 by two well-known figures in the mobile industry in India, Dippak Khurana and Ashay Padwal. Both co-founders worked together at Mauj Mobile where Mr. Khurana led content and international operations and Mr. Padwal led technology, product and operations.

The firm developed a unique Ad Serving platform for WAP and In-App that facilitates full-screen billboard ads and video ads for new as well as existing apps across multiple platforms. It has delivered mobile advertising for over 50 multinational brands, such as Google, Yahoo, Nokia, Nike, Samsung and Vodafone.