Lycos Internet has launched a subsidiary, Brightcom, to focus on changes that are taking place in the digital ads business, which is being aligned around video, mobile and social, CEO and Chairman Suresh Reddy told CNBC-TV18.
In an interview, Reddy said the market opportunity for such ads was huge. "It is a USD 200 billion business globally and we feel there is a massive opportunity for us to act on it," he said.
Below is the verbatim transcript of Suresh Reddy's interview with Reema Tendulkar & Surabhi Upadhyay on CNBC-TV18.
Reema: You have announced a launch of Brightcom. Can you tell us what it is, what does it mean for the company, will there be any change in the financials on account of this in FY17?
A: This is basically the launch of a division or subsidiary under the brand Brightcom. The concept is fairly simple; the tagline summarises it perfectly. It says it's leading through technology and winning through people, which is what this will stand for.
Surabhi: We want to understand what exactly is in front of the company in FY17. You have setup this new subsidiary. There were certain outstanding issues with respect to the Chapter 11 filing of your US subsidiary. So when you are talking about the whole reorientation and reorganisation of the business as well as growth targets, if you could give us some clarity for FY17?
A: Two things have led us to take this decision of reorganising this. One, the market itself; the market has taken some very drastic changes, there have been systemic changes in the digital advertising space, in that market globally and specifically US. Therefore, the advertising which is happening primarily through search, through display ads that are static in nature, has moved on to video, to mobile, to social. Plus the methodology of how these ads were running, is all now programmatic. These are the strong changes and, as a company, Lycos has been following it and we have re-strategised ourselves and we have taken advantage of the changes with our technology changes and with our people relationship across the world.
This particular announcement takes those changes in our strategy on how to simplify and clarify what that offering has. So we consolidated all those pieces under one umbrella; fundamentally advertising on video, mobile, social and regular display. So this combination, we have put it under one name Brightcom and it is programmatically driven. It has got two components; one, technology and two, relationships that we have.
Surabhi: Can you give us certain growth targets for the year, something that shareholders can then work with?
A: We do not give growth targets but I can give you the general market size itself. The market has been growing phenomenally over the last four years in a big way specifically in video and mobile. It is a USD 200 billion business globally and we feel there is a massive opportunity for us to act on it.
Our goal here is to realign ourselves in a way that we can take advantage of those changes in the market._PAGEBREAK_
Reema: Is Brightcom right now a 100 percent subsidiary and considering that you might require more investments in this particular business in digital marketing. Would you be open to perhaps making it a subsidiary then and selling some stake and raising money?
A: We have not considered that at this point. Right now it is all about reorganisation and bunch of other things that we are doing as a company, as Lycos itself. Right now it is all about sorting out, putting the right people in the right job, having right umbrella to run it and go after right market places - that is the whole strategy now and that is a next stage. We have enough money to run those pieces.
However, for growth - that is a different question. We will come to it when we get to that level.
Reema: Could you give us an update on your US step-down subsidiary, Ybrant Media Acquisition (YMA), which filed for Chapter 11 bankruptcy. It required some provisions. Will Lycos Internet be making that? Could you give us an update?
A: Ybrant Media Acquisition (YMA) is an acquisition vehicle. It is a special purpose vehicle which was used to buy Lycos Inc and this was bought from a company in Korea and since there was a dispute in the second payment, we have filed for a protection on this particular entity.
However, we are in discussion with the seller and we are making phenomenal progress. We are more or less there in terms of what are the terms. Now we are trying to make sure that that needs to be executed in the form of a definitive agreement, which take few weeks maybe a month maximum and we should have it all together.
Surabhi: The payout quantum doesn't change. There is no financial impact or potential financial impact of these discussions on the company?
A: There is no impact on the rest of the company.
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