Why Cheetah Mobile Acquired News Republic

Cheetah Mobile has acquired News Republic in an interesting move.

For those not in the know, Cheetah is the company behind Cleanmaster, Battery Doctor — very popular utility applications. Why did they acquire News Republic?

It’s a Reverse Audience Extension play.

The Facebook blueprint, which was classical “Audience Extension” broadly:

  1. Build a large, unique audience base (1bn+ people via Facebook, Messenger, Instagram, Whatsapp )
  2. Collect significant amounts of user intel and data through these apps (with user consent)
  3. Build massive ad targeting and ad serving capabilities
  4. Monetize some of the portfolio apps that are suitable for (native) advertising
  5. When you run out of ad space (traffic) on the main apps, build an “audience extension” through an ad network (FAN) so your advertisers can reach the same users on various apps, even those that aren’t owned.

Pt. 5 is classical audience extension — Twitter did the same with the Mopub acquisition a few years ago.

Cheetah’s business, while similar, has other nuances.

A close look at their 2015 annual report suggests:

  • Cheetah mobile’s app portfolio is at an audience reach of ~500+ mn users (Huge Android footprint).
  • Separately, they own a France-based ad platform, Mobpartner — they have a strong audience reach in France, but no owned properties that attract big brand/premium spenders.
  • Cleanmaster is a deeply monetized application (mobile app revenue is 66% of overall revenue) — Cheetah Mobile knows how to monetize mobile apps well.

There are a few other notes, but I want to stick to these few parts.

So the two strategic business opportunities for Cheetah are:

  1. Create an audience extension for premium advertisers who already spend on Cheetah’s owned portfolio (Best done through building/buying a demand-side platform that can access their user base on exchanges, but separate topic that I’ll save for another time)
  2. Build a premium advertiser base for existing audiences i.e. find “owned” apps that attract premium advertisers and use existing audiences as an extension.

I believe the News Republic acquisition is the latter. They already have a big audience base in France thanks to Mobpartner — but it’s unlikely they have deep access to spends from big brands and premium advertisers who prefer premium publishers/audiences.

News Republic adds an owned property to the Cheetah portfolio that can attract brand spends, which in turn can be extended into the Mobpartner network — it’s a win-win.

Mobpartner has 200 million users worldwide that can act as extension to other premium publishers — data on where these users are isn’t public (or I haven’t been able to locate it), but keep an eye on Cheetah Mobile over the next few months and quarters as pts 1/2 above play out.

All in all — big one! All the best to the Cheetah team.

P.S: Views in post above are personal and may not be representative of my company’s view on the topic.

Originally published at www.srinivaskc.com.