The OTT market in India will grow at 21.8% CAGR from Rs 4,464 crore in 2018 to Rs 11,976 crore in 2023, according to PwC’s Global Entertainment & Media Outlook 2019–2023. Unlike global players like Amazon Prime and Netflix, India’s home-grown OTT platforms are spurred by advertising. In fact, some of them have really risen to the occasion with media planners indicating that Hotstar is the single largest platform for advertising today after Google and Facebook in India. But have the others caught on to the bandwagon just as fast? What kind of scope do OTT platforms provide to advertisers today and what are their limitations?
Rajiv Dingra, Founder and CEO, WATConsult says, “The percentage growth in OTT advertising on a year-on-year basis would easily be in the range of 40%-50%. Digital advertising itself is growing by 30%. Within that, Hotstar would be Number 1, clearly because of cricket. That’s a huge money-spinner and a rough estimate would say they take up 40% of the OTT spends. Then there are others like Voot, SonyLiv and MX Player. But OTT players are fragmented. Even in five years, I don’t see their share to Digital advertising growing to more than 20%.”
Talking about how Hotstar has a clear advantage within OTT players, Suraj Nambiar, Managing Partner & Media Head, India, Tonic Worldwide says, “From an advertising revenue point of view, Hotstar will take a lion’s share of the OTT spends, easily around 50%. Of course you have to exclude YouTube from the equation. If they have cricket or live shows happening, they would dominate it even further.” Karan Bedi, CEO, MX Player says, “Today, money is moving to Digital quickly. The country already has 450 million 4G smartphones. On the other hand, India has 200 million TV screens multiplied by ‘x’ number of people in a household who watch them. But while TV mostly involves family viewing, OTT is for individuals, and thus great from an advertiser point of view for targeting, addressability and ROI. It is not surprising thus that MX Player has 175 million monthly active users, and growing by a couple of percentages per month. We are now the second largest OTT platform in the country on pretty much every metric.”
Talking about the kind of advertising revenue growth that they have seen this year, Akash Banerji, Head, AVOD business, Voot says, “Our ad growth numbers are easily in excess of 2.5x this year versus what we had seen last year. The digital video business in India including YouTube is around Rs 3,000-3,500 crore strong and it will reach close to a billion plus dollars in the next two years. Video as a percentage within digital advertising is only going to grow. And once that happens, then Voot being the second biggest premium AVOD platform in the country, would stake its claim to the right revenues. Voot is one of the biggest OTT platforms with respect to sheer watch time which eventually leads to more inventory and more opportunities for the advertisers to put their ads. So we are talking about really big numbers from a category point of view.”
Most digital heads have pegged the OTT advertising spends at 10-12% of the Digital advertising spends (excluding YouTube spends). Tanmay Mohanty, Group CEO at Zenith India and Head of Global Partnerships at Publicis Media India says, “One of the primary reasons for increase in OTT advertising is the option to view the same TV programme that you have missed on TV now on Digital, reducing the need for appointment viewing, so we are seeing lot of TV plus OTT plans required by clients. Just TV plans won’t give the advertiser as much reach. The ad spends on OTT would be around 7.5% of Adex, and as far as Publicis Media clients are concerned, it is actually around 12-13% of the total ad budget. But if you remove spends on YouTube from it, it would go down to 2-3% of the overall Adex.” In fact, every big broadcaster in the country has realized that OTT is going to bring the next big advertising wave in the country and has started their own OTT platform in response. Amaresh Godbole, CEO, India, Digitas says, “We have all seen how globally Disney has packed up all its inventory and launched Disney+ and that tells you about the power of OTT platforms. In time, you won’t be able to distinguish between what’s TV and what’s OTT because people are watching OTT on their TVs today with the use of Firestick; eventually it will become a seamless experience. In no time, you will see a good part of your TV and Digital advertising budgets being diverted to OTT. It is a category sitting at the cusp right now.”
OTT OVER YOUTUBE, FACEBOOK, TV?
Planners say that advertisers line up on OTT platforms for spots on episodes of Koffee with Karan and similar shows, even if it is 20 weeks late. And this includes handset providers, travel-related brands, alcohol brands, etc. Say, if a brand selling household products wants to target women, then apart from typically advertising on GEC channels on TV, they can extend it to similar shows on OTT platforms or even repeat of the shows on TV on catch-up TV, which they can’t do on YouTube or Facebook. So that is one way of building incremental reach.
Vishal Chinchankar, Chief Digital Officer, Madison Media says, “A decent amount of budgets are shifting from Television to OTT platforms because at the end of the day, it’s all about the same content and the same screen. My sense is that currently we are operating at roughly around Rs 1400 crore, excluding the spends on YouTube.”
