Guvera’s Max Hegerman on global growth and redefining brand partnerships

A year ago, streaming service Guvera reached 10 million users worldwide, up from just 1.5 million the previous October. This week, the company claims 16.1 million users in its 20 markets – not bad for a digital service that betalaunched in 2010out of the Gold Coast.

Part of its rapid growth was the increased uptake of emerging digital business models in 2015. ARIA’s annual wholesale figures for2015 showed revenue from streaming services – along with non-subscription on-demand services such as YouTube and Vevo – doubled over the course of the year. 2015 saw products take 62% of the total market at $207.6 million.

According to Guvera Global Director of Brand Strategy,Max Hegerman, another large part of the company’s global growth is its brand-funded model.

“We’re creating those engagement levels with consumers where we’re actually attaching a brand to a playlist and people can search those playlists, associate brands with the playlist, and make that brand connection,” he tells TMN.

Hegerman is right. Brands spend copious amounts of money to be on television each year – a local PwC report found that by 2019 the local ad spend on mediawill be $16bn – yet television market free-to-air revenue growth is expectedto flatline with consumers moving more toward digital. In fact, the Australian digital advertising market is expected to grow by 13% come 2019.

Max Hegerman

As Hegerman points out, YouTube is the biggest search engine behind Google right now, showing that consumers’ hunger for entertainment and music is insatiable.

“[Brands are] trying to associate with different programming,” says Hegerman. “I think for us, we’re creating a destination which is probably just as important to a younger demographic [than TV], which is music.”

Guvera has been ahead of the curve in how it approaches the popular ad-funded streaming model. In late 2014 it launched its branded channel offering globally with clothing retailer The Iconic stepping up to the plate early in Australia. Then in March it introduced Guvera 3.0, where brands could align with Music Channels that best fit their target audience.

“I think we do need to change the conversation and have it be about [the fact that] we’ve got the users, but we also have a platform where people can spend upwards of 10-20 minutes at a time listening to a brand channel that you helped create and curate,” said Hegerman.

Hegerman has his work cut out for him though, CEO Darren Herft has just given the company a goal to have 500 brand channels, building on the 26 it currently has.

“The gauntlet has been thrown down by CEO,” he laughs. “[…] But the cool part about what we’re doing is that it’s not just music, it’s also content and a creative platform that we can wrap physical events in with [content division] House of Guvera.”

House of Guvera currently runs as a pilot project and sister company in Los Angeles’ Arts District. It’s a live venue and a creative hub for artists, musicians and brand partners which will be replicated in Bombay, India, andMelbourne, Australia.

Hegerman’s decorated background in advertising will be crucial to reaching the goal handed down by Herft. His 20+ year career has seen him work on some of the biggest brands in the world, including Apple, McDonald’s, Pepsi and Nike.

“The 500 number is big but getting there means a lot of really creative presentations to a lot of really cool brands that talk about how we leverage content to create sexy engagement,” Hegerman says.

Business and creative strategy plays a major role in the push handed down by Herft. Guvera needs to understand each brand’s demographic and what attracts consumers to it. The company’s tactic of internal creative collaboration rather than a sales pitch has so far been successful. In Australia alone Guvera has around 13 brand channels, including AMEX, Goodlife, Priceline, Vibe Hotels, Victoria Racing, Virgin Mobile Australia and Australian Tennis. In fact, Guvera’s team-up with Australian Tennis is currently being leveraged with the Indian Premier League(IPL) to build on its existing partnership with the Mumbai Indians.

The India market is currently the jewel in Guvera’s crown. The company has accrued more than 6.5 million users in just over 18 months in the territory.

Hegerman’s six years of advertising, marketing and branding experience in India has no doubt contributed to Guvera’s growth in the country. Originally hired as Chairman of the Board in India, Hegerman coincidentally carved out his current global role just a few months ago when he delivered a presentation about building the brand in India.

“I think Guvera was interested in my background and my ability to manage things, which is what I do really well, but also to help with relationships,” he says.

Reportedly valued at $1 billion, it could be said that Guvera is Australia’s most successful, privately owned international start-up. Guvera’sdominant financial backer is actually private-equity groupAMMA, a company co-founded by CEO Darren Herft in 2008. But if it’s going to take on streaming leaders Spotify and Apple Music, who have 75m and 11m subscribers respectively, it needs funds to expand.

News of an initial public offering (IPO) first surfaced last August; Guvera is apparently looking to raise $100 million. Hegerman tells TMN an IPO will help to expand its top markets and get House of Guvera on the ground in India. “It’ll provide us with the ability to follow though on some of our plans,” he said.

Guvera’s growth just keeps skyrocketing, but if it’s going to change the digital landscape using the weapons in its arsenal then it needs to further define its brand-powered position in each market.

“It really is how we keep positioning ourselves as a thought leader in the music space and it is about how we come at it from a different perspective,” says Hegerman. “That is [about] creative concepts and not necessarily something that is a ‘media buy’ or investment that companies have to make.”