Why are you bullish on apps?
The storage capability on devices has doubled from 30 gigabytes in 2016 to 60 in 2018. As a result, app sizes have grown almost a 1,000 per cent in the past four years. Most popular apps such as Uber, Netflix, Ola, and Gmail have grown by 10 times in size. PubG has 28 million active subscribers in India, which is a heavy app. They offer better standards and monetisation for native advertising, with laser sharp targeting.
You say that OTTs will get a lion’s share of the ad pie (see chart).
The numbers for each of these over-the-top (OTT) players are similar to any large digital publisher in the news, technology or sports category. More importantly, these are doubling every 3-6 months. All the news people took 10 years to reach here, so it stands to reason that OTT will overtake them. In most other countries, there are different categories like lifestyle etc. In India, entertainment becomes an alias for any non-existent content category. OTT delivers the best of TV with the capability to precisely target viewers down to the zip code level. Also, OTT players are distributed across age groups and genders, lending themselves well to mass as well as targeted advertisers. For example, Netflix has a larger share of younger audiences compared to others, whereas Voot really kills it when it comes to attracting women audiences.
If Netflix were to try an ad-supported model, it would pilot it in India. YouTube is one of the strongest brands and the trends of various channels under YouTube give a clear sense of audience preferences. These are some of the largest YouTube channels in Asia. Their reach numbers are astounding.
You have suggested a coalition of publishers for tackling the duopoly of Google and Facebook (see chart).
I am not proposing a coalition, only saying that the possibility of creating one is not-so-distant, given the advancement in ad platforms. Each (digital) publisher has its own set of loyal audiences that do not overlap largely. I gave the example of some of our regional clients. If they combine their audiences, it is over 100 million with minimum overlap. Today, the programmatic platforms enable the possibilities of such a coalition. The Guardian spearheaded a programmatic ad sales network, called Pangea that pulled together CNN International and Reuters. Last year eight of the biggest German publishing groups — including Business Insider- owner Axel Springer, Bertelsmann, and others — pooled audience data to compete with Facebook and Google on the ad-targeting front.
If the online is doing so well why do CPMs not match up? (CPM is cost per thousand people reached)
Currently, publishers have spent a lot of time in building audiences. Hence, (ad) inventory is based on volumes not premium. A lot of effort goes into managing yields. Categorising inventories by various quality parameters of viewability, brand safety can help publishers build a variable CPM model in growing effective CPMs.