Yet there are areas where OTT traditionally didn’t do better than its counterparts, like amount of data gathered on consumers for better profiling and targeting. Banerjee says that it is no more the case: “YouTube, Facebook can give a very detailed understanding of the audiences, their persona, age, gender, psychographic profiling, shopper behaviour, etc. But most of the OTT platforms including Voot in the last two years have really taken a lot of steps with respect to integrating new age ad tech, technologies, integrating Data Management Platforms (DMP), finding ways and needs to enrich the data. So, the kind of understanding of the consumers that today OTT platforms have is no way lesser than what a YouTube or a Facebook would have.”
What’s also interesting is that OTT players like Hotstar are bringing together the upper funnel of marketing where reach, frequency, awareness and all kinds of brand metrics become important, with the bottom funnel that is about action, eg: a platform like Flipkart, which also has immense data on shopper behaviour. Those are the kind of partnerships that one will see in future to beat the narrative of a Facebook or Google which till date dominate a good 70% of the digital advertising market. Meanwhile, e-commerce shopping platforms like Amazon have already made a significant dent in the ad revenues of the two giants in markets like the United States, for starters. OTT in India has the potential to do the same even though there is no matching YouTube and Facebook in scale in India yet. Gurjot Shah Singh, SVP and National Media Head, Dentsu Webchutney talks about another interesting phenomenon in the OTT space: “Flipkart has come up with its own content series but it is not competing with Hotstar or SonyLiv, but simply creating that content to increase the stickiness on the app and to increase the time spent on its platforms. Zomato has done the same. Such content players are also sprouting up in a big way. OTT players like Voot have come up with progressive web apps to tackle the problem of low space on mobile phones in smaller cities where they don’t have to download the app but will get the same experience, as also function well in 2G and 3G networks.”
BRAND SAFETY AND WALLED GARDENS
An advantage that OTT platforms have over Facebook and Google is brand safety, because the content that goes on such platforms is already checked and authorized. So a situation like in 2017, wherein Unilever threatened to pull out of YouTube after the platform was accused of not being able to control ads being shown against inappropriate content, can be avoided. Latish Nair, Chief Digital Officer, MediaCom explains, “Video is till date dominated by YouTube but then the quality of content against which the ad is playing emerged as a challenge a few years ago. Then, viewability became an issue. People were also skipping ads. What OTT probably solved is the guarantee of quality content to the advertiser. Going forward, I may move exclusively to Hotstar because of completion rate, stickiness of the content, brand safety, catch-up TV on OTT. So YouTube commands a share higher because of the user population of that platform. But, today OTT cannot be ruled out either.” However, many OTT platforms are still heavily dependent on Google ad networks and the others for selling ad space. Uday Reddy, Founder and CEO, Yupp TV explains, “We have many big brands that advertise on our OTT platform coming in from various ad networks. Like in India, we go through Google, etc. We have not started taking any inventory directly. To do that, we need to get a wider reach first. Currently, we have 5-6 million monthly active users worldwide, and 4 million probably from India.” However, Vishal Maheshwari, Country Manager, Viu India explains why that is not a reason to worry about, “Five or 10 years ago, everybody was trying to create their own ad platforms, their own serving engines, data sources, etc. Now, the trend is to look at partnerships and collaborations. For instance, we at Viu actually use the Google DSP platform as a primary ad serving engine which comes to us with all the technology, ad formats, etc. that are actually available to the mother company, which is Google. If you are talking about things like data insights, then we also have Facebook SDK that is built into our app, which actually leverages all the data and insights that Facebook has, to be able to deliver relevant advertising on our app. In addition, you can actually resort to partnering with a DSP or data sources to fill the data gaps for better targeting and insights. All respectable OTTs have all these components built into it. As far as functioning independently is concerned, if you have two legs, why would you want to walk on one?”
BOON FOR REGIONAL BRANDS
OTT provides a great option to brands that are very regional in nature, because they can target customers based on geography and wastage becomes significantly lower as compared to a TVC which is more of an option for a pan-India brand. Also, because the response is immediate, an advertiser can change creatives, use different languages for targeting, change budget allocation immediately based on the performances of the platform, unlike in the case of TV. According to the FICCI-EY Media & Entertainment Industry Report 2019, overall consumption continued to increase on video OTT platforms in 2018, with regional consumers driving growth and it is not surprising thus that OTT players like Hotstar, Zee5, etc., have been focusing heavily on regional language content. Several regional OTT platforms catering to regional languages like Hoichoi, AddaTimes, Sun Nxt are getting substantial viewership. Uday Sodhi, Digital Strategy Consultant and former business head of SonyLiv, says, “At the end of the day, you are working on a 40,000 people sample for 190 million Television households, and calling that a third party metric. Instead, on OTT and Digital, you can track every single click, there is far more measurability. Similarly, if you run ads in three newspapers, you won’t be able to figure out which one gave you better performance, neither can you say what is the profile of the customer reading the Times of India or the Economic Times, unlike what an OTT platform can do today. Not surprising then that you are seeing brands like Swiggy, MakeMyTrip, Flipkart, automobile brands and financial services spending a lot more on OTT platforms than earlier.”
