Ajit B: Internet industry not speaking the language understood by advertisers
03 July, 2009
by Satrajit Sen
According to Ajit Balakrishnan, chairman and CEO, Rediff.com, the Indian internet industry is not speaking the language that is understood by advertisers. To make his point, Balakrishnan said that Rediff MoneyWiz, the personal finance service from Rediff.com, has four million active users, whereas the CNBC TV18 channel has five million viewers. But MoneyWiz does a business of Rs 1 crore from advertisements, while CNBC TV18 does Rs 200 crore business.
“Advertisers understand Gross Rating Point (GRP) which is the television rating system. We need a uniform system of measurement for the internet which can also be compared to the television to estimate the reach of both the mediums,” Balakrishnan said while delivering the keynote address at the 5th Digital Marketing Conference organized by Internet and Mobile Association of India (IAMAI) in New Delhi on July 2, 2009.
Speaking on the role of IAMAI in strengthening the internet medium in the country, Balakrishnan suggested that the association should work in tandem with the Government of India. “We have a new government and the new secretary (R Chandrashekhar) is someone who has tremendous knowledge and interest in the internet domain. The Ministry of IT has an annual budget of Rs 160 crore and we need to get Rs 30 to Rs 40 crore out of that.”
Emphasizing the point of garnering governmental support for the internet industry, Ajit Balakrishnan stated that even in the West the basic internet infrastructure like the http protocol and the email service was developed from the Defence budgets and later came into the public domain. “Also, the IT services industry in India saw a boom only after the government supported it with tax exemptions and other infrastructural support. The government needs to do the same with broadband infrastructure in India as access is still a big hurdle,” he said.
Balakrishnan also pointed out that there is a lack of intelligent domestic VCs in India. According to him, “Most of the VCs in India are investment bankers who have been in the West and hence do not posses operational knowledge. They provide money to young entrepreneurs and then screw them over on exit strategy in board meetings.”
“We also miss angel investors,” Balakrishnan added. “In India, we do not need more than Rs 25-75 lakh of investment to get things running for a seed-stage startup. But there aren’t enough individuals around investing in companies. Also we do not have the option to write off the losses made by the startup that was invested in by an angel.”
Speaking on the importance of e-commerce in India, Ajit Balakrishnan said that a healthy e-commerce scenario can start the cash flow in internet. “India has about nine million credit card users and out of that, only two-to-three million credit card users are using their cards on the internet. This rate is very low and one needs to educate the users about the usability of credit cards on the net,” he said.
Balakrishnan suggested that the gap in credit card penetration could be filled by debit card which has a penetration of over 100 million in the country. “It is important to encourage the use of debit cards online because that is what can propel e-commerce and thereby get more advertisers on the internet medium,” he added.
While talking about the importance of cyber cafes for the growth of the internet industry and the need for an equitable distribution of the VAS (value added service) revenue between telecom operators and content providers, Ajit Balakrishnan said, “In China, broadband cafes built the gaming industry and the Chinese also have a liberal VAS industry where operators give 75 per cent of the revenue share to content creators. Whereas in India, operators do not give more than 16 to 20 per cent of their VAS revenue to the content providers. TRAI (Telecom Regulatory Authority of India) needs to intervene and take the percentage share to at least 50 per cent for the growth of the content businesses,” he added.
Tracing the growth of internet since 1995 to the present day, Balakrishnan pointed out that a decade ago when internet service provider (ISP) licenses were being distributed, there were less than 10 million landline connections in the country. And so, ISPs found it tough to scale up their operations. Simultaneously, mobile became cheaper and widely available and the ISPs never got that much time or investment to build out the internet infrastructure in the country.
Moving forward, Ajit Balakrishnan said that in ten years, India will be the largest internet market and will boast around 300 million users. He also felt that in five years, internet would be accessed more through the mobile devices and local languages will be a key driver to the growth of the internet industry.
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I think the second and the third screen will play an important role in building brands and consumer loyalty going forward. You watch the first screen (TV) from a distance, look into the second screen (PC) from nearer distance (two feet away) and then you have your third screen (mobile) with you 24 x 7 and very close to you. How effectively you use these third and second screens is the way forward for any brand. "
so after that BIG talk at the IAMAI, revenues decline again. forget cnbc. first get back to your own "good old days" (no pun intended) in revenues and then try climbng everest. get your self a new team, ajith, or your talks will remain just that
I don't think it is a matter of Internet sites not communicating with advertisers. Traditional media (television, newspapers) are still used heavily by older demographics, and television remains a great way to build brand identity. Bigger companies also have large advertising budgets that need to be spent. Internet advertising does not always provide enough opportunities to use a massive ad budget - so advertisers turn to the traditional sources to spend the remainder.
Ouch. When an industry champion is frustrated, he can land up killing the industry!
- Selling brand advertising: I am surprised that Ajit is realizing what advertisers want after being in advertising for 25 years, and in Internet advertising for 10 years. Rediff has a big role in getting us where we are - both good and bad. Now we figure out we are not speaking the language of the advertisers!
- Most of VCs are investment bankers from the west!? Seriously out of touch it seems! Ajit please go ahead and name a few.
- Operators "should" give more revenue share - how absurd can this get? Its the job of startups to create offerings that will command more revenue share.
Time to get rediff back on track. Perhaps that will help more to revive confidence in Indian internet sector.
Hmmm, sounds like someone needs to hire a better sales team. This will do more to help sales than any new rating system.
As a buyer, trust me, we know the internet isn't TV, a ratings system alone won't help increase rediff sales figures. Publishers can push traffic around in very manipulative ways - and advertisers want to buy from sites that have more than a high UV figure. I'd focus on driving good consistent traffic to your site, and having good conversations with buyers.
So there are few problems other problems besides adverttisers not understanding that perhaps were missed in this post.
1.part of the problem is also the fact that publishers do not allow third party tracking and reporting or if they do , the billing is still on their own numbers and not on theird-=arty reporting.....totally defeats the purpose of tracking if I have to go somewhere else for billing and another place for reporting numbers.
2.The second main problem is How its been sold. Internet has been sold entirely as ROI medium and that too without putting all the stuff in place. People do not talk about Reach or Frequency or time spent on site, because they do not have all these things in place. No one wants to buy Internet media
3. very Important that no other person will say. CLIENTS DO NOT UNDERSTAND INTERNET. they big wigs in marketing department ( most of them , although I must say some of the guys I have known thru some people have really ramped up their knowledge). So clients do not undertstand and hence are unable to pick whats good .
Many of the internet are not even aware of the Rediff's business portal money.rediff.com. Of the total Rediff visits, about 30% visit for email service, 20% visit on the main website and just under 7% visit the business portal. Users just don't need another business portal, if it is not uniquely differentiable than moneycontrol.com?
Let's face it, the current climate for internet portal companies is a cold one. In the wake of the internet market crash, portal players are taking a closer look at their business models. The pressure is on to transform users into paying customers - converting them into hard cash. While seeking to reduce churn and reach new markets, they are also searching for new revenue streams - ones that actually produce the goods.
The first web portals were online services, such as AOL, that provided access to the web. Others were search engines like Alta Vista and Excite that offered users ways of finding the information they were looking for on the web. But by now most of the traditional search engines have transformed themselves into multipurpose web portals to attract and keep a larger audience. At a consumer internet portal like Yahoo!, a whole host of information and services can be found. Check email, update you investment portfolio, shop for a car or vacation, do research for a term paper or even join a discussion group. Portals users can do it all. For more information, visit this site: http://personalmoneystore.com/payday-loans/no-fax-loans/no-fax-payday-lo...
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