The article was initially published in RBC in Russian. Insense is Starta Ventures portfolio company, Batch #2.
Insense connects brands to influential bloggers: brands place orders for native advertising through the platform and bloggers select projects based on their interest. Thirty-five thousand bloggers and more than a hundred companies currently collaborate with the platform.
“When we were deciding on the location, we didn’t think about our own comfort, but about where the business would grow,” says Danil Salyukov, the co-founder and CEO of the platform Insense, where brands collaborate with Instagram-bloggers. “We chose New York, where any leading advertising agency is only 5 to 10 minutes away,” the entrepreneur explains.
The story began three years ago in Moscow when Danil founded Insense with his brother Anton Salyukov and his friend Alexander Fedorenko. The idea belonged to Anton, who had an experience in social media marketing business. Before Insense, Danil worked at Qiwi where he developed social networks and online games, and created content. Alexander was invited to the start-up when they needed a person with expertise in advertising — he was the creative director in the TWIGA Digital group.
In 2016, the automated platform Insense was ready to be launched. Insense connects brands to influential bloggers: brands place orders for native advertising through the platform and bloggers select projects based on their interest. Insense helps the clients create a brief for the contractors and monitors the fulfillment of the parties’ obligations.
In the beginning, the founders invested about 700,000 rubles of their own funds in the company. But the market, according to Danil, was not ready for the product. “In 2015, in Russia, meetings with advertisers had to start with an explanation of blogging and of Instagram and what ad campaigns could be held there,” recalls the head of Insense. Then, the team decided to move to the United States. The first investment round helped to make the move. Several private investors, as well as Starta Ventures, invested $ 300,000 in the company.
In the States, the entrepreneurs faced the opposite situation. “We were told that everything we offered used to be interesting two or three years ago,” recalls Anton. The market for Insense’s core business of marketing, the so-called influence marketing, in the United States compared to Russia was “a hundred times larger in volume and five years ahead in technology,” says Salukov. According to IAB Russia and MediaKix estimates, in 2017, the Russian market reached 4.8 billion rubles and the international market reached $ 4 billion.
From the very start, Insense focused on Instagram, which was “the very platform that I didn’t want to clutter [with low-quality advertising].” In addition, the team correctly recognized the growth potential: Instagram is the most popular social platform among advertisers. According to MediaKix, in 2018, the amount of advertising on the platform will reach $ 1.8 billion. It also helped that Insense had a direct contact with the relevant managers of Facebook, the parent company of Instagram.
After moving to the US, Insense managed to reach a pool of customers without marketing expenses, by word of mouth. So, the Canadian SMM platform Hootsuite began working with the Russian startup, which, in turn, brought the NHL team Vancouver Canucks in as a client when they wanted to increase their ticket sales. As a result, today the main markets for Insense are the US, Russia, and Canada. The company also operates in Germany, France, and Great Britain.
The founders do not disclose the financials. According to Alexander Fedorenko, this type of business can earn “tens of millions of dollars a year.” The revenue is made up of license fees for using the platform and contract fees. The license fees account for most of the revenue: the subscription fee ranges from $ 100 to several thousand dollars per month. The commission starts from 15% but is individual in each case.
Thirty-five thousand bloggers collaborate with the platform. “Forty thousand bloggers will be enough to meet almost any demand,” says Fedorenko. The company needs about 170 regular customers to stably remain operationally profitable. There are already more than 100 of them, and Insense will come to the desired goal by the end of the year, the CEO hopes. In March of 2018, the company raised $ 1 million, which was funded by NP Capital and Venture Development Partners and other investors. The next round is scheduled for the beginning of 2019. The founders retain control of their company.
“We need to quickly develop the platform…It is the heart of the company. And we need to respond to all changes and desires of our users,” concludes Anton.
