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IndustrySpeak: Digital media remains buffered from market meltdown

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IndustrySpeak: Digital media remains buffered from market meltdown

With India, too, in the grip of an economic slowdown, the worst since 1930, that is affecting businesses and markets worldwide, companies here are taking measures to safeguard themselves. India’s digital media industry, which accounts for a mere 2 per cent of total media spends, is largely unaffected – so far – from the effects of the slowdown.

With more and more consumers, particularly the youth, shifting to digital media for all their needs these days, the sector is looking up. Moreover, the entry of IPTV (Internet protocol television) will also give the much needed boost to digital media. It is also projected that Internet search and mobile services are expected to grow by 60 per cent and 80 per cent, respectively, in 2008.

According to media observers, digital media in India being at a nascent stage, is largely buffered from the global economic slowdown. Some are also of the opinion that if any medium is likely to be benefit in the current scenario, it would be digital media. The observers also added that new entrants might find it tougher, and unless they came up with the right differentiation, they would not be able to find a place for themselves with the consumers.

exchange4media spoke to industry players and media agencies to find out how the digital domain is coping up

The impact

Anurag Gupta, CEO, DGM India, said, “Companies partnering with the US are seeing a slowdown. The digital medium will be the least affected in the current economic slowdown as it has the least penetration in India and only around 3 per cent of the advertising size, therefore, I believe that the digital media will not suffer much. At the end of the day, everything is performance oriented. The advertisers will always go for a performance-driven market and digital is strong on performance.”

Sandeep Singh, Co-founder and Business Head, Quasar Media, observed, “Digital media in India is still at a nascent stage, though we are witnessing a lot of new ventures in this medium. Like any other medium, even the digital medium will slow down, but the slowdown will certainly not be as big as that in television or any other medium. The digital medium will benefit in terms of immediate returns as it helps one target a specific group and not necessarily the masses, making it easier for the advertisers.”

Viren Popli, Senior VP - Mobile Entertainment, Star India, was of the opinion, “Keeping in mind the market meltdown, people will definitely move towards digital. They will be willing to spend more on the digital media as it is measurable, and this is the time when people will experiment with the medium, and because the industry is less than half a per cent of the market share, we are not very worried about the effect the global economic slowdown will have on the medium.”

On the other hand, Amar Deep Singh, VP, Interactive Avenues, said, “There is a definite slowdown across media. In the case of digital media, given the stage it is in, it is not seeing the kind of growth it was projected to grow at. In India, digital spends are still likely to grow at about 25-30 per cent in 2008-09 as compared to 50 per cent that it was projected to grow at. In the US, the digital medium is satisfied with no cut in spends as against drastic cut in spends across traditional media.”

According to Amit Tripathi, Managing Director, Id8labs, “There is a harsh probability that people will shift their deposits from mainline, where there has been an evident drop in ad spends, to the digital medium because of the accountability of the platform. Secondly, it is the financial services that are the large spenders in the online space, and the maximum part of the spending that these sectors do has been in the third and fourth quarter of the year, that is, October to December and January to March. Therefore, the exact impact of the slowdown would be evident only when those quarters start. As of now, all we can do is wait and watch.”

The scenario in 2009

On the shift in ad spend to the medium, Tripathi said, “The industry will be about Rs 1,000 crore by December 2009. When the mobile share of the advertising revenue grows – which it will perhaps in a year from now – the industry will grow even faster, because mobile as a platform would be the tipping point as far as the online space is concerned.”

Star India’s Popli said, “I believe the medium will do extremely well in the year 2009. But the cost of operation will go up and the growth of the medium will remain unchanged. However, the challenge is that today’s scenario is fairly uncertain. Companies largely into technology are more likely to see more difficulties.”

Interactive Avenues’ Singh observed, “Advertisers have been using the digital medium for customer acquisition, which is good for the medium since the budgets for customer acquisition come from the sales budgets and not the marketing budgets, and as long as the cost of sale is within the permissible norms, sales budgets are infinite. In times like today’s, where all advertisers are looking at cutting marketing spends, Internet spends have not been reduced. So yes, the digital medium will definitely benefit from this economic slowdown.”

What media agencies have to say

Despite the economic meltdown, there is a growing clutter in the Internet market. Media observers believe the medium is still young and has enough space for more players to join the fray. However, it would be difficult for the new players in terms of creating differentiation in their content.

According to NP Sathyamurthy, Joint President, Lintas Media Group, “From an advertiser’s perspective, the Internet is still at a nascent stage and, therefore, has room for more players. I believe that over a period of time, when the large players reach the highest growth point, they will then get into consolidation mode.”

Rajneesh Chaturvedi, National Director, MEC Access, was of the opinion that Internet as a medium in India was getting fragmented as more and more players were joining the fray. He added, “There is certainly room for more players, and the more the players, the more would be the competition, giving rise to better content and quality of the space.”

Speaking on the new portals being launched, Chandradeep Mitra, President, Mudra Max, opined, “The Internet is still in its nascent stage and is set to grow even further. I believe, it is going to become tougher and tougher for new entrants to make a mark in the Internet space. Internet penetration in India is still very low, and unless the new players had new applications or something unique to offer, they would find it difficult to exist.”

Being a measurable medium and a more direct and specific one, advertisers are more likely to increase ad spends in the digital medium. The year 2009 will surely be the year of the digital.

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