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  1. Why mobile advertising is yet to pick up pace in India

Why mobile advertising is yet to pick up pace in India

Online content players’ experiments with specialised content are slowly paying off. But a viable ad revenue model continues to elude them

By: | Updated: June 9, 2015 3:31 PM
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Online content players’ experiments with specialised content are slowly paying off. They are getting the eyeballs. Brands too are ready to play along. But a viable ad revenue model continues to elude them

How many of you were prompted to watch Anurag Kashyap’s period crime drama film Bombay Velvet based on historian Gyan Prakash’s book Mumbai Fables, after catching a glimpse of the movie on Star India’s mobile app Hotstar? This was the first time that a Bollywood movie had been promoted on a mobile app and it got viewers talking. Director/producer duo Karan Johar and Anurag Kashyap also ensured that it was different from a TV promo. Johar, who also acts in the movie, interviewed the rest of the cast and Kashyap. The hour-long chat show was premièred on the app. Next, film studio Fox Star India, a Rupert Murdoch company, rolled out an exclusive preview of the film to Hotstar’s 15-million audience base on May 10. The movie preview comprised four minutes of selected scenes from the film.

Meanwhile, Sony Entertainment Television, part of television broadcast company Multi Screen Media (MSM), premiered its mythology-based series Sankat Mochan Mahabali Hanumaan last month on its mobile application Sony LIV. The online premiere took place at 12 noon on May 4, eight hours before it debuted on television screens on prime-time the same day. This has now become a ritual as every episode of the show is first aired on the app, followed by a telecast on TV.

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After e-commerce players, led by e-tailer Myntra which last month shut down its website and morphed into a mobile app based retailer, it is now the turn of news and content players to go full throttle on mobile. From pure play digital players such as The Quint and The News Minute to traditional players such as Rajasthan Patrika Group launching multi-media digital platform Catch News to television broadcasters Star India and MSM bolstering their content offering on their respective apps, besides international players such as Scroll, Quartz and BuzzFeed, everyone is now turning their focus to m-commerce. “Contrary to popular belief, we are not content companies. Rather, we are mobile based technology companies pushing relevant content to people. We need to understand that there are more mobiles than desktops in India so there are more people consuming content on their mobile,” said Vignesh Vellore, co-founder, The News Minute, explaining the new-found enthusiasm for m-commerce. For instance, The News Minute sends a mail containing news and features to one’s mailbox and upon clicking on the news item, the user is directed to the site.

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However, even as content players are busy chasing the eyeballs on mobile, they are yet to work out a stable revenue model. “The biggest problem is that everyone, including advertisers and content players, think that mobile advertising is all about  how many clicks a banner has got or how many views an ad has received and has nothing to do with building brands. There is a very tactical and short-term approach towards mobile. Mobile advertising is highly driven by return-on-investment,” said Milind Pathak, COO, Madhouse, a GroupM owned mobile marketing and communications company.

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The Ficci-KPMG 2015 report puts growth in digital ad spends in 2014 at 45%, touching Rs 43.5 billion against Rs 30.1 billion in 2013. While the share of mobile advertising grew from 10% in 2013 to 14% in 2014 touching R5.2 billion, most of the money is still spend of search, display and social media. And even for mobile advertising, it is in-app advertisement which claims the major share with 40%, followed by mobile web ads at 25% and movie video, TV, SMS, MMS advertisements at 35%. Analysts say that online publishers need to follow a mobile-first strategy, that is, think mobile, plan mobile and do mobile, if they want to survive. “One needs to understand that on the mobile phone, people mostly tend to snack on content. At the same time, there are people who indulge in serious reading at times, so publishers need to create content based on all sorts of needs. Distribution of the content is equally important and a big challenge. Given the fact that in India people have a range of devices, publishers need to think of ways that their content can reach people irrespective of the device,” said Gopa Menon, associate vice president, Isobar, a full service digital marketing agency of Dentsu Aegis Network Ltd, adding, “And for all this to happen they need to invest heavily in technology.”

Again, given there is a demand for all kinds of content, for a content player to thrive it is important that it finds its own niche. Says Satyan Gajwani, CEO of Times Internet Ltd, the digital arm of Bennett Coleman & Co. Ltd (BCCL) which offers a range of content through its apps such as Times of India, Economic Times, Newspoint, Navbharat Times, Maharashtra Times, Navgujrat Samay, Eisamy and Vijay Karnataka apart from running niche online publications such the HuffingtonPost India and and AdAge India, “There is a huge demand for quality content on the web and mobile. Hence it is important for a content player to first identify the target group he wants to cater to and then focus on ensuring that the content reaches those readers,” said Gajwani. For the record, in 2013, Times Internet had inked a deal with US-based online media company Gawker Media to bring the Gizmodo and Lifehacker websites to India. In the same year, the digital arm of BCCL signed another partnership deal to run the Indian version of US-based news website Business Insider.

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Content players claim they have already understood the need for differentiated content, so each online content site is unique in its own way. “From BuzzFeed to Scoopwhoop to The Quint to The News Minute, each one has a different content strategy.

We all know that content still remains the king. So in addition to building a solid technology team, the focus is to give differentiated content which can be accessed from any device,” said Samir Patil, CEO, Scroll India.

Television is the only exception here, says Uday Sodhi, executive vice president and head (digital), Sony Liv, MSM.

“Broadcasters are yet to create original content. While some efforts have been made at a small level, most of the content on the app is ‘catch up’ content. Our traditional business is still feeding digital with content and that needs to change,” he says.

