Publishers and Advertisers have the same story to say in India. That Google is killing the innovation in the market. That it controls 80% of supply source outside of Facebook. And almost all big media buys are going through it.
This is driving the competition (local ad networks) out of business. This is also delaying the adoption of programmatic buying; Google itself sells its inventory on performance and because supply (publishers) follow demand (advertisers), they are forced to accept lower incomes given by Google.
The big issue is that Publishers in India do not generate the kind of revenues through digital advertising that is required for them to survive and scale and the subscription based content market is really unknown. Unless like the Tata’s and Reliance, you’re willing to sell content through prepaid reloadable cards.
Consider this: When was the last time you’ve heard of a runaway media success from India? A service like buzzfeed, Youtube or a platform dependent on digital ad revenue. I have heard of none. Most of the up and coming media companies or artists are sub platforms within Youtube, where they are at the mercy of Google and their absurd terms.
Indian advertisers mostly asking for Cost Per Acquisition (CPA) or Cost Per Download(CPD) are not helping either. But of course, they want what they want. When the whole world is figuring out how to leverage artificial intelligence in automated buying and driving such results, Google simply uses its clout (and lower prices) on the adwords platform to help get those results. Thus, the effective CPMs (effective Cost Per Millie or eCPMS) — a metric used to measure the money earned per thousand ad impressions, in India are amongst the lowest in the world (< $1.00). Mobile impressions are even cheaper. Video is also at an absurd ($2.00) whereas the same video CPMs are at about $10+ in Australia.
Google, for the most part thus operates with lower cost as its competitive advantage and with its stranglehold in the market is sounding the death knell for many a publisher.
And because they don’t have a choice, most publishers still just plug into Google Adwords or go to the other extreme of generating direct sales. Neither approach works well. Ad agencies’ digital budgets therefore are mostly confined to Google Adwords. Boutique ad networks and focus on video gives publishers some additional advantage but then again, it is not enough.
Ad networks in India therefore are really a non entity, except those who have gone global. Ad driven media platforms are non existent and it would be very hard for an India first, global digital company to emerge from such a non competitive scenario.
And, India focused media businesses are either never born or are born to die because ad supported model in India is not mature yet and neither are subscriptions; And Google’s monopolistic situation presents itself as extremely anti-competitive marketplace.
So how does one navigate this Google dominated, commoditized media market? How can companies compete with Google? I have a few ideas:
Build an India Focused Ad Marketplace
I think for starters., many of the top media houses like The Hindu, Times Group, NDTV amongst others should set up their own private ad exchange, or the equivalent of a stock exchange (for advertising) in India.
Many detractors might say why an India specific exchange. Well, if India can have its own credit card processing system…it can also have a India focused ad marketplace.
This exchange could be partly owned by many of these players but operate in the best interest of both the advertisers as well as publishers in India.
If there are doubts about execution or technology, perhaps they can strike a deal with some of Google’s worst enemies in the marketplace? Facebook or Appnexus are two names that I would suggest. With the size and scale that both of these companies operate, it would be a matter of 18 months before the publishers wrest control of both supply and eventually demand from Google.
Invest in more Indian Ad Tech Start ups
It seems that investors are content in putting money in eCommerce company and taking 10–30% of all that investment and putting it for inorganic acquisition of customers. Why any of these investors or their portfolio has not invested in ad tech is something that I do not understand.
Publishers should look to programmatic / other partners for monetization
I don’t understand why every publisher only wants to work with Google. Why don’t they try to work with Appnexus, Pubmatic or Rubicon Project. Why not work with Millennial Media or InMobi for mobile?. I think it is really important for publishers to consider other players more seriously. Publishers in the US have already started doing that and are driving media through private marketplaces, deal-ids and a host of other innovation in programmatic buying and such efforts are showing results.
What’s stopping Indian publishers and advertisers? I think it is both the fear of the unknown and too much reliance on Google.
Closing thoughts
Google’s ad revenues in India, estimated to surpass $1B. I can also confidently predict that this market will grow 10X in the next few years. Media companies must act now or they will have to continue to to deal with an undesirable market scenario as it is today.
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About the Author: Asif Ali, is the CEO of Reduce Data (http://reducedata.com), a programmatic advertising platform based in Mountain View, CA with Offices in India
Write to azifali@gmail.com if you have questions or comments relating to this article.
