It was around mid-September when online search engine giant Google announced that it would make YouTube videos available to Android users in India, offline. This meant that people would be able to download videos in their YouTube app when connected to a Wi-Fi network and then, view them later as many times as they wanted, without any data connection. Interestingly, the viewership that the videos and the ads on them garnered would be tracked offline too wherein the content would be made accessible to the consumer offline only after the content owners give their consent to it.
Now, when Google was busy making this announcement, FameBox Network, an Indian digital video network, decided that it would invest $10 million in digital channels to become Asia’s premier talent led digital entertainment network by 2017. This network would straddle over 5,000 video channels enlisting over 50,000 content creators across six Asian markets in the next three years.
It’s not just the content owners and creators that are walking the digital path. Advertisers too are finding the online video space convincing enough to head for a ‘digital first’ strategy when designing their brand communication. Last month, Epic Television Networks, the integrated media company promoted by industrialists Mukesh Ambani, Anand Mahindra and entrepreneur Rohit Khattar, rolled out a video promo on YouTube to reveal the first look of its Hindi general entertainment channel, Epic. Again, auto maker Hyundai Motor India (HMI) launched an online video campaign titled ‘Aliens Capture’ to promote its SUV variant Santa Fe with the intent to expand its brand outreach through digital. Not to forget, in September, Nescafe launched the #ItAllStarts campaign on YouTube featuring a stammering comedian that just ‘stuttered’ its way into the digital space with over 5 million YouTube views.
As Sanjay Gupta, senior general manager and group head – marketing, Hyundai Motor India, puts it, video marketing has become one of the most important advertising tools in today’s business. “Video marketing has the potential to go viral or generate views from a lot of potential customers. It is repeatedly shared on social media sites or by email with thousands of viewers generating a large amount to traffic to the video.”
He says that by accessing the ad on the digital platform, the audience is able to respond emotionally to the content of the video ad. “We immediately get to know the response about our product,” he adds.
The reasons are not too far to seek. Indians today watch close to 5 billion videos every month—almost five times the size of the country’s population. “The average time spent in watching online videos per user has grown by as much as 27% between 2013 and 2014 wherein an average viewer watches close to 68.7 videos for a total of 431.5 minutes per month. That’s the time spent by a housewife who religiously watches a daily soap every day of the week for one full month,” says Harikrishnan Pillai, founder, TheSmallBigIdea, a digital marketing agency.
The fact that anybody can put up a video on the net unlike television or radio that needs a deep-pocketed broadcaster to develop and distribute the content is a big game-changer. “The online video industry is steadily escaping the rigid hands of the organised media such as television channels and music companies. Anyone with talent and dedication can put their expression out there,” says Bobby Pawar, chief creative officer, Publicis South Asia. “The creators are now able to self-distribute their content thanks to YouTube, Facebook, Twitter, etc. And an audience that gets bored faster than ever before is discovering these new shots of entertainment and spreading them.”
Now, while the reasons are plenty, the most important factors that are driving the growth of online video consumption seem to be the growing penetration of mobile and internet clubbed with the falling internet bandwidth prices.
Internet penetration in India is only 16%, which works out to around 220 million people. Out of this, about 110 million people are consuming content on the mobile phone. Now out of the 110 million, 85% are consuming content on feature phones that have 2G connections wherein video streaming is very difficult. “This is a very big opportunity,” says Suveer Bajaj, co-founder and director–media operations, FoxyMoron, a full service digital agency. “MTNL and its national counterparts have collectively reported that the asymmetric digital subscriber line (ADSL) connection usage in India is going to spike from 100 million to 300 million in the next 18 months. Not to forget, the government is looking at investing around R500 crore towards rural internet penetration,” he adds.
Now with internet penetration going strong, 4G eventually going mass and smartphones getting cheaper, video content consumption on mobile is only going to get even more aggressive. “4G is a very big opportunity for content consumers. Once it goes mass, 3G rates should get slashed by 40-50%. So, while right now about 4.5 million people choose to use 3G connections, this number should double with the adoption of 4G in the near future,” says Roopak Saluja, founder and CEO of The 120 Media Collective, a company that creates communications solutions and content for audiences and brands across multiple platforms and geographies. Bang Bang Films, a production company, and Jack in the Box Worldwide, a digital agency, are part of The 120 Media Collective.
The YouTube connect
When one talks of online videos, YouTube is but a natural corollary. According to industry experts, the monthly reach of YouTube in India is 50-60 million with about 3.5 million unique users visiting YouTube on a per day basis.
