How $100M Israeli startup Optimove is revolutionising brand marketing with machine learning and data analytics
In this age of hyper communication and information overflow, companies often struggle to reach their customers in the manner they want to. Breaking through the clutter is not easy, and meaningful communication is scarce.
While there is no dearth of channels - SMS, email, social media, in-app alerts, website pop-ups, Facebook and Google ads, digital assistants, and more - to distribute a message, it is often lost in transit or delivered to an unintended recipient, making communication lose its relevance. (This is also why your inbox is flooded with spam and useless promotional messages.)
As a result, marketing campaigns, sometimes even large-scale ones, fail, investments and returns are not on par, people’s expectations remain unmet, and eventually, brands lose customers to competition.
Enter, new-age deep tech. And, marketing automation.
Here customers can be “micro-segmented” using AI, machine learning, and predictive analytics, their tastes, preferences, and consumption patterns can be grouped automatically, and relevant communication can be sent out to them under the right context to a) create impact and b) move them into action.
This is what most martech companies aspire to do.
What is Optimove?
Tel Aviv-headquartered Optimove is one such company that does this for 350+ companies and brands, mainly in retail, ecommerce, travel and hospitality, gaming, and entertainment, from around the world.
One of the largest SaaS startups in the field of marketing automation (also known as precision marketing), Optimove helps brands grow their businesses through existing customers by a) retention and b) monetisation. Lengthening the customer life cycle and adding creative value are its core offerings.
Optimove’s smart cloud uses data analytics to gauge the emotional intelligence required to connect with each customer on a deeper, nuanced level. This data is then translated into actionable insights and passed on to marketers to help them plan and execute their communication strategies more accurately and contextually.
The more relevant the communication, the higher the chances of consumers reacting the way a brand wants them to.
Amit Bivas, VP of Marketing, Optimove, explains,
“We take models of operational research and apply it to marketing. This drives smarter, multi-channel communication at a scale.”
The journey so far
The startup was founded in 2009 by serial entrepreneur Pini Yakuel, on the principle of “combining art and science for marketing”. In a decade, Optimove has grown to over 200 people with offices in Tel Aviv, London, and New York.
In 2016, it raised $20 million in Series A funding from Israel Growth Partners, a growth-stage fund that invests in Israeli high-tech startups, at a then-valuation of $100 million.
Founder-CEO Pini said at the time, “We have been profitable since Day One. We’ve always invested our money neck-and-neck with our revenue.” He, however, did not divulge specific financial numbers.
After focusing on Western markets in the past, Optimove is now making a strategic move into Asia, with India emerging as a “significant market” with the “biggest potential”.
‘Strategic’ focus on Asia, and India
Amit tells YourStory,
“India and Israel together is innovation-meets-consumption. We have the technology, you have the market. India is also a tech-first, digital-first nation. It has an affinity for innovation. Being tech-forward and less reliant on old tech habits, it is always in search of new technology, and we believe that we can be a good fit.”
Sure, there are many digital-first companies in India now, and the acceptance of new technologies has improved too. But, while opportunity abounds, the sheer size of the consumption class poses several challenges.
“Indian consumers are evolving very rapidly. They are moving between micro-segments. And, there can be hundreds of such segments. So, brands need to strategically invest in technology to add creative value such that customers keep coming back. They have to remember that every customer defines value differently.”
Optimove has already on-boarded a few Indian companies, including two, which it signed “just this month”. These include PokerBaazi (an online poker platform), The Label Life (an online fashion and lifestyle brand), ZEE5 (OTT service), and Ability Games (a research and game development company).
How Optimove’s deep tech helps brands
Globally, Optimove's SaaS offering is being utilised by StitchFix, Dollar Shave Club, Sephora, Lastminute.com, Staples, Foodora, and several hundred others.
And, each of its business partners have had unique use cases.
Lastminute.com (a travel booking platform), for instance, managed to increase its average order value by 18 percent with Optimove’s solutions. The Netherlands-based company, which services over 10 million customers, wanted to “move from mass, undifferentiated communications to segmented and personalised ones”. By using Optimove’s platform, it was able to increase customer response rates through email marketing.
Paris-based luxury beauty retailer Sephora wanted to bring in audience segmentation via location and weather, so that it could send its customers communication and product alerts on what they required at the given time. This would help increase chances of customer action (purchase).
“It was all about bringing in a harmony across segments and multiple interests, while each segment was dynamic,” Asaf Cohen, VP of Revenue, Optimove explains.
Klium (the largest online shop for Maintenance, Repair and Operations products in the European Union) wanted to improve its customer loyalty, increase the size of orders, and bring in more repeat customers. Optimove helped the platform grow its “active customers group” by 52 percent.
Closer home, in India, Optimove's target is to help ZEE5 add several million users to its current base of 61.5 million, and also increase conversions (from free sign-ins to paid subscribers).
Amit says, “We are bringing in strong analytics and making the customer journey more holistic and happier. Different customers are using different subscriptions across different languages. We are trying to find correlations within datasets and gain a consolidated view of the consumer.”
Personalisation, but with security
Because Optimove’s entire operation is based on data - and mining of that data for personalisation - obvious questions around security and privacy arise. The startup asserts that it has one of the lowest opt-out rates (when customers request brands to delete their data and sign out of all communication).
“For GDPR-compliant companies globally, the average customer opt-out rate is 10 percent. For our clients, it is one percent. So, it is proven that if you do relevant marketing, customers will not want to opt out.”
In 10 years, Optimove has established itself as a force to reckon with in martech, now a $100 billion global industry. It has forged successful partnerships in the US and Europe. With most innovation now moving eastward, the company hopes to make a dent in Asia, especially in India.
“India is a nation of mass consumption, and that makes competition between brands extremely fierce. They fight over customer experience and engagement. That’s the value Optimove will bring to its clients,” Amit states.