How OTT and e-commerce platforms are challenging Google-Facebook duopoly

In the US, advertisers are expected to spend $4.61 billion on Amazon in 2018, accounting for 4.1% of all digital ad spend. While in India, nearly 15% of digital ad monies can be attributed to the ad revenues of OTT platforms.

The Google-Facebook duopoly is being challenged. E-commerce sites and OTT platforms are eyeing a slice of the ad pie and slowly but steadily eating into the monies that traditionally went to Google and Facebook.

In the US alone, advertisers are expected to spend $4.61 billion on Amazon in 2018, accounting for 4.1% of all digital ad spending in the country. A study by eMarketer expects the spend on Amazon to double this year. In Q2 of 2018, Amazon generated $2.19 billion in ad revenue. The study expects “increases of more than 50% per year through at least 2020, when Amazon will enjoy 7.0% of all US digital ad spending.”

In India, ad-supported Over-The-Top platforms such as Hotstar, SonyLiv, and VOOT etc are quickly gaining ground as reliable alternatives to Google and Facebook. According to a recently launched KPMG Report titled ‘Media Ecosystems: The Walls Fall Down’, nearly 15% of the digital ad monies can be attributed to the ad revenues of OTT platforms. The report estimates the size of the digital advertising market to reach Rs 11,600 crore in FY 2018 and the OTT platforms are expected to earn Rs 1,720 crore from advertising alone.

OTTs the big draw

YouTube is the leading video streaming site in India with 245 million monthly active users (MAUs). It is a highly favoured destination for advertisers. After YouTube, Hotstar is emerging as the undisputed second when it comes to video streaming in India. Hotstar has 150 million MAUs.

Streaming sites like Hotstar and Sony Liv that broadcast sports events see massive traffic during matches. During the IPL 2018, a total of 202 million viewers logged into Hotstar to watch matches. The final match alone had a record number of 10.3 million viewers logging in. Around 70 million users watched the FIFA World Cup on Sony Liv.

Digital media buyers say that on a normal day, Hotstar’s masthead is priced at Rs 15-20 lakh per day. It is important to note that OTT platforms make hay during matches. Like with SonyLiv during FIFA and Hotstar during IPL and Asia Cup. According to sources, ad rates on Hotstar for key matches range between Rs 30 lakh and Rs 1 crore.

Abhishek Desai - Director - Marketing Operations, India, P&G, said that for his brands, the most obvious choices after Google and Facebook are OTT platforms like Hotstar and VOOT and e-commerce sites such as Amazon. He said that he chooses to spend on e-commerce from a sales perspective and prefers OTT platforms because they are not as walled as Google and Facebook and are brand-safe as well.

Hotstar has increased its ad rates following the successful performance during IPL, say media buyers. “I have noticed that some inventory on Hotstar is as much as 1.2 times more expensive than YouTube,” said a digital media buyer who did not wish to be named. Hotstar has emerged as a brand-safe platform that offers curated video content alongside which brands can advertise. “This allows Hotstar the bargaining power to claim a premium for its video ad inventory,” said Gopa Kumar, EVP, Isobar India.

Digital media buyers say that the money being spent on OTT platforms is directly coming out of the money that used to be set aside for Google/Facebook. OTTs have become a marketer’s prime choice after YouTube in particular because the platforms support video ads. Delivering the Subhash Ghoshal Memorial Lecture, Rajan Anandan, VP South East Asia, and India, Google, said that India is turning out to be a video-first Internet market. He said that by 2020, 500 million of the 650 million Internet users from India will consume video content.

The e-commerce story

E-commerce in India is still a relatively small part of the overall retail market, accounting for just over 2% of the retail market. Yet, it is a very viable and sought-after place to advertise for products that are bought online. A study by Isobar India shows that fashion apparel, electronic goods and beauty products are the three most popular categories bought online.

Rahul Vengalil, CEO, WhatClicks, said that advertising on e-commerce sites directly impacts sales while ads on OTT platforms serve the purpose of creating awareness about a brand. Shrenik Gandhi, co-founder and CEO, White Rivers Media, said he has noticed consumer-facing brands that are present on marketplaces prefer Amazon as a platform to advertise after the behemoths of Google and Facebook.

Digital marketers say it is hard to measure how much money is flowing into the e-commerce platforms from brands because the spend most likely comes from the sales team’s budgets and not necessarily the marketing team’s budgets.

The killer combo

It is when e-commerce and OTT platforms work together that they can truly challenge Facebook and Google. To that end, Flipkart and Hotstar have tied up to share data and serve ads on Hotstar.

Explaining the basis of this partnership, Prakash Sikaria, Senior Director, Flipkart said, “As we scale up, we have been trying to figure out how to show relevant ads to customers when they are on the platform and off the platform. The endeavour is to make the shopping journey shorter.” He said that Flipkart does not have video ad inventory and the tie-up with Hotstar gives Flipkart the opportunity to “move from a static conversation to a more engaging video conversation.”

Media buyers have applauded this strategic partnership, calling it a masterstroke. “Marrying viewing habits with shopping content helps understand the consumer so much better,” said Shamsuddin Jasani, Group MD for South Asia, Isobar. He said that more such collaborations where partners share data to better understand a consumer’s journey and influence the consumer at the right time are needed for the industry.

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