The last great battle for serving offline ads | Sandeep Bomireddi @ Adonmo
While Google and Meta may dominate the online advertisitng world, the offline advertising sector remains a largely untapped frontier. Adonmo, co-founded by Sandeep Bomireddi, has successfully navigated the challenges of this space, transforming traditional advertising methods into dynamic and digital campaigns.
🚀 Early Entrepreneurial Ventures and Lessons Learned
Before Adonmo, Sandeep and his co-founder attempted to launch various products, including a platform for analysing real estate data and a listing service for hospitals. Both ventures ultimately failed to gain traction, serving as a harsh but crucial learning experience. Sandeep reflected on these setbacks, stating,
“I did not imagine things to be this hard when we started doing this. I have definitely aged fifteen years in the last five years, mentally and physically.”
In 2015, while still working at Microsoft, Sandeep along with his co-founder Shravan started exploring a mobility advertising model inspired by a U.S. company called Rapify. However, they quickly recognized that existing solutions in the market were already addressing similar needs.
To differentiate themselves, Sandeep and Shravan pivoted to a more innovative approach: dynamic advertising displayed on screens mounted atop taxis. This concept allowed for real-time updates and location-based advertising, a significant improvement over static advertisement.
The duo faced significant hurdles in developing the technology necessary for their screens. They had to create a product from scratch, as off-the-shelf solutions were unavailable. After extensive research and reengineering, they developed a cost-effective solution for their advertising screens.
🏢 Securing the First Major Client: IKEA
Securing IKEA as their first major client marked a turning point for Adonmo. After several months of persistent follow-ups, IKEA agreed to a deal worth seven lakh rupees, a sum that exceeded their initial expectations. This partnership not only validated their business model but also provided them with a significant case study to attract future clients.
Sandeep recounted their journey with IKEA, stating,
“Seven lakh was something that we never imagined could come from one customer in one PO (Purchase Order). It was life-changing.”
The collaboration with IKEA introduced Adonmo to GroupM, a leading media agency, which further expanded their reach in the advertising market. This relationship became crucial for scaling their operations and gaining credibility within the industry.
⚖️ Navigating Regulatory Hurdles
As Adonmo began to gain traction, they encountered numerous challenges, particularly regarding regulatory compliance. Operating in a gray area of the law, they faced scrutiny from local authorities, which threatened their business operations. Sandeep shared a harrowing experience when bureaucratic obstacles led to the impounding of their advertising vehicles.
He explained,
“There’s just too much power in one entity to shut us down overnight if they want to. This incident taught us that we needed to derisk the business.”
The onset of the COVID-19 pandemic significantly impacted Adonmo's operations. As lockdowns were enforced, the demand for taxi advertising plummeted, leading to a sharp decline in revenue. With limited advertising inventory to sell, the company faced an existential crisis.
Sandeep and his team made the difficult decision to pivot their business model entirely. Instead of relying solely on taxi advertising, they began exploring opportunities in ambient advertising, which allowed them to reach consumers in various public spaces.
Reflecting on this transition, Sandeep noted,
“COVID kind of accelerated our vision to build ambient advertising. We first wanted to win the cab space, but COVID made us jump directly into it.”
🎯 Pivoting to Ambient Advertising
Adonmo's pivot to ambient advertising was both a strategic and necessary move. The shift allowed them to leverage their existing technology while expanding their reach beyond taxis. They began deploying screens in elevators, malls, and other public spaces, capitalizing on the growing demand for digital advertising.
As they embraced this new direction, Sandeep expressed optimism about the future, stating,
With their innovative approach and tenacity, Adonmo is well on its way to reshaping the offline advertising landscape.
🌱 Building a Sustainable Business Model
The foundation of Adonmo's success lies in its sustainable business model, which emphasizes the importance of balancing supply and demand in the advertising space. Unlike traditional advertising models that often prioritize demand generation, Adonmo recognized early on that building a robust supply of advertising inventory was crucial. This approach allowed them to create a cyclical mode of growth, where increasing the number of screens directly attracted more advertisers.
