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IDOS 2016: OTT advertising vs TV advertising

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GOA: Is Online Video (read: OTT) advertising eating into TV’s share? That was the question posed  by the final session of IDOS 2016 held in Goa’s Leela Hotel. The obvious consensus answer from the panelists was a big “no” - and it does not take a genius to reach that conclusion.

On the panel were IPG Media brands CEO Shashi Sinha, Sony Pictures Network India (SPNI) digital head Uday Sodhi, Starcom India Group CEO, Mallikarjun “Malli”  Das and Eros Now business head Zulfiqar 'Zulfi' Khan.

“Digital advertising accounts for about eight to nine per cent of total ad spends,”  said Malli. “Most of this goes towards Google, Facebook. Two to three per cent is going towards digital video, and that too most of it is going towards You Tube.  It’s early days yet for the OTT players to have any revenues of significance.”

“Google has played a pioneering role –  the educational and evangelizing approach that it along with YouTube took visiting advertisers and agencies to explain to them the efficacy of using it  platform,” said Zulfi. “The OTT industry is too nascent and new, and has a lot of work to do.”

Sinha pointed out that the disparity in CPMs between television and online IP video is drastic. “Television is being sold on a cost per rating point (CPRP) basis in India today. In most countries, it is on a CPMs,” he said. “The CPMs even for TV are very low, and for online video, even lower. Airtime on television has become a commodity as there is plenty of inventory, but networks have large enough audiences to present to advertisers.”

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Added Malli: “Television also has a reliable currency – BARC – to measure what’s happening to their spends – the reach, the viewership. Which makes all of us in the media and advertising community secure. We can buy across a network and aggregate audience.”

The panelists agreed even though the OTT players are providing very specific - in fact a surfeit of data, enough confidence has yet to be built in among the advertisers. “There’s fragmentation in the OTT community. There are too many platforms,” said Sinha. “And you can’t aggregate enough audiences of significance to allow us to take CPMs up here.”

Sodhi agreed that OTT video platforms had managed to build an active audience of about 70 million. He said: “China’s tipping point for OTT to significantly impact TV ad spends came when the number of users crossed 200 million.  India has to grow. SonyLiv has around around 10 million. Good and stable bandwidth and right pricing  of data are the issues to be dealt with to expand the OTT user base,” Sodhi said.

Malli believed that the audience of 70 million is large enough. “The Times of India has a seven and a half million readership and there is thousands of crores going into the paper.”

Both Malli and Sinha stated that agencies have started presenting media plans which, include TV plus and online video. “That’s a great improvement over earlier. We are putting in money behind online video. But it’s left to the OTT- owner – the broadcaster – to show it as OTT ad spend or TV ad spend. However, to be fair, the sector will grow when FMCGs start putting in their faith behind digital online video,” revealed Sinha.

Then what is holding the ecosystem back? “Most of the robust OTT platforms are backed by the broadcasters,” revealed Sinha. “The leadership is fearful their targeted revenue objectives from television might get impacted if they start shifting the focus more toward digital video advertising. This leadership has to take a hard call.”

He pointed out that BARC - of which he is a technical committee member - is gearing up to measure online video consumption and become the second country in the world to do so.

“We are ready to launch online video measurement  by March 2017. Relevant data is going to be provided by some of our partners in the ecosystem to allow us to provide effective measurement numbers. However, the signal has to come from the broadcast community,”  he quipped.

Zulfi pointed out that Eros Now has around a  million subscribers – split between India and overseas – paying Rs 49 a month for its Bollywood movie service.

However, his view that today snacking was the primary form of consumption of digital video, was countered by Sodhi, who stated  that the SonyLiv audience was sticking around for  around for 16-22 minutes per session.

They all agreed that there is a bright future for digital video advertising. But, none wanted to hazard a guess as to when will it happen. “I have no clue when will the inflection point come,” Sinha said. “It is now.”

Malli too said that he had no clue about it. “Although the stage is set, I can’t predict when a significant migration to digital will happen -- in one, two or three years from now.”

Sodhi revealed that almost 70 million users are being added to the digital video consumers pie every year. “Within two to two and a half years we will have 200 million users,” he predicted. “And that will be a number no one will want to ignore. The advertising tap will flow and flow then.”

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