Online advertising, which has seen a year-on-year growth of around 21% over the last five years, is arguably the most cost-effective way to reach audiences in India, particularly the younger and more affluent population. Users have maintained their time spent on the internet over the last year, and growth is especially pronounced on social networking sites — where Google’s Orkut and Facebook are among the market leaders — to complement use of email, search and portals. Online advertising is expected to account for Rs1,800 crore in revenues by 2015, according to MAGNA global advertising forecast report 2009-10. With its low costs, cost per action (CPA) models have ushered in the use of ad networks in internet advertising. Emerging mobile internet access technologies will accelerate this growth. Three digital media experts look through the crystal ball to bring you the future.
Revenue model is still questionable
Like in developed media and entertainment markets, India, too, is witnessing a trend to access online videos. A recent online survey conducted by Nielsen, captured the growing interest in online videos among Indians — of the estimated 45 million internet subscribers in India, nearly 63% either stream or download content on a computer or a portable device.
According to estimates, the online video advertising industry is currently generating revenues of Rs 40-60 crore, and is expected to touch Rs 200 crore by 2012. However, the ticket sizes are small, and the performance-based payment legacy is flowing to video advertising as well. This restricts actual expenditure to about Rs 8-12 crore.
The catalysts for this growth in online video advertising would include the impending licensing of 3G and WiMAX, which can open up the market for online videos on mobiles.
The use of online videos is a highly cost-effective way to reach diasporas across geographies. Globally, brands have started shifting their budgets from traditional media to the online world.
As media channels continue to fragment and emerging content platforms mature, advertisers will gradually begin to understand the implications of consumer video behaviour and realise the potential of online video. As PC penetration improves, bandwidth costs will come down as economies of scale set in, providing impetus to the demand side.
However infrastructure-related concerns, such as lack of PC penetration and low penetration/ high cost of broadband internet, pose challenges for this segment. The bandwidth cost for serving a video is also very high.
Providers will have to incur heavy expenditure on the serving end to ensure the high-quality delivery of video content to their end users.
Further, both advertisers and content owners such are yet to realise the full potential of online video. TV content owners are still grappling with concerns such as protecting copyrights for allowing aggregators to host their content. Advertisers on the other hand, still doubt the efficacy of the medium. The medium, although advanced, lacks standard metrics required to measure campaign effectiveness. The exclusivity of content seems to be limited too.
While the progression of viewership preferences to an interactive platform such as online video is inevitable, the revenue model is still questionable. The following emerging trends can shape the future:
Disaggregating videos: Content that was previously tied to a portal is now being embedded across sites and is disaggregated to wherever audiences confluence.
As such, video views are very different from site traffic or a page view that forces media owners and advertisers alike to rethink their marketing expenditure.
Mobile and micro monetisation: While the internet platform is growing rapidly, its monetisation in developing economies is limited. Mobile, on the other hand, blends well to subscription, downloads and other monetisation models.
Examples are downloading online videos to mobiles or call-to-action message overlays on a video. This can lead to newer revenue models, where micropayments are collected over a large audience base.
In-video placements: As audience aversion to intrusive advertising grows, brand messages will have to be seamlessly embedded with content. While the avenues for such integration are limited for traditional media, online videos offer endless customisable opportunities. The low-cost and potential viral spread would popularise embedded video advertising.
Although, only time will determine the commercial success of this medium.
— Raghav Anand
(The writer is the segment champion for mobile entertainment at Ernst & Young’s Media & Entertainment Practice. Views expressed are personal)
Agencies must gear up for new role
It is now essential that digital agencies start talking the brand language and be true partners in helping companies build their brand in the digital space. The role change needs to happen from being the so-called tech players or enablers to brand champions.
Digital agencies need to understand why this transformation is necessary and how this would take place gradually. They need to look into
a) Role of agencies in brand building
b) Delivering extraordinary consumer experiences
c) How to evangelise the medium for better brand value
d) How to maximise return on investment in times of recession.
I have been for all my career been a brick and mortar person in brand building and communication business thereof. Digital entered horizons of people like me only in the last 6/7 years and mostly was used as an add-on or a supplementary to the core communication delivery means. However digital media, today has become a “key” means if not sometimes the “core” in the brand building process.
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