Monday, August 4, 2008

Social Networking - The Misunderstood advertising medium

It began with Internet Advertising in general, marketers found it a tough cookie to accept, and some marketers still do, and now as we are finally seeing a rise in online ad-spends proportions, this step-motherly treatment is bound to come up again – Social Networking being the victim. India has been witnessing a steep rise in online ad-spends across all genres, with FMCG being amongst the last ones to join in, with the likes of Clearasil also jumping on the Internet advertising platforms. Consider this - Alexa suggests that 3 in top 10 websites worldwide are social networking sites. Also, 90% users visit their profile everyday on these social networking sites and these sites reach out to more than 40% users online. This is one place where users login when they have time in abundance and hence, are most receptive to advertising. A marketer can target users by Gender, Age, Occupation, Interests providing one of the most accurate mapping of a consumer’s behavior. Couple this, with the availability to create virals, applications etc. On paper, this seems to be the best available option for all advertisers, and money should be pouring onto this inventory left, right and center. Now comes the reality check –
• Click through ratess are very low, so Cost per Impressions deals go entirely against the advertiser.
• How does the advertiser know whether people have actually noticed the ad?
• How can one gauze the success of the campaign?
These are only some of the apprehensions that agencies/ad-networks today are facing from marketers on social networking campaigns. Pilot campaigns have been carried out for advertisers of all kinds – Apparels, Sportswear, Cosmetics, Laptops, Jobs and others, but very few advertisers have adopted this channel as a branding medium as a Yahoo!, Rediff or an MSN homepage has been. With Internet advertising becoming extremely RoI focused, it has been a completely unfair treatment on the Social Networking Sites as a medium of brand building. “Internet is the medium to generate RoI while TV is best utilized for branding” – that’s what the CMO of a leading job portal in India suggested, with all their campaigns targeting maximum resume acquisitions. Social Networking as a medium has been dropped mostly because of the lack of advertising RoI obtained. A very fundamental error here being made is that while marketers trust TAM measurements, which is a rough approximation at best, a potential marketing goldmine, in these social networking sites is being ignored. This is inspite of the fact that it’s measured and targeted much better than how TV ad-effectiveness is. Also, what needs to be understood is the variety that each social networking site offers - Facebook users are more affluent and qualified to convert. MySpace attracts so many more viewers that “there's no way marketers are going to leave”. And Hi5 leads the race in the younger age group. Facebook proudly offers the healthiest female: male ratio attributed to the privacy and safety feature associated with it.
A key aspect here is also the impatience of advertisers with social networking medium. Virals, and even banner ad campaigns are run best on a long-term horizon so as to build communities on this extremely open medium to connect to the audiences. As people see the virals, and experience it, they trust it and as an inherent aspect of all social networking sites, people will listen and spread the word themselves. Brand advertisers like Auto, Apparels, Sportswear, Personal Technology, Portals, FMCG, Personal Care, Education and even classifieds should have social networking as a must have medium of all their marketing plans. If the medium is given more time and understood better as regards to the branding opportunities it provides, we can hope that perennial under-achieving inventory makes a come-back very soon and rules the dollars the way Spain ruled the Euro.

Wednesday, June 4, 2008

Small websites – The new growing breed

‘More than 80% of online publishers in India have less than 0.1% page-views of what the largest Indian publisher has’, this fact is alarming enough for even a not so internet savvy person to understand where the market is headed to. The 80|20 Pareto Principle is here to stay for sure, if not grow bigger. A true indicator of the growing Internet exposure is the Web 2.0 culture and the growing number of small publishers in India. From a recent research report that we carried out, Small publishers are growing by the day, and it’s getting localized to the extent that more than 50% of the publishers deliver less than 1000 impressions a month. This is just a drop in the more than billion impression ocean that the largest Indian publishers have.

Primarily consisting of blogs, review sites and regional websites, most of the traffic comes through search for small publishers and ad-networks are the most preferred intermediary for inventory monetization. This can be attributed to the lack of brand value of these small publishers, and advertiser’s reluctance to go to each and every small publisher. That is where ad-networks cash in with their accumulated inventory. So, while ad-networks seem to be the only choice available to these small publishers, they are also preferred because:

• Ad-relevancy is highest from ad-networks.
• The danger of inventory being unsold is minimal, and hence the opportunity loss.
• Ad-networks are mostly self-serve models, and hence high transparency.
• Click frauds are well taken care of.
• Ad-networks have competitive filters, to manage competition.

