In this interview you will learn about David’s background, the business model of Otogami, the affiliate marketing, and why you should share your knowledge with other entrepreneurs.
Interviewer: Hi. Today we’re in Madrid with Otogami. David, who are you and what do you do?
David: Apparently we are a price comparison engine, but we are much more than this, we are a Google for everything. Right now we’re focusing on video games, but in the future we’ll see. We’re exploring more segements.
Interviewer: What did you do before you started this company?
David: I worked as developer for many many years, I’m very very old. But just before Otogami I worked for Atlassian an Australian company, right now it’s based in San Francisco, working on projects like JIRA and Confluence, a whole platform for developers.
Interviewer: Okay, great. Can you please briefly explain the business model of Otogami?
David: We have model one that the main business model is affiliate marketing. We search for the best offers in video games and we give all this information to the users. If they finally buy the items we get commissions. But on the other hand we also have another business model with data. Data is the best product with the best margin, and we have a lot of knowhow about how the prices are changing from time to time. So we are starting to explore this business model.
Interviewer: When you have this kind of data, to what type of customers would you like to provide it and in what way or what type of applications?
David: For example, we can tell one shop if they have the best price in their local market, Germany, Spain, in Europe, or in the whole world, because we are searching for a lot of offers in a lot of ecommerce sites. The other thing is that we can compare their prices with their competence, so we say you are very cheap or not, or this shop is doing this kind of thing or this kind of pricing strategy, because we can see how one shop is changing the price in reaction to, for example, another offer. And the last thing is that we can predict if prices are going to change.
Interviewer: And regarding the other business model, the affiliate model, how do you manage this kind of customer acquisition affiliate revenue spread. Because on the one hand you have to acquire these customers through differnt channels, social, etc., and on the other hand you’re earning some kind of affiliate revenue in some other ways, etc., how do you manage this kind of spread between the cost of getting the users to buy something and having the revenue?
David: The point is that we can’t focus on how we can monetize each transaction, because the price of video games, for example, is very low and the commission is also very low, so if you try to invest and get their money back just with the first transcation it’s not going to work. So what we try to do is to get a lot of users to create relationships, not transactions, and getting some kind of revenue or profit from time to time with the biggest value of these users.
Interviewer: How important is branding over performance marketing for your business model?
David: It’s super-important, because in the video games market recurrence is very very high, you can make two or three video games each month. So our strategy is to be the top of mind of this kind of things for the users if our target is to be there, when they need to buy one video game they must think, Okay I must go to Otogami to find the best price or the best offer.
Interviewer: Great. Can you please describe what a video game is?
David: For the user, the point is that the video games market is so big that you can find very different video games from castle games to series games or to blockbusters, like Call to Duty. So it’s very difficult to define what is one video game, but what I can tell you is that the market is changing, and the prices are getting lower and lower and lower.
Interviewer: And this is because of piracy, or is it because of competitive factors?
David: It’s because of competitors. You can get very good games just in your browser, and free to play games are very very good, so right now it makes no sense to sell one video game for €60, right now it’s crazy.
Interviewer: Let’s talk briefly about the corporate strategy of Otogami. What do you perceive the two or three major drivers that you want to work on for the next two or three years in order to become the leader in your own market segment?
David: Just regarding video games, I think the best thing to do is that we want to be the single catalogue. You have a lot of search engines, but we want to be the place where you can find digital downloads, physical games, platforms like PlayStation or Xbox or whatever, even mobile games. Right now if you try to find all these games you don’t have any single site where you can search for all these games. Because we’re focusing just on video games, our data model allows us to convert all the versions of one video game to all the platforms and all the editions. I want to know the best price of Fifa ’14, I can tell you the cheaper version is for your iPhone, and it this kind of edition, and you can buy it here. I think that we are the only website that can do that, and this is our first goal right now.
Interviewer: Other fun stuff would be to create a recommendation engine based on the big data that you have, based on the purchases or user behavior.
David: We have something like this right now. We even have one algorithm for recommendation looking at the prices, because we know historically when the prices are going to change – for example for one blockbuster game usually the prices drop down after two months of the launch date – we can recommend you when is the best moment to buy one video game. So first we assume that you know which kind of video games you want to know about, so we’re going to recommend you when you can buy these video games, what is the best moment to buy your video games.
Interviewer: Market development, as you said you are mostly or mainly in the affiliate marketing segment, how do you perceive has this market developed over the last years and will develop, and what are some issues and challenges in this market?
Interviewer: How do you perceive the future development? Will these affiliate platforms become better in quality or what kind of deals can they offer for publishers?
David: I hope so. I think that there is a huge opportunity in the affiliate marketing sector. If one can create a very good tool for ecommerce they’re going to go out of money, because the point is that you can see guys like us but they’re not in very small shops, and if one new company can focus on this kind of long-tail market, they’re going to get a lot of money because I can help a lot of shops that want to do affiliate marketing but they have no idea how to do that.
Interviewer: Zanox is not a player who is interested in them?
David: Right now I think that they’re focusing on big players, not a long-tail.
Interviewer: David, we always try to share some insights and learning with our readers, and you have a very interesting learning about knowledge sharing and how can you improve your business with it, can you tell us about that?
David: The whole team came from the open source community, we really believe in this kind of sharing knowledge. My advice is that a lot of people are worried about people stealing ideas or knowhow, I think that ideas don’t work for nothing and you can get much more profit if you share your knowledge with other people. For example, we share our google analytics account with other companies and we just ask them to share with us their accounts just to learn how they acquire traffic, how they acquire customers, how they measure their traffic. And it’s working. Nobody did nothing against us just to do that, and our investors are pretty happy with these steps because we’re learning a lot. So my advice is don’t be afraid about sharing your knowhow with other people.
Interviewer: Thank you very much David.
David: You’re welcome.