Korea’s YDM wants to be the leading digital marketing brand in Asia. Here’s how

Yello Digital Marketing CEO David Lee on stage at Influence Asia 2015. Photo credit: YDM

Yello Digital Marketing has a plan. The ad and digital marketing arm of Korean-headquartered company Yello Mobile has been making headlines for a couple of years now, mainly through its aggressive acquisitions across Asia. Since Yello Mobile was founded in 2012, it has grabbed majority stakes in over 80 startups, mainly in the shopping, media, adtech, travel, and online-to-offline (O2O) categories.

(UPDATE, 24/12: Parts of this story conflated details regarding Yello Digital Marketing and its parent company, Yello Mobile. This has been corrected. In addition, the correct Korean name of YDM’s CEO was restored.)

A US$100 million investment in late 2014 from Silicon Valley-based fund Formation 8 at a US$1 billion valuation gave Yello Mobile unicorn status. Earlier this month, it was announced the company has raised an additional US$47.2 million from existing investor Formation 8 at a US$4 billion valuation.

“[South Korea’s] digital industry has matured quite fast compared to its market size,” YDM CEO David (Sang Seok) Lee tells Tech in Asia. “The industry has always thought about how it can expand outside of our market, not just recently but for a while.” And when it comes to expanding, David says, the company saw two options; Southeast Asia or Northeast Asia.

Picking uncertainty

The company chose to focus on the former. While Southeast Asia’s market is a lot more uncertain than its Northeast counterpart, the latter is much more mature as a market, and therefore less attractive in terms of opportunity. “What we are looking for is three years from now,” David says. “What is most important for us, more than making money, is whether we can be leading this industry in this region.”

Southeast Asia is mainly comprised of developing markets that are only now unlocking their digital potential. A lot of those markets have large populations, and a lot of those people are just now getting online, mostly through smartphones. It’s a brand new audience for marketers, and YDM wants to be one step ahead.

The five Southeast Asian markets YDM chose to focus on – Thailand, Singapore, Malaysia, Indonesia, and Vietnam – are home to early-stage companies that are starting to prove their business model and building local expertise and knowledge. YDM can then put that expertise to good use. “When we look at the companies, we look at the people in them,” David says. “Because they’re still early-stage, they may not be leading companies in their markets, but we look for the entrepreneurs that share our vision and philosophy and have proven themselves.”

See: Asia’s top 20 startup unicorns (INFOGRAPHIC)This approach has led YDM to acquire startups like Thai online marketing company Adyim and Indonesian adtech company Adplus.

Across borders

Going forward, YDM will be switching gears a bit when it comes to expansion, David says. First, the company’s existing acquisitions will be doing joint, cross-border projects together. And second, startup leaders will look into expanding their own companies into other strategic markets in Southeast Asia, such as Cambodia and Laos, with YDM’s support.

An example of the former is the recently launched AdPocket, a mobile app for Thailand that uses a smartphone’s lock screen as an advertising platform. Users can earn points from viewing ads when they unlock their phone, which they can use to top up their phone credit, buy in-game items on various participating platforms, and even pay bills.

The AdPocket app for Thailand.

The Thai version of AdPocket is a collaboration between Adyim and Korean company Futurestream Networks, based on a previously successful iteration in South Korea.

Under the influence

Paying off