Mobile advertising network InMobi will close its offices in Africa and Russia in what analysts have attributed to low uptake of mobile phone-based marketing, despite the region’s high and rising telephony penetration.
Also read: InMobi closes Africa office
The firm said on Friday it would shut down its offices in Nairobi, South Africa and Russia and move operations to its regional offices in the Middle East hub of Dubai or London.
The mobile ad network, which was founded in India in 2007, seems to have encountered a rocky path in Africa where despite growing number of mobile phone subscribers, Industry analysts say, this has not translated into higher digital advertising revenues.
“We routinely review our business to align investment based upon growth opportunities,” said Mital Goel, InMobi’s public relations manager in charge of Europe, Middle East and Africa, in an email response to the Business Daily.
“Current global market conditions justify changes to the investment levels we make in certain countries including Kenya and South Africa,” added Ms Goel.
The firm in February 2011 headhunted Harvard-trained techie Isis Nyong’o from giant search engine Google where she was business development manager for Sub-Saharan Africato head its operations in Africa .
InMobi pioneered the use of mobile-based solutions for customer engagement, advertising and market intelligence in Africa.
“InMobi will continue to service all markets affected by these changes through centralised sales teams located in our regional centres,” the firm said in the statement.
The company said it is currently engaging its employees in the affected offices ‘to discuss any redeployment’ to its hubs in other regions. No definite date for the closure and redeployment was given.
InMobi is owned by Japanese telco Softbank and three venture capital firms namely Kleiner Perkins Caufield & Byers, Sherpalo Ventures and Mumbai Angels.
The firm has had a network of about 578 million consumers in over 165 countries, through which it registered more than 93.4 billion mobile ad impressions monthly.
The closure of the Nairobi office comes at a time when mobile phone penetration and internet subscriptions are on the rise.
Data from the Communications Commission of Kenya indicate that mobile penetration has increased to 75.4 per cent of the population in June compared to 28.7 per cent in 2007 in a period that has seen industry’s subscribers jumped to 29.7 million from 10.7 million.
Kenya has 14.03 million internet users, putting the country’s penetration rate at 35.5 per cent from 22 per cent a year ago.
A meagre 0.2 per cent of Kenyan internet subscribers use tablets and connected devices.
“Most clients in Africa are still stuck in the old media and uptake of digital advertising remains low,” said a marketing analyst at Scangroup who did not wish to be named.
Furthermore, the analyst said, the advent of Twitter and Facebook has offered cheaper options in mobile advertising, squeezing out traditional mobile advertising carriers.
US investment banking firm Cowen estimates that Google generated seven per cent of its total revenue from mobile ads and forecasts the firm to double in the current fiscal year due to increased uptake of smartphones and tablets in the developed markets.