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Ad networks here to stay, but consolidation needed to reduce clutter – Part 1

10-February-2010
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Ad networks here to stay, but consolidation needed to reduce clutter – Part 1

According to PricewaterhouseCoopers’ ‘Indian Entertainment and Media Outlook 2009’, Internet advertising is projected to grow by 32 per cent over the next five years and reach an estimated Rs 20 billion in 2013 from Rs 5 billion in 2008. Even the share of the online advertising is projected to grow from 2.3 per cent in 2008 to 5.5 per cent in 2013 of the overall advertising pie.

Ad networks in India is pegged at around Rs 30-40 crore and estimated to be around 10 per cent of the entire digital media spend in India. While ad networks are still at its growth stage, some industry experts believe that few years down the line there would be consolidation in the market, which would reduce the clutter.

One of the reasons for the rapid surge of ad networks in India is evangelising, as a result of which marketers began exploring the networks. Another reason that has led to the clutter is the low entry barrier and low investments. Apart from horizontal ad networks, India now has vertical ad networks and online video ad networks, which are taking this growth even further.

The year 2009 has seen some interesting developments in this space. For instance, Vdopia, one of the largest video ad networks and video ad platforms, had announced that Nexus Venture Partners had invested $4 million in their Series-A funding round, wherein this investment would help Vdopia get resources to execute the company’s growth plans.

Komli Media, a digital advertising and technology company, launched an online video ad network in 2009 moving beyond just banner ads. Some of the other ad networks in India are Tyroo, InviziAds.com by Games2Win, Networkplay, and even ibibo, a social networking site, had earlier ventured into the ad network space with ‘adwinks’.

Automobiles, telecom, consumer electronics, financial and online services are some of the active advertisers. And now, FMCG brands, too, are increasingly exploring this medium. In fact, FMCG and automobile brands are the fastest growing categories in online advertising.

exchange4media spoke to some industry players to find out the impact of ad networks on brands and its way forward in India.

Ad networks provide reach

Anurag Gupta, Managing Director, DGM India, explained, “Ad and affiliate networks are growing at a good pace, both in terms of value as well as in terms of share of digital spends. Ad networks provide reach to an advertiser. Typically, a media plan will have direct buys on 10-15-20 websites/ publishers. To gain extra reach, advertisers routinely make use of different kinds of networks, who bring an aggregation of multiple websites, could be thousands in numbers on one platform with one payment mechanism. Also, what is important is that the media bought from networks are far cheaper than those compared to the media buys from the large portals.”

He further said, “The other kind of ad network is ‘Rep networks’. They are like sales houses, representing most of the times, on an exclusive basis, inventories of some publishers. Hence, these inventories are available only through these networks or sales houses. Affiliate networks, on the other hand, provide a platform for getting CPA deals for an advertiser. No one can come close to delivering ROI better than affiliate networks.”

According to Amar Goel, Founder and CEO, Komli Media, “Today, marketers are increasingly using ad networks, ad network. I believe, ad networks are fast becoming crucial in media plans, wherein ad networks have emerged as a great way to reach out to their TG with a lot of interesting customised solutions, performance based solutions, etc. They offer very good reach in the digital medium.”

Narayan Murthy Ivaturi. National Sales Manager, Tyroo.com, noted, “Indian ad networks have a long way to go, because even now in India, a large part of inventories are managed by the large portals, whereas the ad networks are used only for performance driven campaign. Internationally, ad networks are utilised for other purposes as well, which has only started to pick up in India through some networks. However, we still have a long way to go in terms of technology, investments in systems and procedure, and we will have to work hard in order to change the perception of ad network in the market.”

Rammohan Sundaram, Founder, CEO and Managing Director, Networkplay.in, said, “Ad-networks are finally maturing in India, technology does play a role, but cluster creation with audience packaging is flying with the advertisers and that's where we at NetworkPlay have scored. We have a bunch of power brands that contribute to 33 per cent of the Internet audience in India as per Comscore, which in itself shows how Ad-Network as a model in a cluster aggregation format is taking off.”

Where Ad networks scored:

DGM India’s Gupta added, “The evangelisation by different networks in India has made the advertisers aware of the benefits of working alongside these networks. Also, the networks have fundamentally been brought together on one platform disparate inventories from multiple publishers, and made them available under various kinds of packages that can match the targeting needs of an advertiser.”

According to Networkplay.in’s Sundaram, “The factors that have led to rapid surge of ad networks has been evangelisation, gap in supply and demand, availability of desired audiences and massive technology inroads, which have only added to brands understanding the value of the medium to start using the internet in the first place. Ad-Networks are part of the eco-system, which is growing and hence the growth.”

Ivaturi of Tyroo said, “Low entry barrier is one factor, which led to so many ad networks cropping up, investments are low, access to advertisers on a performance bench mark is very easy. These are some of the factors that lead to the birth of so many ad networks.”

The concluding part on February 10, 2010.

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