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Japan-based news aggregator SmartNews is launching a U.S. ads business Tuesday.
The company was founded in 2012 in Japan and came to the U.S. in 2014, but has only monetized via ad networks and open exchange programmatic up until now.
Now, armed with 10 million monthly active users in the U.S., the company is building out an ad sales team and letting advertisers purchase their inventory via private marketplace deals and direct sales under the leadership of Kevin O’Kane, a former Google executive.
O’Kane said that the company is now choosing to launch its U.S. ads business partly because of the growth of its user base.
SmartNews was downloaded 9.4 million times in the U.S. during the first 10 months of 2020, buoyed by consumer interest in its pandemic coverage O’Kane said. By comparison, the app was downloaded 4.9 million over the same period in 2019, according to estimates from analytics firm Apptopia. Apptopia estimates the app has been the number two most downloaded news aggregator app since January 2019, capturing 20% of market share, behind NewsBreak but above Google News (Apptopia doesn’t count Apple News, a juggernaut given that it comes pre-downloaded on all iPhones).
This has also been a period of growth for SmartNews’ balance sheet. The company last year raised $230 million in funding, bringing its valuation to $2 billion. The company was also eyeing an initial public offering last year, according to The Wall Street Journal; a SmartNews spokesperson would not share the status of those plans.
But the news aggregator’s continued rise isn’t definite. Growth has slowed in recent years. There have been approximately 3.52 million app downloads in 2022 year-to-date, a decrease from 3.8 million in 2021 over the same period, which is a decline from 2019 and 2020, according to Apptopia.
There are industry headwinds as well. The mobile advertising ecosystem has been challenged by Apple’s deprecation of mobile identifiers and is expected to experience further fallout when Google phases out cookies on Android phones in the coming years. And publishers may be increasingly wary to partner with third parties like SmartNews, as cookie deprecation increases the value of a direct relationship with audiences.
Still, with over 3,000 publishers on its service (who are paid via licensing fees) and an already dedicated user base, SmartNews is starting from an enviable position, said Thomas Triscari, an economist at programmatic advisory Lemonade Economics.
“It looks like they have overcome a classic chicken-egg challenge,” Triscari said, explaining that SmartNews has “Invested money on securing inventory supply via content partnerships before earning revenue, then [sold] that supply to advertisers who think it performs as well as other alternatives, so they keep on spending.”
A more balanced view
Like all modern platforms, SmartNews seeks to be both a clearinghouse for all information and to have the tech that helps users find the content they like best.
But unlike many of the most popular social giants, SmartNews works to thread the needle between the delight of personal discovery and the danger of echo chambers. The app boasts a “balanced news feed” feature that lets people see news from both sides.
“It’s not everybody, but [many users] really want to understand a bit more balanced view,” said Megumi Yoshinaga, evangelist at SmartNews. This viewpoint is informed by road trips SmartNews employees take semi-regularly across America to chat with its users and learn about their news consumption habits, Yoshinaga said.
SmartNews is also hoping to sell advertisers on the uniqueness of its audience. It claims that 40% of its users make more than $100,000. Its users spend, on average, 19 minutes per day on the app, per January 2022 Comscore data, and the app has higher monthly time spent per user than Apple News and Google News combined as of June 2021, per analytics firm App Annie. The company provided both figures.
As a result, SmartNews is aiming at mid-to-lower funnel advertisers who can capture its focused users, O’Kane said.