Content is only one part of the jigsaw puzzle. Although publishers believe differentiated content will help them getting eyeballs, which in turn would bring in the ad dollars, observers say the current style of advertising on the mobile will drive away the audiences. “Right now, every model that has worked on the web is being tried out on mobile. From banner ads to ads being played during videos to rich media experience, native advertising, nothing has been left. Mobile has become a mini-web when it comes to advertising and here lies the problem,” said Pancham Endlaw, head, South Asia at Opera Mediaworks.

And here lies the challenge too. Despite mobile being a very personal device, ads tailor-made for different needs and consumer segments on mobile still remains a distant dream for many advertisers. “Currently the media plan is finalised based upon the content and traffic. For example, as an advertiser I would use a site such as Firstpost to advertise when I want to talk to a very select set of consumers about a premium product whereas if I want to target first-time buyers I would advertise on sites such as The Times of India. While mobile still remains part of the web, with every campaign we are taking a step towards making it independent,” said Pratik Seal, CMO, Housing.com.
Agrees Vignesh of The News Minute who says this is perhaps why online publishers are paid peanuts compared to other mediums despite  providing a huge reach to advertisers, when it comes to ad rates.

Compared to television, the advertising rate for mobile is very low. The cost of a 10-second ad spot during prime-time on a Hindi general entertainment channel is R80,000-100000. While banner ads on more popular mobile sites and applications such as NDTV, Firstpost and The Times of India are for  R200-250 cost per impression (CPM), the cost comes down to R70-150 CPM in case of newbies or second rung apps/sites. Similarly, the cost of running ads during a video ranges from R2-3 per view in case of popular sites. It should be noted that in case of videos, a publisher and an agency is only paid if a viewer decides to watch the entire ad film without skipping it.

According to Menon of Isobar, two things bring an advertiser to an app or a mobile site. “Either the content is distinct that gives it a premium positioning such as in case of Huffingtonpost, Firstpost and Quartz, or one has managed to win the eyeball game by providing news quickly such as in case of NDTV and The News Minute,” he said.

As for buying fixed presence for a month on m-sites/apps such as NDTV which generates 6-8 million visits per day, advertisers need to shell out R3-4 lakh, whereas a ‘roadblock’, as per which all ads on a web page are dedicated to one advertiser on The Times of India’s m-site/app costs R2-3 lakh per day.

However, Sanjay Mehta, Joint CEO, Social Wavelength, a social media agency points out that there are many ways to create personalised and targeted advertising on mobile. “For example, a person entering a gym has a fitness app on his phone. Based on his location relevant ads can be sent to his mobile at that particular time. While FMCG and other categories are yet to take a deep dive into contextual form of advertising, the only companies currently using this form of advertising are the e-commerce companies given the vast of pool of data they are able to mine,” he added.

Meanwhile, advertisers say one of the biggest reasons why brands are yet to do the tango with online publishers is that not much data is being mined which makes it difficult for brands to advertise in a targeted manner. “We had launched a mobile campaign on Facebook’s app for two kinds of consumer profiles. For smartphone users in the SEC A bracket we had a campaign with stickers and videos through which we sent messages such as “3 pm: a busy day for you. Relax, have a Coke”. For SEC C and D consumers who are mainly users of feature phones, we sent messages such as ‘Drink a Coke and download a Deepika Padukone wallpaper’. The fact that Facebook allows targeting various kinds of consumers at different times is what makes the campaign a hit,” said Debabrata Mukherjee, vice president, marketing and commercial, Coca-Cola India and SW Asia.

Even as online publishers are getting their act right with differentiated content, distribution can spoil the best of laid plans if not handled properly. While television broadcasters pay Rs 1500-1800 crore annually as carriage fee to cable operators and placement charges to direct-to-home (DTH) operators, this is yet to happen on the internet where telecom operators would be allowed to charge for placement. For content players such as The Quint, replication of TV distribution model on the web means the end of world. “The TV distribution model has done nothing for the industry apart from crippling it. In fact, high cost of carriage fee was one of the reasons why we faced so many issues when we ran Network18,” said Ritu Kapur, co-founder and CEO, The Quint.

In the age of personalisation, a mobile phone is the most personal device one has. This is the reason why analysts believe that mobile advertising, which so far has been about replicating the web, needs to take a leap by finding inconspicuous ways of placing ads which do not alienate the customer. Citing the example of Vdopia’s ‘InView’ which allows video ads to run as the time the content is being played, Preetesh Chouhan, senior vice president, APAC, Vdopia, says, “Publishers can insert video ads right in the heart of the content, be it an article or listing. This allows publishers to maximise revenue by running video ads on any display inventory, gaining five to six times the revenue for the same ad inventory.”

This is also why Google launched theTrueView ad format on Youtube in 2010. The ad format lets users skip ads they aren’t interested in watching. The format has been expanded now onto the mobile app and the same has been implemented by other ad video networks as well in their own style.

Moreover, adoption of new ad formats in addition to using programmatic technology is expected to give the industry a new direction that would spur the growth in advertising on mobile. “Putting up a banner or a mobile site or an app is not innovation. Rather, it is considered to be an interruption. Going forward brands will become publishers. In fact, brands such as Hindustan Unilever’s digital content platform called BeBeautiful which caters to women and shares content on fashion, lifestyle and beauty is an example of how brands are looking at innovating advertising,” added Pathak of Madhouse.

According to Gajwani even as companies continue to tinker with the advertising model, in the long run not everyone is expected to survive. “We can definitely expect a shake-out in the future but before that we can also expect innovative mobile advertising solutions,” he added. Advertisers, tech companies and online publishers are waiting for that.

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