ACCENT ON ORIGINAL CONTENT
Most OTT platforms are trying to create a niche for themselves in different categories by creating original content. While most of it has been open to advertisers selling spots, content integrations will become the way forward. Anand Chakravarthy, MD, India, Essence says, “Advertiser-funded programming is now seeing a resurrection on OTT platforms because it’s too expensive to create your own Television show. Additionally, OTT platforms have become an extension of the larger content strategies of brands outside of their own YouTube channels. For example, if a brand spends a lot of money creating a branded content video during Diwali, the message will be relevant for just four weeks. But with OTT platforms beginning to host this content, it is giving people the ability to watch it year-long, providing branded content a larger shelf life.”
As per industry experts, a majority of the 30+ prominent OTT platforms in India today have less than 15% of their revenues coming from the subscription model, so they are massively dependent on advertising. The OTT revolution in India today is just 3-4 years into the making. According to the latest report published by KPMG India, we will have around 500 million online video subscribers by the financial year 2023, making the country the second-biggest online video market in the world after China. At present, India’s online video market has around 300 million user-base. The growth has mainly been driven by original and exclusive content offered by multiple players. Only when the figure goes north of 500 million can we possibly say if India will also see China-type revenues in OTT advertising and also if it will be in a position to challenge Google and Facebook in the country.
WE OFFER ADVERTISERS A COMBINED SOLUTION THAT STRADDLES TV AND DIGITAL: UDAY SHANKAR
BY RONALD RODRIGUES
At the launch of Hotstar’s India Watch Report 2019, Uday Shankar, President, Walt Disney Company Asia Pacific, Chairman, Star and Disney India, commented on the opportunities being offered to advertisers through the digital platform. “With digital platforms, viewers have become seamless in viewing content on TV and also indulge in private viewing on small screens so the business models need to dramatically evolve in line with it. We have started offering advertisers a combined solution that straddles TV and digital. If viewers are transiting from one platform to another, from one screen to another, then why should the advertisers not have the same flexibility? This is going to be the path for the future,” he said.
“For advertisers, all kinds of targeting and segmentation can be done within the legal frameworks of technology and privacy policies. I do not think digital will overtake television. Even today, most advertisers buy both television and digital. As we go along, I think both will come closer because the players who have their presence in both digital and television will offer solutions or commercial arrangements,” he added. “In the future, with digital we will get a better opportunity to target and segment the audience. The whole settlement for advertisers will become a lot more seamless. People will not have to go and shop for various things in different shops as a lot of options will be available.” He pointed out that one big limitation for an OTT platform is that the measurement system is still not doing justice to what is happening, how people are consuming content and what is the accurate data. “When we are trying to shift consumption habits and content consumption drive, it is going to be an expensive business,” he noted.
Some key highlights from the report:
Users don’t conform to stereotypes
• 63% of the total online entertainment consumption came from non-metros. Lucknow, Pune and Patna surpassed Hyderabad, Bengaluru and Kolkata in video consumption
• Men have as high affinity to family drama as women; More than 40% viewers of Family drama are men.
• 45% of total entertainment consumption came from women (3.2X growth in video consumption by women compared to last year)
• 41% of Game of Thrones viewers also watched Hindi family dramas
Regional languages travel the distance
• More than 40% video consumption came from regional content
• Tamil, Telugu and Bengali are the top regional languages. In fact, Bigg Boss Tamil is the highest watched entertainment show having beaten all the Hindi TV shows
CHALLENGES IN BUILDING AN OTT ADVERTISING SYSTEM
There is no doubt that OTT platforms have changed the way people consume content in the country, with a fair number of people in the urban areas even going to the extent of deactivating their DTH connections, and switching to OTT platforms for entertainment. Lack of a common industry measurement metric is creating a problem for OTT players and advertisers alike. Some media planners claim that the big OTT players are also not okay with integrating tools on their platforms for measurement because they don’t want the numbers tracked by an external agency. Others say OTT platforms leave them with little control on the campaign in the absence of a self-service platform on the lines of YouTube and Facebook. Vishal Chinchankar, Chief Digital Officer, Madison Media says, “The kind of control that we have is very limited to the hygiene part, which is buying, targeting, frequency capping, viewability and brand safety. I can’t manage my SOV (Share of Voice) etc., because at the end of the day. I am still relying more on the platform data, because there isn’t any system which throws up all the data at my face nor is there any third party data, like from a BARC for Television.”
