New Delhi: With video advertising having caught the imagination of net users, the online ad market in India seems to have come of age quite quickly in India.
While the current size of the market is only Rs450-500 crore, some reports estimate that it is growing at a CAGR of more than 100% and is likely to become a Rs2,250-crore industry by 2009. Ad networks such as Ozone Media Solutions Pvt. Ltd, Komli and Tyroo are nextgen online ad agencies that are capitalizing on this boom by serving as intermediaries between advertisers and publishers.
Kiran Gopinath, founder and CEO, Ozone Media Solutions, which has partnered with 190 websites and services HSBC, State Bank of India, ICICI Bank, among other advertizers, talks to Madhusmita Priyadarshini about the medium, the market and the opportunities his company offers to advertisers and publishers. Edited excerpts:
Kiran Gopinath, Founder and CEO, Ozone Media Solutions
According to an estimate, 30-40% of online ad happens through direct deals between the publishers and advertisers. Where do you fit in?
An ad network is basically an infomediary that does the work of digging up unsold inventory on websites and selling it to advertisers. This is what it is by definition.
The 30-40% you are talking about refers to the top four or five portals only who can afford to do business directly. There is a long trail of publishers who do not have the wherewithal to hire a sales guy and approach the advertiser.
Even for the advertiser it is a nightmare to deal with 200-300 odd websites for campaigns run on large scale. That is where they approach us. We serve as a single-window stop, managing such large campaigns for them and adding value to advertisements all the same.
(In conversation with Kiran Gopinath)
How exactly do you add value to campaigns?
Apart from managing and optimizing huge campaigns for advertisers (according to their individual requirement), which would otherwise be a burden on their resources and time, we do extensive ad survey through which we target ads on websites or categories of websites based on countries and segment of visitors, among other parameters, making the ads more directed and effective.
What kind of revenue sharing model do you have?
We charge advertisers on cost-per-click (CPC) or cost-per-thousand basis, depending on the advertising model laid down in the contract and share the revenue with the publishers on a 60:40 ratio. Sixty per cent goes to the publishers.
How has the online advertising evolved in the last five years in India and how do you foresee it as growing 10 years down the line?
It is still miniscule in India. This year, overall online ad revenue stood at only Rs450 crore as compared to total ad revenue of Rs60,000 crore. In the US, the online ad market alone is worth $22 billion (Rs87,000 crore).
Having said that, the market, after some initial hiccups and sluggishness, has grown at a tremendous rate since 2004-05. Some reports suggest that the online ad spend will grow to Rs2250 crore by 2009.
We, in India, have in fact adopted growth shortcuts and have escaped the learning curve the US went through. This is something very positive to have happened at this stage.
Could you elaborate?
For example, even at this nascent stage of the market, the online video advertising available in the country is almost at par with that in the US.
We have the strength of database and technology that the US has. We are very democratic in the sense that we do not block any online content, which is very similar to what is happening in the US.
How is online video advertising faring in India?
It is catching up in a big way and limited broadband numbers are the only constraint today. Once broadband usage goes up, online video advertising is going to grow exponentially and emerge as the next big thing in the ad space.
If broadband usage is one major limitation, what are the advantages online has over print and television.
For starters, online advertising has the kind of measurability no other media can offer. You can track exactly the number of people across regions and age groups who have clicked on your ad and shown interest in your product. And it is all in absolute terms. In print or television what you can get at best is only a sample measure.
Internet as a medium is very transparent. It is all out there for everybody to see and know.
Also, ads on websites are much more targeted and focused on specific section of audiences.
What has your growth curve been like?
I started Ozone Media with practically no investment and over a period of two years have put in Rs6 lakh or thereabouts.
Growth has been tremendous for us as we had an ‘early mover’ advantage with very little competition around. To put it in figures we have grown about 150% quarter on quarter and more than 300% year on year.
Startups have now become a trend in corporate India. Being a startup yourself what difficulties do you think such enterprises face in the country?
Startups face difficulties on various counts. Right from incorporating a company, to finding a good CA, to investing into the business, to convincing investors about the viability of the business model, a whole lot of things go into a startup’s success.
Generally speaking, it is very difficult for a startup for the initial six months. But if one survives that one can survive the rest.
Do you foresee stiff competition from new entrants?
The market has already moved way ahead for new players to catch up. Key players are already there in India and the market is well distributed among them. This is not a place like the travel industry where you can have ‘n’ number of players joining in and flourishing alike.
What major challenges do you face as an online network?
It’s all about being able to match the requirements of the publishers with those of the advertisers. The publisher wants maximum returns on the real estate on his website. The advertiser wants good value for the money he wants to invest. Our challenge lies in how we are able to satisfy them both.
At this point of time we are also trying to draw in more and more sectors to advertise and market on the net. The FMCG sector of late has started advertising online quite rigorously. The fairness cream brand Fairever, for example, has had a successful online campaign with us. People have started realizing the potential of the medium.