Doubling your revenue, so why aren't you using DARO? 🤔

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: CEO Staff Peter's DARO onboarding meeting notes

I joined DelightRoom last month as CEO Staff! Alarmy is super famous and I've used the app myself for over a year so I was familiar with it, but our new business, DARO, was honestly full of question marks for me at first.

"It doubles ad revenue all on its own?"

Half in doubt, I started digging into this ad monetization solution called DARO. Armed with questions and some healthy skepticism from that process, I requested a 1-on-1 onboarding meeting with Jay, our CEO and the lead of the DARO business.

But this meeting turned out to be unexpectedly exciting. I figured many of you might have the same questions I had when you first hear about DARO, so I reconstructed that day's conversation into an interview format.

What is DARO?

🧑‍🚒 Peter

My first impression upon seeing DARO's landing page was, "Wait, why wouldn't any team running app ads use this?" Since I'm new to ad tech, how exactly does using DARO increase revenue?

💜 Jay

Let me explain the basics of network ads first with a super simplified version. Simply put, advertisers want to show their ads, and app publishers have the ad inventory. In the network ad market that connects the two, the ad that bids the highest price gets shown. Advertisers here want high efficiency at a low unit price. Optimizing the ad unit price in this bidding system is the key.

We applied the know-how that Alarmy had previously used to generate revenue through these network ads to other companies, and their revenue jumped anywhere from 50% to over double.

So just like Amazon launched AWS using their know-how in massive data processing and DevOps, we turned Alarmy's ad monetization know-how into a product—DelightRoom Ad Revenue Optimizer, or DARO for short.

So it's a product that packs the know-how of generating over 2 billion KRW in monthly ad revenue while growing Alarmy to 3 million DAU and 100 million downloads. You can think of it as a SaaS that connects and optimizes various network ad platforms to boost ad revenue.

Plus, adding a lot of ad placements naturally increases revenue, but it ruins the UX and causes retention to drop. We're also providing consulting on the know-how to increase ad placements while maintaining retention.

🧑‍🚒 Peter

Ah, so that's how Between saw such a massive revenue spike in April! That's great news for me, since I'm heading up the Between business unit.

Target Market & Strategy

🧑‍🚒 Peter

Then who is DARO's core customer group right now?

💜 Jay

Actually, our strength is that we already have successful experience in ad monetization in the global market through Alarmy. It's a product with proven know-how in major markets like the US, Japan, and Europe.

Because of that, our most ideal clients are services that have global traffic but are struggling with ad monetization.

However, since it's a B2B product, references and trust are crucial, so we chose the strategy of starting with the highly accessible domestic market. We're building successful case studies in the Korean market and then expanding globally.

🧑‍🚒 Peter

In that case, what are the key metrics or outcomes you're looking to achieve in the domestic market, which is your current primary focus?

💜 Jay

For now, the goal is to build good success stories in the network ad monetization space within the domestic market. We're already delivering results with major clients, which is bringing in several other clients through inbound channels. We plan to kick our global expansion into high gear once we've secured a solid position in Korea.

Sales

🧑‍🚒 Peter

I see...! How is B2B sales currently being handled? Which is the main focus between outbound and inbound?

💜 Jay

To be honest, we're doing almost zero outbound, and even among inbound leads, we're only moving forward with partnerships after reviewing a very select group of clients.

Since we have to make choices with the team's limited resources, we're carefully curating clients who can help us advance our product with high-quality data and heavy traffic, and with whom we can build a great track record together.

🧑‍🚒 Peter

Just like my initial question, it really is a product that everyone wants.

If there are clients who don't convert, what was the reason they dropped off? And how are you solving that problem?

💜 Jay

I think there are two main reasons.

First, some companies want to internalize ad monetization by operating their own ad servers. They want to run it themselves even if it takes more time and money.

Second, ad revenue itself has seasonality. It goes up and down depending on the time of year, but there are cases where they take the seasonal bumps for granted, blame the seasonal dips on DARO, and end up churning.

In these cases, we often find that other platforms' performances had actually dropped even more, or when running A/B testing, they end up confirming that DARO is delivering better results and come right back to us.

🧑‍🚒 Peter

With a product like this, I imagine Private Equity would be quite interested in it for Buyout (deals where PE acquires management rights) or Growth Capital (deals investing in companies that need funds to grow) purposes. What do you think?

💜 Jay

Oh, how did you know? I can't disclose company names, but the Growth Capital side in particular has shown a lot of interest.

We've even had private equity firms, who invested in companies with traffic but no monetization, come to us for advice, which led to us co-reviewing potential acquisitions of several listed companies.

For Buyout deals, doubling the ad revenue means they can recover their investment quickly and turn a profit, so we're getting a lot of collaboration requests to do strategic investments together right off the bat.

Revenue Model & Pricing Structure

🧑‍🚒 Peter

Come to think of it, providing ad optimization increases revenue, but clients might be highly sensitive to the fee or cost structure. How is DARO's revenue model designed?

💜 Jay

Yes, our revenue model is structured to take a cut from the increment created by shortening the value chain on the demand side.

The key is that we take our revenue from the margins saved by cutting out the middlemen in the value chain between the advertiser and the publisher. So the revenue shown on the DARO dashboard is the exact amount that gets settled with the publisher.

As you mentioned, it's natural for them to ask sensitively about the fee structure during onboarding, but in reality, it's a zero-loss setup for the client. The revenue they actually get settled is a 150-200% increase compared to before, and they find massive utility in not having to spend resources on ad operations.

DARO's Core Tech & Market Competitiveness

🧑‍🚒 Peter

How does DARO compare to global players like AdMob and AppLovin?

💜 Jay

To be honest, those global companies are technically superior and possess massive ad inventory. That's why we're optimizing by including ad inventory from countless companies, including AdMob and AppLovin. In reality, we're much closer to being in a partnership with AdMob and AppLovin rather than being competitors.

But the most important differentiator is that we didn't start as a platform company; we started as a publisher building an app service and monetizing it with ads, just like our clients.

So through all the experiences and struggles we went through with Alarmy, we truly understand—in a "customer-centric" way—what problems they might be facing, what kind of integration is most convenient, and what kind of settlement methods or dashboards they want.

I think that's our biggest differentiator.

Challenges Ahead for DARO?

🧑‍🚒 Peter

What do you consider to be the main challenges DARO absolutely must solve going forward? What's the mission for this year?

💜 Jay

Recently, there are many folks out there who aren't necessarily clients we lost, but who are actively waiting for us.

Because these clients run their platforms so well and have so much clout, their proportion of direct ads is super high. So they haven't been able to integrate DARO yet since we only serve network ads for now, but in Q4 this year, we're planning to launch a feature that manages and streamlines both network ads and direct ads together.

Historically, many people used different platforms for direct and network ads, or managed direct ads via their internal admin. We'll be launching a single platform that manages both in one place, compares them against each other, and optimizes them, so I consider this to be a massive undertaking for this year!

If you want to know more about DARO, please visit daro.so or drop an email to peter@delightroom.com!