In the first part of the ad networks report, exchange4media had explored the role of ad networks in India and its maturity stage. The second part of the report seeks to find out the current challenges in this medium and how to overcome them, besides the trends to watch out for in 2009-10.
According to industry estimates, ad networks in India is projected to grow anywhere between 20 per cent and 25 per cent of the overall market in the next two to three years. Although this space is projected to take another couple of years to become a mainline Internet vehicle, which would result in ad networks commanding a significant portion of the Internet advertising pie, there are numerous challenges to meet and steps to be undertaken in order to make ad networks grow at a faster rate.
Challenges and trends in 2009
Ratish Nair, Co-founder, Ad Magnet, observed, “The years 2009 and 2010 will be crucial for ad networks and by the end of 2010, or even earlier, we should see ad networks as a common choice in most media plans. 2009 will also see the growth of vertical networks within the larger network. This year, we should see the separation of men from boys in the ad network space.”
Having a different take on the trends, Alok Kejriwal, Founder and CEO, Games2win, said, “Most importantly, I see bankruptcy in ad networks, one reason being delay in payments by advertisers. Secondly, a lot of small players are going to die, so inventory is also going to dry up, therefore, ad networks will not know what to sell because a lot of their partner sites would start under-performing. Thirdly, large ad agencies of the world are now starting their own ad networks, which would bypass these intermediaries.”
Rammohan Sunderam, Founder and MD, Networkplay.in, pointed out, “The challenges today are very different; growth projections, revenue numbers, VC commitments are leading to kill one another for that extra bit. This is where we think we have been very correct, we have set the right expectations, though aggression is being met in style and that’s clearly because we are not playing in the performance space at all.”
“The trends to watch for in 2009-10 will be on the product side with so many ad products being rolled out by various companies. It will be interesting to see if any of those can actually take on the big five and work as catalyst for growth for networks like ours,” he added.
Amar Goel, CEO, Komli Media, noted, “Among the challenges, first of all it is to tell marketers to see the value of ad networks so that they go from the current 5 per cent of the market to 30 per cent of the market share. Marketers should realise that ad networks can most certainly be an integral part of their marketing plan.”
The growth mantra
Kejriwal of Games2win pointed out, “There is heavy investment in technology, but a lot of ad network players do not understand marketing, they apparently know a lot about technology, but not what an advertiser wants. Advertising networks need to do a lot more in terms of less performance ads and more branding ads. In India, performance ads are mainly financial ads and the financial markets are going through real bad times. Today, it’s the Pepsis, Sony Ericssons, and the Nokias that they need to be buying into ad networks in a big way.”
Nair of Ad Magnet said, “For the ad networks to grow, some of the key things required are – reliable, robust and scaled up technology in order to offer advanced targeting features like BT, contextual targeting, etc. These would make advertisers keen to use ad networks as they would be able to target their audience with much higher precision. The ad networks need to be transparent, advertisers do not like shocks, like seeing their ads run on objectionable content, and they should create more valuable inventory so that advertisers see a reason to advertise on ad network beyond just performance-based deals.”
Sunderam of Networkplay.in said, “A lot of people are betting on ad products that supposedly will change the game on the trade side, but the audience growth on the consumer side is also as important. If you get sticky audiences in the torso and long tail of publishers, then you have a clear offering that will be exciting for advertisers to latch on to, which otherwise are pork belly price equivalent in today’s world.”
The global economic slowdown has hit every sector and section of the society, and the ad network space has not remained untouched either. Kejriwal said, “Slowdown has impacted ad networks really badly as they are the first to get impacted, and intermediaries will never survive if they do not provide extraordinary values.”
Nair was of the opinion that, “The slowdown may have impacted ad networks to the extent that if an advertiser is reducing spends, he may consolidate on a few sites. However, at an overall level, given the advertisers’ requirement for more accountable spends, I would think the better ad networks should have benefited from the downturn.”
On the other hand, Sunderam noted, “Slowdown has not impacted ad networks at all, we are growing at a fast clip and we see the slowdown as an opportunity to tap the right advertisers and educate them to ensure they understand the value of audience on our offering. Our results speak volumes of our achievements, and we are seeing absolutely no impact on our business due to the slowdown.”
Ad networks in India need to evangelise itself and educate the marketers and advertisers on their need and the value that they could impart to their companies. Going niche has become a trend in any medium, even in ad networks, and will be the only form of ad networks that will see better results as compared to the horizontal ad networks.
Ad networks in India far from mature, lag behind the US by 7 years