Executive Summary

Fugu Mobile believes there is a future in the convergence of mobile marketing and mobile games. The company, with offices in both India and Shanghai, develops and executes mobile advertising campaigns as well as develops mobile games. The company's mobile marketing campaigns may include a real-time SMS voting activity at a brand-sponsored concert, an interactive short message element added to a traditional TV commercial, a branded WAP site that includes simple mobile games or a 2D barcode service.

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Fugu Mobile is preparing for the convergence of mobile marketing and mobile gaming with its "Enrapture Ad Platform", which allows the company to embed ads in mobile games. Parameters such as location and time of day can be set for when the ads are displayed. Different ads from different companies can be inserted into the game at different times. However, until mobile marketing really starts to take off in China, Fugu Mobile is relying on the traditional mobile gaming business to pay the bills. Fugu publishes mobile games in 25 countries worldwide, including European countries and the US, taking advantage of the lower costs of game development in China and India. Fugu Mobile, however, takes a less-than-rosy view of China's domestic mobile games market, for reasons discussed in Part 2 of the interview.

In Part 1 of Pacific Epoch's interview with Fugu Mobile CEO Ranjit Singh, we discuss the company's mobile marketing business and some of the challenges facing the market, including spam and privacy issues. Look for Part 2 on Friday.

Singh has been in China for six years and previously worked with Indian interactive marketing agency Contests2Win, setting up the company's, as well as those of its mobile marketing subsidiary Mobile2Win's, operations in China. Singh founded Fugu Mobile after Mobile2Win's China business was acquired by Disney's Internet Group in 2006.

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Pacific Epoch: Can you walk us through a typical mobile marketing campaign?

Ranjit Singh: We work with the brand and the advertising agents, but we find it more effective talking to the brand directly. There are very few advertising agencies that are really innovative and willing to try new things, though a lot has changed in the past two years. Many brands are asking their agencies for a mobile strategy. They want to try mobile advertising and the agencies come to us for the mobile expertise.

Typically, when we work with the brand, we sit down with them and they give us a briefing of what they want to accomplish. We then design a plan for them, which could include SMS, MMS, QRcodes and more. We figure out what will work best for the brand and design a solution for them. Every solution we create has to be very interesting for the consumer because there has to be an incentive for them to participate. The incentives are usually some type of entertainment or prize. The solutions could cover product launches, sales campaigns, events, road shows, member loyalty programs and other specific aspects of the brand. Over the years, the technology has become more capable, and there is a natural tendency for brands to move towards richer media. We see a lot of brands move towards things that are more interactive, richer in content. We see a convergence happening between entertainment and brands. We create games from the same point of view.

PE: How do you divide your business between India and China?

Singh: We do a lot of our R&D in India because we have the resources there. Marketing is all done in China. In China, we have three developers, three programmers, one full-time illustrator, one part-time designer and one project head. I also handle sales, along with a colleague of mine who used to lead Mobile2Win. There are four technology employees in India.

PE: Why have you chosen to do both mobile marketing and mobile gaming?

Singh: We have set up our business in such a way because we believe these two businesses will merge into one business in the long run. Also, mobile marketing is a very campaign-based business, so is not a very predictable business; also because it is in the very early stages of development right now. It is very difficult to predict revenues for mobile marketing, while mobile gaming provides stability. Gaming is also not geographic specific. We create the games in India, but they are being distributed in 25 different countries. By developing games from two of the lower cost locations globally, my returns are much higher. On the other hand, mobile marketing is very geographic specific. We have done several campaigns where the brands are in other countries, but those are difficult to do so. Mobile gaming is what currently drives our business - mobile marketing is what we see as the future. We think it will be at least another year before mobile marketing becomes big in China. We have already passed the initial stage of introducing the idea of mobile marketing to the market because now we have agencies approaching us about mobile marketing campaigns. Online advertising has now reached the mainstream and I would say the same thing will happen in the mobile industry a year from now. I will look for mobile marketing to take off at that stage. Right now it is still very campaign-based and driven by brand managers who want to do something new for their brands, rather than a mobile strategy being built into marketing plans.

PE: Some big companies including Focus Media are starting to get into mobile marketing Do you see them as competitors?

Singh: It is still very early, and there are very few players in this market. We actually complement each other since we work with other mobile marketing companies as well. Again, with mobile marketing, there is no one company with complete expertise since there are so many different aspects of it - there are QRCodes, WAP sites, SMS, Java and more. When we work with a brand we bring in a partner who has a strength that we don't have.

PE: How is your business different from what Focus Media and Shanghai-based Madhouse do?

Singh: Madhouse's strength is WAP advertising. It is positioning itself as the DoubleClick of the mobile space. They publish and serve ads on WAP sites. They help serve ads for us. I am actually doing a campaign with them right now. We design and develop ads for the clients, but we work with Madhouse to publish those ads. Madhouse is more of a partner than a competitor.

PE: What about Focus Media? They seem to do a lot of SMS Push advertising.

Singh: I wish companies and brands would not do Push. Many brands have stayed away from mobile marketing because they associate mobile marketing with spam. Even China Mobile and China Unicom insist that it has to be permission based, but there are still loopholes in the system. We try to educate brands that it is not effective because 99 percent of the users will be unhappy with spam. We still get brands asking us to send out spam messages to a large number of users, but we refuse to do so.

PE: Are the majority of your clients international companies or local brands?

Singh: It has been largely multinational. We have had very little success with local companies as they are less likely to try anything new. They are not very open-minded [about mobile marketing] and are less likely to spend a lot of money.

PE: What are some of the advantages of mobile advertising?

Singh: The good thing about mobile marketing is that it is digital. It is easy to track data. We get the users' mobile number through campaigns. With their mobile numbers, we know which province and city they are from, and we can then do a lot of data analysis from there. When we worked with a restaurant chain, we could tell them that participation in their campaign increases right before lunchtime. We worked with a brand that was doing a sampling activity across several cities, and would receive responses as people participated. We received the sampling schedule from the brand, but when we were not getting any responses from Hangzhou, we eventually found out that the sampling agency made a mistake on the dates. So it works as a tracking mechanism for feedback as well. You can also build a lot of consumer information. For example, we ask for consumers' names and email addresses for the mobile gaming tournaments we run. This builds a database of email addresses, which could be used for cross-marketing down the line. The data acquired from the consumers is much harder to get than data that is automatically captured and it has to be very carefully balanced with the value the consumer is getting from the campaign.

PE: Do you think capturing consumer data will bring up privacy issues?

Singh: That is not too big of an issue for large multinational companies because they already have established names [that consumers trust]. Also, there is certain amount of discipline that the brand imposes on itself. The brands cannot send out SMS to its database of mobile phone numbers unless they have received permission from the users beforehand.

PE: Do you think that most consumers are probably not even aware that their mobile numbers, locations and other information are being captured?

Singh: Most likely. That is how most of the spammers get away with it. They are capturing the data, but the consumers are not aware of it. But the mobile operators are clamping down on this now.

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