Ashish Mehta remembers the night of 25 July. Like it was yesterday. He returned home at around 8 pm to Pune after a busy, eventful day in Mumbai. Early in the evening, he learned that a leading business newspaper was about to break a story about his company. So, after dinner, he sat down to write a long email to his employees confirming the news story and more, wanting them to “hear from me”, rather than “wake up to it.”
Starting with the baby-steps
The email traced Sokrati’s humble beginnings as a digital marketing startup, and its eight-year journey to where it was that day. The constant ups and downs, and how they refused to sink despite these challenges. To quote a few lines from the email: “We always believed that we wanted to build a company that outlasts us.”, “We always treat our client’s marketing dollar to be spent, as our own dollar. Let’s spend it right. And spend it well.” He ended it with a reassurance that nothing would change overnight. “It’s still Sokrati. Only stronger.”
Around 4 am that morning, he pressed the send button.
And then, he tried to catch some sleep. Except, nothing. No sleep. He just tossed and turned in his bed. Like the four days before. “I was going through a plethora of emotions,” he says in a long, candid phone conversation. “It was surreal. It didn’t sink in,” A few hours later, his phone wouldn’t stop buzzing.
The next morning, 26 July, there was the small matter of a town hall, he’d announced to inform his big decision to the 250-odd employees in person. At 11 am, when Mehta, and his co-founders Anubhav Sonthalia and Santosh Kumar Gannavarapu walked through the doors of Sokrati’s office in Baner, Pune, the reception was rapturous. Claps, cheers, whistles. All at once. “It was like the Wankhede Stadium in 2011 when Mahendra Singh Dhoni lifted the cricket World Cup,” Mehta says.
What had the co-founders won? Just 24 hours ago, Mehta as CEO of Sokrati, had signed off on a deal, where the digital marketing startup would now be part of the Dentsu Aegis Network (DAN), a multinational digital communications network. DAN is a wholly-owned subsidiary of Japan’s largest advertising agency, Dentsu. Reports valued the Sokrati deal in the range of Rs 700-800 crore, but officially, it remains an undisclosed sum.
It is rare to come across a venture capital-funded exit story from India. One, where everyone makes good money. This is why Sokrati’s story is compelling. Let’s sample this. The company raised funds of around Rs 35 crore over two rounds. And it has been bought for, if reports are to be believed, for Rs 800 crore. Its investors have made big exits and so have its founders.
Needless to say, the Japanese giant has been acquiring companies to grow and it has gone to the usual suspects, a WATConsult in Mumbai, National Capital Region-based SVG Media and Webchutney. But with Sokrati it went to Pune. A city not too far from Mumbai. But it is not a traditional market for a technology company. So, what does Sokrati do?
Growth of digital marketing
It is a digital marketing startup. It helps firms, of all sizes, optimize their digital spends. It tells companies, which videos work when it comes to promoting shows on Youtube (Voot), it helps e-commerce companies bid on the right keywords (Snapdeal) and it guides the likes of banking and financial institutions (SBI) pick products, which will sell digitally the fastest.
While Sokrati makes for a good exit story, this deal also brings into sharp focus Dentsu’s strategy in India. It wants to close the gap with WPP, the British multinational advertising, and public relations agency, also the number-one marketing communications company in India.
Fast. And it is finding nifty companies, which can help it get there. Dentsu believes digital advertising spends in India will be going through the roof. According to eMarketer, India’s growing digital advertising market is forecast to go past the $1 billion marks in 2016-17. Today, digital ad spends represent anywhere between 12-15% of the total advertising pie, pegged by a GroupM report at Rs 61,204 crore in 2017.
But as digital consumption grows, triggered by falling data prices, cheap broadband, and cheaper smartphones, companies like DAN see an opportunity for themselves to stay ahead of the curve. Hence, the rush.