Mobile advertising network InMobi has closed its offices in Africa and Russia in what analysts have attributed to low uptake of mobile phone-based marketing despite the region’s high teledensity.
The firm’s offices in Nairobi, South Africa and Russia will be shut down and operations moved to its regional offices possibly to 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 Ms Mital Goel, InMobi's public relations manager in charge of Europe, Middle East and Africa.
“Current global market conditions justify changes to the investment levels we make in certain countries including Kenya and South Africa,” said Ms Goel told the Business Daily.
The firm in February 2011 headhunted Harvard-trained techie Isis Nyong’o to head its operation in Africa from giant search engine Google where she was business development manager for Sub-Saharan Africa.
InMobi pioneered in Africa the use of mobile-based solutions for customer engagement, advertising and market intelligence.
"InMobi will continue to service all markets affected by these changes through centralised sales teams located in our regional centres,” the firm said in a 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.
The global 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.
Data from the industry regulator shows that of the 14.03 million Kenyans who access the Internet, mobile data accounts for 98.9 of total Internet subscriptions.
Findings of a research done by InMobi in July this year show that smartphones account for 10.4 per cent of total devices in Kenya while a majority of Kenyan subscribers, 89.4 per cent use feature phones which have limited or lack Internet access. 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.
InMobi is owned by Japanese telco Softbank and three venture capital firms namely Kleiner Perkins Caufield & Byers, Sherpalo Ventures and Mumbai Angels.