No service tax on digital advertising, industry experts put forth wishlist for Union Budget 2017

As the first two quarters for the fiscal year 2023-24 come to a wrap, news publishers are not only experiencing tectonic shifts in their print and broadcast media business, but their digital arm too is facing dynamic consumer shifts.

In an increasingly converged world, besides making sense on ROI matrices, digital offers extended reach at a very low cost, an ability to engage with the viewers in a two-way conversation, co-opt them into the content creation process, empower them by giving them a voice and retain them. The cost and business efficiencies clearly operate at many levels, says Sanjay Trehan, a digital and new media advisor.

According to a study by Reuters Institute, India is a strongly mobile-focused market where 72 percent readers access news through smartphones and just 35 percent via computers. However, despite the glittery user penetration numbers, advertisers, it seems, are not finding it worth investing their money in digital news publisher platforms.

For NDTV, the revenue was down by 35 percent in Q1 of 2023-24 due to lower advertising spends both on broadcasting and digital. Nevertheless, despite low advertisement spends, digital business remained profitable. For Network18 as well, revenue was flattish during the quarter as a weak advertising environment had an impact on the digital segment.

Jagran Prakashan Media’s Q1 FY24 digital revenue stood at Rs 14.43 crores as against Rs 16.78 crores in Q1-23. Mahendra Mohan Gupta, Chairman and Managing Director, Jagran Prakashan Limited, stated in the financial results that “Digital business had nearly the same revenue as in Q1 of the previous year partly because of unfavourable market conditions and partly because of inability to monetise the consumer base to the expected level.”

The Indian Express experienced a slowdown in ad revenue in the last two quarters but subscribers and events business performed well, according CEO Sanjay Sindhwani.

Focussing on sector-wise advertisers, Sindhwani underlined that the IT sector, which spends majorly on digital, has been severely impacted in the economic slowdown. The auto sector has supply chain issues where their order books are full but delivery is an issue. Now, because they are overbooked, advertising is not required for them, he said. Edtech is somewhat tumbling now, which has also resulted in layoffs and cost-cuts. In fact, the whole startup sector has been cost cutting heavily. Gaming was still big but has not seen much growth in the recent past due to regulatory issues and their restrictions on advertising.

For Republic, over the past year or so, there has been a significant shift in direct advertising towards digital publishers along with the always-growing network demand, shared Tapan Sharma, Head of Digital, Republic. The network’s revenue has also grown alongside the continuous growth of revenue in the industry.

Sharma believes the drop in advertisers is happening because advertisers and agencies have now become more aware, vigilant, and methodical with digital ad spending and campaign management. They are looking for better Return on Ad Spend (ROAS) and improving campaign efficiency.

“As a result, publishers who have not prepared themselves well to address the ever-evolving media planning and buying environment may be facing the challenges of monetising via advertising,” added Sharma.

Digital business sustains on two factors - Advertisers and subscribers. On one hand, where the advertisers are declining, publishers are generating quality content to increase their subscriber base who are ready to pay for paywalled content.

Trehan added, “For content behind paywalls to work, it has to be exclusive, differentiated, value-added and premium in nature viz. data and research. The more one has this kind of content, the better will be their subscription traction. Based on this Karmic principle, NYT today has about ten million subscribers, perhaps the most of any publisher in the world.”

The advertising revenue is further split into two - direct and programmatic. Publishers who have been heavily dependent on the latter have faced declining revenues because they have lost the traffic due to certain changes in Google and Facebook’s policies.

Pradeep Gairola, Business Head- Digital, The Hindu, has seen a positive growth in subscription revenue but not a large one. Fifty percent of their revenue comes via subscriptions and paywall content. The direct to programmatic advertising ratio for Hindu currently is at 70:30 split.

But there are obstacles for publishers who are more dependent on subscribers than advertisers too. Major one being, the subscriber revenue is not about acquisition but retention. And, Indian publishers have retention rates much lower than international publishers.

Gairola highlighted, “When we approached the business ages ago, we lacked the wisdom that this is not an acquisition business but a retention business. Retention depends a lot on what kind of audience you have been able to acquire. Secondly, what have you done to ensure that the audience builds a relationship with you and builds a habit around you.”

It is a pertinent industry problem because Indians are accustomed to free content. Unlike other countries, news in India has always been fragmented as an industry and has never charged a penny to its readers. This is also why The New York Times, The Guardian, and other international publishers have higher retention rates.

According to Sharma, the newspaper industry has not really made any significant increment in the subscription fee for the past many years. Whereas a digital news consumer was never asked to pay anything to read or watch news by Indian digital news publishers at large.

“Additionally, the sheer amount of content we are generating, we are not able to communicate or showcase the same to the reader. We haven't been able to establish to the reader how we add value,” shared The Hindu executive.

Further Sindhwani added, as a news publication, if one has to do credible content then it costs money. Customers need to appreciate and value good content in order to be able to pay money for it. The sooner the audience will understand that, the sooner they will be able to differentiate between free content and paid quality content.