Sandeep articulated this strategy succinctly:
“The more inventory you have, the more advertisers you will attract. The better you can sweat your inventory, the better you can pay.”
This philosophy not only helped in acquiring clients but also in maintaining a steady revenue stream. By focusing on high-traffic areas and strategically placing their screens, Adonmo was able to tap into the growing demand for local advertising, especially in urban settings.
📊 Financial Viability and Growth Metrics
Adonmo's financial trajectory has been impressive. In the last fiscal year, the company reported revenues exceeding ₹100 crores, marking a significant milestone in its growth journey. This growth was not merely a result of expanding its inventory but also of effectively leveraging its existing assets to maximize profitability.
The split between large national brands and local businesses has also evolved, with local businesses contributing more than half of Adonmo's earnings in some cities. This diversification has strengthened the company's market position and reduced reliance on a single revenue source.
🚀 The Zomato Investment and Scaling Up
The investment from Zomato marked a turning point for Adonmo, providing the necessary capital to accelerate its growth trajectory. Initially, Zomato was introduced to Adonmo through Ant Financial, and their collaboration began with smaller projects. However, as Zomato recognized the potential of Adonmo's model, they decided to invest significantly.
Reflecting on this pivotal moment, Sandeep shared:
“That was the first big check that could materially change our course of growth.”
This investment not only boosted Adonmo's financial standing but also validated its business model in the eyes of other investors. With Zomato as both a customer and an investor, Adonmo gained credibility, which was crucial for attracting additional funding and scaling operations.
Following the Zomato investment, Adonmo set ambitious targets to expand its inventory rapidly. The goal was to increase the number of screens from 2,000 to 50,000 within a year. This aggressive scaling required significant hiring and operational adjustments.
Currently, Adonmo's revenue streams are diverse, with a mix of income coming from large national brands and local businesses. This balance has allowed the company to weather market fluctuations and maintain a steady growth trajectory.
As of now, Adonmo controls approximately 85% of the ambient advertising market share in India. This dominant position not only enhances its negotiating power with advertisers but also solidifies its brand presence in a competitive landscape.
🔮 The Future of Ambient Advertising in India
As companies increasingly seek innovative ways to connect with consumers, ambient advertising presents a unique opportunity to engage audiences in a more organic manner.
Adonmo is at the forefront of this revolution, leveraging its extensive network of screens in high-traffic areas to create meaningful interactions between brands and consumers. As Sandeep emphasized:
“We want to be present there talking to you, engaging you, interacting with you.”
This vision aligns with the broader trends in advertising, where personalized and contextually relevant messaging is becoming increasingly important.
As urbanization continues to accelerate, the demand for ambient advertising is expected to rise. Brands will increasingly seek to capitalize on the unique value propositions offered by platforms like Adonmo, which can deliver targeted advertising in real-time.
The ambient advertising market in India could mirror the success seen in countries like China, where companies like Focus Media have established vast networks of screens. As competition increases, Adonmo's first-mover advantage will be crucial in maintaining its market leadership.
🗣️ Advice for Founders
For aspiring founders, the journey of building a startup can be daunting. However, Sandeep emphasizes the importance of resilience and adaptability in overcoming challenges:
“Founders often struggle with managing sales teams, but selling is the first skill that they need to have.”
Understanding the dynamics of sales and marketing is crucial for any founder. Whether it's securing initial funding or attracting customers, the ability to communicate your vision effectively can make all the difference.
Establishing strong relationships with investors is equally important. Founders should focus on building trust and demonstrating their commitment to delivering results. As Sandeep advises:
“Deliver on your promises.”
This approach fosters credibility and opens doors to future funding opportunities, allowing founders to scale their businesses more effectively.
The entrepreneurial journey is often filled with challenges, but it also offers immense rewards. The satisfaction of building a successful business and positively impacting the lives of others is what makes it all worthwhile.
As he reflects on his journey, Sandeep shares:
“The moment of gratification is really when one of your early employees can give that down payment to buy a nice house, which they otherwise couldn't afford.”
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