According to a recent IAMAI (Internet and Mobile Association of India) report, India's online advertising market is set to touch Rs2,938 crore in 2013-14, growing at a consistent clip of around 30 per cent. This includes search, display, mobile, e-mail and video advertising as well as social media advertising, which were earlier valued at Rsl,750 crore in 2012, growing by 29 per cent over the previous year. For a while now, the market has witnessed a significant shift towards online ad spends, search and display making up a large chunk of this. However, of late, video advertising seems to be picking up pace thanks to the proliferation of Websites and apps offering video content and enabling one to watch live TV as well. This in turn has opened up additional revenue streams for players, who often rely on a subscription based model and tie-ups with telecom operators for revenue.This sudden traction can be attributed to a booming app economy, coupled with a growing number of users consuming such content onlineand low cost smartphones flooding the market. According to the report, video advertising now constitutes around 7 per cent (Rs150 crore) of the online advertising market. While you have Websites and apps like YouTube, Bigflix, Ditto TV and others offering such services, many players are betting big on this segment in the coming months. After all, what better way to reach out to a potentially large untapped audience?
For instance, the current IPL season has been grabbing eyeballs not just on TV but on mobile as well, as more and more users tune in to catch the action on their smartphones. nexGTv, which won the mobile broadcasting rights to live stream Pepsi IPL 2013, has already sold out most of its ad inventory. Brands have the option of advertising between overs and breaks, banner ads and short video ads before the live stream launches. NexGTv claims that in less than 20 days of IPL, over 1.5 million users were added and has so far received over 15 million hits.
"The last 7-8 months have seen significant traction in terms of adspends," says G. D. Singh, director, DigiVive, which operates nexGTv. The app which launched video streaming a year-and-a-half ago has received 12 million downloads till date, offering sports and live television including entertainment channels. He points out that after the rollout of 3G services, networks have scaled up to a level where it's become possible to stream video applications far more easily, thus encouraging brands to look at this segment with renewed interest. Currently, nexGTv offers 105 channels out of which 35 are paid and the remaining free. Singh believes monetising content has become easier through such revenue streams.
Monetising contentThey've been seeing around 1 million ad impressions a day. Singh points out that while the first half of IPL started out slow in terms of ads, the second half has picked up. They expect to sell out most of their inventory in the next few days. While one can largely find technology brands like Samsung and BlackBerry advertising on such platforms, other consumer brands arecoming on board as well. Typically, the ad inventory is auctioned through a bidding process.
However, players often complain that tying up with telecom operators on a revenue share basis isn't always sustainable as the operators end up taking a larger cut. For most players then, it comes down to looking at other avenues to monetise content. Some like Ditto TV (launched by Zee) also operate on the OTT (over the top) model to avoid such costs.
Zenga TV is another player that has been seeing gains through ad revenues. This Web/mobile TV service offers free streaming, with 150 live channels and video on demand (VOD) content, including music, movies and others. Currently, the company has rights to a base of 18,000 movies and 40,000 music tracks. "Almost 60 per cent of revenues now come from advertisements," says Shabir Momiin, CTO & MD, Zenga TV. For their platform, video on demand generates significant traction, constituting 60 per cent of their offerings. Live TV makes up the remaining 40 per cent. He adds that over the last 6-7 months there's been a spike in the number of advertisements and brands coming on board, resulting in a significant jump in the number of impressions.
Interestingly for Zenga TV, 40 per cent of users are from metros, and the remaining come from Tier II and III cities. They currently have around 23 million month on month users. Zenga TV says that it is also one of the largest content suppliers to YouTube.
Prashant Mehta, CEO, Komli Media, an ad network, points out that one of the reasons for the surge in ad spends is the increase in the number of users moving to smaller devices like mobile phones and spending more and more time on the Internet. Another advantage for these players is strategic tie-ups with handset manufacturers.
As more users move to consuming content on their mobile phones, coupled with the number of low cost handsets being purchased and expected fall in data rates, it looks like video advertising is set to get a boost in the coming months.