For any industry, the feedback and the ideas have to come from both the client as well as the seller. This is where the synergies lock and hence business grows. With ad-networks depending on small publishers to build inventory and small publishers depending on ad-networks to sell inventory, there is a cooperation of sorts, and hence, we get this fast booming small publisher revolution in India.

The key reasons for this fast booming revolution could be bulleted as follows-

Complete transparency through the automated self-serve models.
Relevant and well targeted ads.
Excellent click fraud detection and reporting mechanisms Opens up the small publishers to big spending advertisers who otherwise advertise only on tier-I sites.
Ensures inventory is sold in absence of sales teams.

However, the situation is not all rosy as good as it seems. A careful situational analysis of the small publisher-ad-network industry would suggest that this partnership is still in its infancy and will take time before it grows to become a potent force as it’s in USA and other developed markets where SMEs are an integral part of the ad-market.


If we do an EIC (Economy-Industry-Company) analysis based on the report, these are extremely positive signs for the economy. Internet has not only reached the masses, rather it has got them involved and the Web 2.0 concept is a definite success today. From an Industry standpoint, the base is ever expanding with innumerable publishers coming in and creating valuable inventory. Ad-networks are the likely beneficiary of this, and this is where Horizontal ad-networks are creating excellent brand-building inventory in the market. From a Company viewpoint, Tyroo stands to be one of the biggest gainer out of this boom, with its inventory accumulation currently beyond 3 Billion impression, and expanding every day, helping the small publishers build that value chain, and creating for advertisers, an unparalleled inventory across genres.

Wednesday, May 28, 2008

Ad-network storm in India

Ad-network storm in India

A swarm of ad-networks coming across verticals, accumulating inventory through various exchanges and potential tie-ups has warmed up this, rather innocent looking (a year ago that is) part of the Internet advertising industry. Earlier seen as an industry where buying across the Tier-I websites, Rediff, Yahoo!, MSN among others was the key to campaign performance, the situation has now changed drastically. However, it’s begun very recently with almost each interactive agency announcing their own ad-network coming in to the market. However, a very key component missing in many of them, which every ad-network needs to look forward to is technology, which is the key differentiator in this business. One needs to understand that the success of the best of ad-network companies, including Google has come through its excellent technology and self-serve models. It’s the back-end tech-team that determines the key competitive advantages that ad-networks might leverage in the market.

Current Indian Scenario

A detailed look into the market reveals the following ad-networks operational\getting launched in India-

1. Tyroo
2. Google Adsense
3. Tribal Fusion
4. Advertising.com
5. Axill
6. Integrid Media
7. Ozone Media
8. Komli
9. WebChutney
10. Interactive Avenues
11. Paypod
12. Contest2win
13. Adwale
14. DGM
15. Publicitas
16. NDTV Media
17. Ibibo
18. Ad-Chakra
19. Ishir Infotech

One definite conclusion to come out of this is the bright future of ad-networks in India, and this is what’s tempting all the Internet companies to launch an ad-network. The current market scenario is now moving towards where the US markets were a few years ago, with ad-networks coming up left, right and centre. Presently US has more than 200 ad-networks with very less, if any differentiation between them. This is where the role of technology becomes crucial, in providing top-ups over the current system, and building a competitive edge over others.




Where is this ad-network storm moving to?

In desperate efforts to build competitive advantage, ‘Verticalisation’ of ad-networks is happening in India, with category focused ad-networks coming in, aggregating inventory across genres. Another stream of ad-networks is the performance networks, working mostly on CPA models for Finance, Matrimony and Travel portals. And the last and the toughest to execute strategy is one of Horizontal networks, which build a huge network across all genres, trying to work on both Premium and Performance business models.
Inspite of all the competition and new developments happening, ad-network industry can be safely concluded to be still in the initial stage of PLC with ad-network spends on the lower band of the budgets, but the industry is definitely growing (Approximately 160%), and that too at more than double of what the internet advertising industry is growing at.