Anand Chakravarthy, MD, India, Essence, however, says that OTT platforms are slowly addressing that problem, “Because most OTT platforms are not self-serviced, fundamentally we have to let them build a plan, and rely on them for execution as well but it’s changing quite rapidly as brands like Zee5 and Hotstar are investing in better quality targeting capabilities on their platform, where now you can target specific cohorts of audiences, do geo-targeting. For them to really build a strong advertising ecosystem, they will have to invest in technology and tools and platforms that allow their ecosystem to become more friendly for advertisers to use in a meaningful way. Very soon, you will see some of the key OTT players launching their own self-service platforms.”
ZEE5 is one of the few platforms which earlier this year introduced third party measurability in OTT through integrations with Moat & Nielsen DAR, to offer result-oriented campaigns to advertisers. Taranjeet Singh, Chief Revenue Officer and Business Head, ZEE5 India explains, “We are one of the few platforms who offer third party measurement on our platform. We have already integrated Moat and DAR and we would be more than happy to partner the industry and probably also lead the conversation when the time is right to set up a unified measurement system. As a brand for us, measurement and transparency are two key values with which we are building our ad platform. And we have already showed how committed we are to the cause.”
The head of a media agency who did not wish to be named said, “OTT platforms don’t like to share data on the customer who viewed the ad on their platform with us. Now the problem is, my client wants an OTT plan which will include various platforms, just like the TV plans we have, and in the absence of data on the consumer who has watched the ad on one platform being shared, I will be showing the same ad to the same person across five different OTT platforms which results in wastage. It is okay when you are going with a single large OTT player, but if you are taking a bunch of OTT platforms to advertise, it becomes a problem.” On the other hand, Priti Murthy, CEO, OMD India suggests, “There is a big opportunity for the OTT players to grow from the existing market by strongly putting in a TV+ measurement perhaps like how YouTube did. If you send a TV plan to YouTube, they can tell you what’s the incremental of TV plus YouTube. So, if the same methodology applies, advertisers will be more confident than they are currently to enable us to push OTT up in the ad spends.”
OTT is a significant platform for brand-building, but should also be seen as an active integration platform. We are sitting at a very high awareness level; however, we intend to build more on brand relevance by advertising on OTT. We have plans to initiate our investments on OTT from next year as we will do a build-up before we start having newer products joining our portfolio. ROI on OTT is largely about reach. While YouTube and Facebook provide us a bigger reach, the quality of audience is better on OTT. OTTs can improve by churning more and consistent content in the lifestyle space
Managing Director, Harley-Davidson India
For brands like ours, which do not have a strong national footprint - we don’t operate out of 5,000 towns - OTT works because we can target a few cities and demographics very sharply and selectively. So, we do use them as a very active constituent for marketing. For products like cars where our TG is a little bit more affluent, Hotstar works well. But, we are also now equally invested in growing our auto and moto portfolio which are low cost where a large chunk of new entrants will come in and their viewership lies in Zee5, SonyLiv, etc.
MANISHA LATH GUPTA
Marketing Director, Uber India & South Asia
We have increased our budget on Digital three-fold this year. We got an opportunity and strategically decided to advertise on an OTT platform, basically Hotstar during the IPL which hugely benefited us. Basically, we advertised our men’s grooming range because it made sense to showcase the range during cricket matches. But this was just advertising through spots, we are also looking at content integration on OTT shows in a big way. We will try, learn and adapt as we move forward. But will only dabble with it where the fit is right.
Vice-President, Personal Health, Philips Indian Subcontinent.
Digital is growing and it’s important for everyone, and especially for Kia because these are the preferred means of communicating with the younger audiences. We are looking at OTT tie-ups now as part of our overall digital strategy. We have achieved a high ranking as far as our YouTube videos and our digital campaigns are concerned. We are very focused and are very proud of what we are doing. We are focusing mainly on the Digital platform now.
Head Marketing and Sales, Kia Motors India
About 40% of our ad spends are on Digital. We did a couple of controlled experiments on Hotstar but the jury is still not out on how do we measure the return on those investments. We tried a few things but the ROI does not add up; the Hotstar team asks you to look at it as something that’s not Digital but slightly closer to TV, but actually we are able to measure TV better than we are able to measure Hotstar, not in terms of inputs but in terms of output. OTT is a great bet, but not for performance. So, we have not had the best overall experience on OTT.
VP, Marketing, UrbanClap
In a media dark place, a dark market like ours in India where alcohol brands can’t directly advertise on TV, we get huge benefits from being on OTT platforms. Then we come at par with any other FMCG brand when it comes to advertising media spends. About 20% of our overall advertising spends are on OTT. We create our own content, participate with content creators and even advertise on Hotstar. But mostly our strategy is content-driven. We see what OTT platform is doing well in what genre and then accordingly invest with them.
Senior Brand Manager- India & South East Asia, Bacardi India Pvt Ltd