“Indian YouTube users are spending significant time watching, creating, curating and uploading videos on YouTube,” says Gautam Anand, director of content and operations, YouTube Asia-Pacific. “Three-quarter of Indian internet users consider YouTube the first stop when looking for videos in general. Altogether, 63% of internet-savvy Indians using YouTube watch music videos. About half of them watch TV shows and film trailers. Two in five also rely on YouTube to educate themselves. Meanwhile, around one-third go to YouTube to watch user-generated videos,” he says.
The fact that YouTube is localised in 61 countries and languages makes it a clear favourite among its user base. As per YouTube, 100 hours of videos are uploaded to the website every minute, thereby making it the largest video repository in the online space.
“Analogous to retail, think of YouTube as a mall, which naturally has high footfalls so the chances of walk-ins are far greater,” says Saluja.
Having said that, apart from YouTube there are other services too in India that are getting attention. Take, for instance, Aircel Popkorn (Live TV) that allows customers to watch live TV and videos-on-demand (VOD) or record shows for a later view. “Since youth, a section which is highly sports-driven, is a very important segment for us, Aircel associated with a digital company called DigiVive to offer Pepsi IPL streaming on Aircel nexGTv this year. Currently, we are also exploring services related to video blogging, sporting events and devotional feeds. We feel that these categories have significant potential that can be tapped,” says Anupam Vasudev, chief marketing officer, Aircel.
With the onset of video advertising, audiences are now able to spend more time on one platform without being stuck in one place. This is music to the advertisers’ ears. A joint report by the Confederation of Indian Industry (CII) and PricewaterhouseCoopers (PwC) states that the size of the online advertising industry should jump from the current R3,000 crore to R10,000 crore in the next five years—an indication that more and more advertisers should start investing into the online space to captivate their target audience. Now, industry pundits note that it is video advertising, currently about 22% of the digital advertising pie, which will be propelling this growth.
“Digital advertising in India is expected to display a compounded annual growth rate (CAGR) of 32% to reach R7400 crore in 2017, with 2014 closing estimates being close to R4000 crore. Video advertising currently forms 22% of this pie. Ad spending on online video is increasing close to 46% year-on-year in the last two years, far outpacing search (15%) and display overall (19%),” says Pillai.
The primary monetisation techniques used by the platforms include the AVOD (Advertising-VOD) model, the SVOD (Subscription-VOD) model and the TVOD (Transactional VOD) model. The AVOD model is the original YouTube model where YouTube manages and plays the advertisement and the revenue generated is shared with the content owner on a pre-decided percentage basis. In the SVOD model, people subscribe to a monthly pack to get access to the content. Here, the content owners either take a share of the revenue or are paid upfront a ‘minimum guarantee’ amount to have their content on board. The TVOD model is a pay-per-use model where the viewer pays a particular amount only when he wants to watch a particular content. Here, the revenue sharing with the content owner is a greater percentage wherein sometimes for some prestigious content properties, these platforms also pay the content owners an upfront fee. Now, with YouTube almost synonymous to the online video industry, YouTube is said to keep around 45% of the spoils before sharing with content creators and publishers.
Today, the largest demographic on the internet is the 15-35 age group. And that is the target audience that brands are seeking. No wonder then that brands are seeking amplification of content through digital media. The math also supports this strategy. The production cost of a 10-second ad for television is R20-40 lakh. If the same commercial is to be made only for the online platform, which could be lengthier also, it will not cost more than R4-5 lakh. Now, if a brand intends to buy a 10-second spot on a top Hindi general entertainment channel, it would have to shell out a minimum of R70,000. On digital, that inventory could be bought at a fraction of that price wherein the ad could run for a longer duration. For instance, the Nescafe ad on YouTube runs for 3 minutes but on TV its duration is cut short to a few seconds. “If an advertiser knows the exact location or demographics (age, gender, etc.,) of his target audience, then he can show only his select target audience the video, rather than wasting money showing a non-target audience. Therefore, return of investments from video can be assessed by platform, geography, time period, etc., at a very granular level unlike TV which only has macro level measurement,” says Suhale Kapoor, executive vice president and co-founder, Absolutdata Research & Analytics. Absolutdata is a consulting-oriented, analytics & research firm with Fortune 500 clients across more than 40 countries.
Even otherwise, it is a win-win situation. When a video commercial is launched on the digital platform, it creates humungous conversations. That content, if taken onto television, only helps in increasing the momentum.
“Evidently, digital video is increasingly being served and consumed across platforms that range from social platforms such as Facebook and Twitter to chat platforms such as WeChat. With the mobile being the primary media device, video content is increasingly going to be platform
agnostic. In effect, video will be the new text, the new language of consumer internet,” says Saket Saurabh, CEO of digital entertainment network #fame Digital.