Overview of Sokrati – Online Ads Optimization Startup

(A few days back, Pune-based startup Sokrati announced that it has received an undisclosed amount of Series-A funding from Inventus Capital Partners, a company that has also invested in such companies as RedBus.in, TeliBrahma, and FundsIndia.

PuneTech chatted with co-founder and CEO Ashish Mehta to get more details of the Sokrati story.)

About Sokrati

Sokrati is a company that provides technology and services to merchants on the web for automated optimization of the placements of their online ads. For example, if you’re an e-commerce company, you probably spend a lot of money on buying Google AdWords, and other ads on various websites around the world. As the competition in your market heats up, it becomes more and more difficult to figure out where exactly to place ads, and what kinds of ads to get maximum conversions (in this domain, a “conversion” is when a person who sees your ad clicks on it and becomes a customer.)

On Founders and How Sokrati was Founded

Sokrati was founded by Ashish Mehta, Santosh Gannavarapu, and Anubhav Sonthalia, who were previously working for Amazon in Seattle, USA, but then quit to form Sokrati, and moved to India about 3 years ago.

The founders managed the Paid Marketing for Amazon from business & technology perspective. They saw that Paid Search Marketing (and Online Marketing in general) is very challenging for advertisers with dynamic content on their website – typically catalog based Advertisers in Shopping, Travel or Classifieds domain. And none of the established players like Marin Software, Efficient Frontier or Kenshoo provided an apt solution. They had some ideas on how to make it work for advertisers in these domains and started moon-lighting in November 2007. They signed up as one of the Amazon Affiliates, and spent weekends and after-work hours to build a proof-of-concept model. Within a year, they drove an incremental revenue of $20 million to Amazon – purely from the rudimentary PoC that they built on the side! It was easy then to quit their jobs in Dec 2008 and came to Pune to build a more production ready, more intelligent and sophisticated technology.

The idea & focus overall has still remained the same; though they are constantly taking feedback from clients and building product extensions to entail a larger piece of a more unified Digital Marketing & Analytics.

For more information about the founders see the Sokrati management team page.

Case Study to Illustrate Sokrati Offerings and Technology

To get an idea of what exactly Sokrati does, and how, consider this case study with a client who is a prominent jobs portal in India.

The client was managing Paid Search Campaigns (i.e. buying of search ads on Google and other search engines) in-house, incurring heavy spends. The key issue was – for the trailing 1 year or so, performance had started to plateau and there wasn’t much momentum in the campaigns. Scaling the campaigns with a controlled Cost-per-Action was getting very challenging & difficult for the client. And while experimenting various ways (mostly manual), the campaign structure + quality of keywords were just getting worse by the time.

Sokrati helped the advertiser ramp up their volumes by almost 2x within 8 weeks of campaign management by Sokrati.

The basic approach Sokrati took was to use Sokrati’s proprietary data mining & clustering algorithms to generate extensive set of keywords (from about 68000 to roughly 1.5 million) & very targeted ads. This allowed a lowering of CPCs (cost-per-click) & improved relevancy – eventually leading to better CPAs (cost-per-action) & higher volumes. This combined with real-time optimizations leveraging decay-rate algorithms has helped lower the overall CPA by 25% without sacrificing on any of the volumes. In other words, to get exactly the same amount of resumes, it cost the client 25% less in ad spending using Sokrati’s algorithms.

The other critical improvement provided was the ability to track beyond “binary” conversion flag. Sokrati’s proprietary tracking system is able to capture several more conversion parameters. For example, before Sokrati, the client was measuring only the number of resumes and the amount incurred to acquire them. Now, with Sokrati tracking, they are able to track the quality of the resume – whether it was an IT or Bank related; whether its a Fresher or had 5+ years experience. Not only that, the advertiser is now able to provide differential ROI targets for different “mix” of conversions; and Sokrati is able to optimize the mix in real-time.

About Their Technology Stack

Sokrati technology is built using Ruby-on-Rails for the front end and has Linux + MySQL + Java on the backend. They are using the cloud quite extensively have close to 50 servers now, all hosted on Amazon EC2 (US & Singapore). They did evaluate a few vendors in India – but didn’t find anything interesting or as reliable.

We asked Ashish whether it was difficult to hire developers with the required knowledge in Pune.

Hiring has always been a challenge & I don’t think, its a function of Pune specifically, but India overall. Though we’ve been very fortunate to get the key senior members of the team that are like-minded and truly start-up oriented, it has been lot slower than we would have liked. For example getting talent with data mining or machine learning skill-set is a struggle. We have interviewed over 100+ candidates but still haven’t been able to fulfill the positions; and have a long list of open head-counts in the company.

What is the one piece of advice you would give to founders of other technology companies in Pune – something you learnt during your journey so far and you wish you had known earlier.

Our start-up stint has just begun and there will be many things that we will learn either upfront or by failing over the next few years. But I’d like to share 2 learnings that we’ve gained from our stint so far –

1) One key learning that I’d like to share is to not procrastinate on raising funds. Once a start-up feels they are ready to raise funds or think they “need” to raise funds to grow faster (and only IF they feel so) – then the founders should not delay this process. As the funds will provide the stimulus to exponentially grow faster. I think we could have raised funds about 6 months back by being more aggressive but we let it take its own sweet time. In the internet world, where competition is so cut-throat & landscape so dynamic, even a small delay or a few missed opportunities could prove to be very fatal.

2) Customer Servicing & listening to their feedback is ultra-important. Coming from Amazon, we ingrained this idea directly & indirectly, on how to value each and every feedback from customer (big or small). But we’ve experienced that several start-ups, especially in India, are so obsessed with their product / services that they tend to overlook this aspect of the business. Its very vital to put yourselves into the customers’ shoes while building the product.