See the original story in Japanese, part of our coverage of the Infinity Ventures Summit Sapporo 2014.
Our readers may recall that Japanese news curation startup Gunosy raised about $12 million back in March. The company recently started distributing ads on its news app, and we’re told they generate several millions of US dollars monthly from the advertising sales.
We spoke with the company’s co-CEO Shinji Kimura at the Infinity Ventures Summit to find out more.
The Bridge: We heard that your business has been rapidly growing after you starting broadcasting a TV commercial. What kind of download numbers are you seeing?
Kimura: We had acquired 1.8 downloads as of March 15th, but we’re going to hit 4 million downloads pretty soon.
The Bridge: So you’ve been doing very well in the last two months since the commercial started. On the other hand, some people were disappointed with some unexpected changes.
Kimura: We are sorry for the users who have been using the app since launch. But some users pointed out that the personalization feature we initially adopted results in many duplicate articles. Furthermore, curated content includes many longer articles, which can be tiring to read especially on weekends.
So we adjusted the app to provide users with lighter content, and that resulted in a boost in our daily active users.
The Bridge: We also know that the demographic of our readers would be very limited if we focus too much on startups. So when you think of business opportunities, it must be difficult to determine how wide-ranging to set your scope.
Kimura: Yes, advertising opportunities are also limited if you persist in a niche. For instance, female users don’t like our app. Even my wife used to use SmartNews. I realized we had to change it. (Laughs) Now she uses Gunosy. So we think our adjustment was successful. […] About 10 million people launch our apps every day, and almost 30% of them do it to check out news articles in morning. So we can publish articles written by professional writers exclusively for our readers.
The Bridge: In Japan, there are quite few platforms, including Yahoo News Bylines, where professional or independent writers can write articles and get paid.
Kimura: I think monetization is important. Driving traffic back to media companies is sort of meaningless without monetization opportunities. But we know there’s opportunity out there in smartphone ads.
The Bridge: We’re told that your monthly revenue has reached around several million US dollars. It this true?
Kimura: I can’t disclose details but it seems like that, yes.
The Bridge: So now you can give some benefit back to media from which you’re curating articles?
Kimura: Typical media give you as little as $US 0.02 per page view. But I think our platform will be able to pay you as much as one US dollar. Considering that we can make our platform open to contributors in the future, if you can write an article earning 300,000 page views, you can earn 3,000 US dollars from us. I think we need to establish a content distribution ecosystem that helps creators or authors make a living.
The Bridge: How can you achieve such high profitability?
Kimura: It’s because of smartphone ads. The existing types of ads on desktop websites don’t effectively keep the attention of their audience. A smartphone ad is placed in a limited space and has higher visibility. This was proved by Facebook. One of the reasons why TV commercials perform well is because they are inserted right in the middle of a program.
The Bridge: But because ads are inserted between articles, some people feel it’s annoying.
Kimura: I know that. So we’re thinking more carefully about how to insert ads. We’re also planning to provide a full-page ad package. If we start it, I think our users will not hate it. Because we’ve been conducting A/B tests many times to find out what kind of ads users are comfortable with.
The Bridge: Thank you for your time.