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The Meltdown: Digital media no longer buffered; looks for profitability – Part 1

16-December-2008
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The Meltdown: Digital media no longer buffered; looks for profitability – Part 1

The economic slowdown has started affecting the digital media as well. exchange4media had carried a report on the Meltdown and the digital media in October 2008, wherein major players had expressed confidence that the industry was buffered from the slowdown impact. However, in less than two months that scenario has changed.

The impact in the long run

Amardeep Singh, Vice-President, Interactive Avenues, explained, “There definitely has been a slowdown in the spends on the digital media. Some of the online businesses, which were in the valuation game, have now started focusing on profitability. Having said that, the digital advertising industry, which ended 2007-08 at about Rs 550 crore, is likely to grow to anywhere between Rs 650 crore and Rs. 675 crore in 2008-09, so we are still talking about 15-20 per cent growth in an overall market, which is likely to show negative growth. Last year (2007-08), we had estimated 2008-09 to grow at 50 per cent, which has not happened for obvious reasons.”

On a positive note, Pearl Uppal, Director - Sales, Yahoo! India, observed, “Slowdown is unlikely to hinder the growth of digital advertising, as digital ad spends in India have significant scope of growth before it reached an optimal share of the total ad spend. Digital, in fact, is seeing stronger traction from advertisers as they look to optimise and increase their marketing efficacy in the current economic environment. It is a positive move for us in the small and medium business segment as these businesses have a smaller budget, but we have offerings to suit their requirements.”

Rishi Khiani, COO, Web18, noted, “There exists some kind of a slowdown with certain key driving categories like travel and finance being directly hit. However, the online advertising industry has surely seen growth, although, not at the same pace as witnessed before. The larger impact of the economic slowdown has not been too positive. On the other hand, there is considerable talk amongst advertisers looking at the online medium as one of the more cost effective media vehicles available and the real value of the same will unfold soon.”

Sanjeev Bikhchandani CEO, Naukri.com, was of the opinion that, “By and large the impact might be felt in the industry as the marketing spends have gone down. The negative impact will only be felt in the short run because of the slow growth, however, in the long run the category leaders will emerge stronger in the market share while the weaker ones will find it tough to survive.”

Gourav Rakshit, Group Head - Online Marketing, People Group, said, “We have always looked at recessions as a great time to build and consolidate businesses. We continue to focus on what the critical success factors are for each business and strengthen our capabilities that support these success factors – be it understanding our consumers better, building world class products, focusing on retaining and building world class talent base. Keeping focus on these factors and getting through these times gives us a definitive long-term competitive advantage.”

Saurabh Vartikar, VP - Mobile Marketing, Mauj Mobile, added here, “The impact has definitely been positive, but the reasons cannot be attributed to the recession alone. Inquiries from traditional advertisers on mobile and overall digital marketing have gone up by over 60 per cent quarter on quarter for Mauj. These enquiries are from sectors such as realty, banking, consumer goods and retail.”

Also read:

IndustrySpeak: Digital media remains buffered from market meltdown

Tomorrow: The Road Ahead

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