Trehan also observed a trend of upward revision of subscription rates for digital when bundled with other value offerings. As more and more products are being bundled along with the main offering, rates are being hiked. Games, puzzles, premium content, exclusive videos are now becoming a part of the 'All Access' subscription.

Sharma believes news subscriptions in India will see significant growth over the next two to four years and publishers will certainly need to focus on offering discrete quality content consistently for paid users.

“The Indian digital news readers are now much more evolved and so is the industry. Within the next few years, the industry will experience habit creation amongst the users of paying for a digital news subscription. This has already started happening in the metros and will further grow in the rest of the markets,” he added. 

test

Thousands of Twitter users were not able to login to their accounts on Thursday morning as the social media site experienced a massive outage for nearly two hours. The problem, which started around 6.30 am, lasted till round 8.30 am. 

Users were unable to log in on Twitter website. However, the microblogging site was working fine on mobile phones.

According to outage tracking website Downdetector.com., User reports indicate Twitter is having problems since 7:13 EST" . Some users also reportedly complained that their Twitter notifications were not working.

In India, Twitter users are getting this message while trying to access the website: “Something went wrong, but don’t fret — it’s not your fault. Let’s try again," with options to refresh or log out.

The 5G spectrum auctions, set to begin on July 26, will see a total of 72,097.85 MHz of spectrum worth at least Rs 4.3 lakh crore put under the hammer. With Adani Data Networks now also staking its claim, in what was already a heated contest between Bharti Airtel, Reliance Jio, and VI (formerly Vodafone Idea), the amount is expected to exceed Rs 1 trillion, according to various industry experts.

The impact on the telecom industry aside, India’s subsequent adoption of 5G is expected to have huge implications on India’s growing digital economy, as well as its booming advertising and entertainment industry, which is expected to reach Rs 4,30,401 crore by 2026 at 8.8% CAGR, as recently reported by PwC's Global Entertainment & Media Outlook 2022-2026.

Mitesh Kothari, Co-founder and CCO, White Rivers Media, believes that consumers now understand internet technologies better than ever before. People who were cost-driven are becoming experience-driven and are actually willing to pay more for a better experience.

“5G is set to bring an immersive AR/VR, 4K video and mobile gaming experience to entice consumers. Plans clubbed with digital services are more likely to penetrate as people are more willing to pay for an ‘all-included’ experience. And, of course, 4G is going to be around anyway, so the ones who cannot afford 5G will always have an option,” he says.

On the impact of raised prices on the Indians who are about to come online, Ashwarya Garg, Co-founder, HYPD Marketing Technologies, said, “We have grown from 250M internet users to 900M internet users today. While the country today has 4G, there are still areas and localities where only 3G prevails. And in a few places, there is only 2G. It is roti, kapda, makaan and the internet today. So, there is no question about a dip in internet adoption,” he says.

Garg further says, “With the release of any new technology, there is a race for faster and quicker adoption. We will surely see a lot of ATL/BTL and influencer-led activities, campaigns specifically designed to educate and adopt on the 5G networks. We should expect a lot of activation via gaming creators, YouTubers, and artists popular on OTT platforms, all of whom would educate them about the end use case.”

Juhi Hajela, VP of Global Marketing at now.gg, points out that despite its massive growth and future potential, with only 47 per cent internet penetration, India is still growing its connected base. “Over the years, we observed that mobile internet connections emerged as a driving force for internet access in India. As a mobile-first country, improved mobile data connectivity will bring a new wave of consumers to utilize the high-speed internet.”

New Ball Game

And the gaming industry, which is the fastest growing space in digital advertising, has the most to gain, given that India is a mobile-first country, across every segment. Experts like Rohit Agarwal, Founder and Director of marketing agency Alpha Zegus, point out that in a country where mobile gaming dominates over 80 per cent of the online gaming and esports segment, there is no doubt that data speeds and data charges hold tremendous value in the growth of this industry.

“The industry has already seen a CAGR of about 37% in the past couple of years, and telecom operators like Jio, VI, Airtel, etc. have accelerated the growth with the introduction of 4G at a highly competitive price point. In the next five years, the CAGR is expected to hit close to 40%, and in my opinion, over 20% of this would be driven by the introduction of 5G, as 5G will allow gamers from remote parts of India to play high-quality games with ease,” says Agarwal.

This would allow tournament organizers to organize more localized events with higher participation and will be able to reach a wider viewing audience. This, in turn, will give brands more sponsorship opportunities, not only to reach out to a bigger audience base but also to experiment with more complex advertising formats which would otherwise be very data dependent.

Gaming creators and streamers will benefit from this improved speed. That would also mean 3G, 4G connectivity will become highly affordable, allowing more consumers to access it.

“India is heading toward becoming the top gaming country in the world. We expect that with 5G auctions, the existing internet service that is already affordable will become faster, allowing Indians to follow their gaming passion. However, limiting device specifications is a real challenge for some players,” says Halja, concluding, “We believe that mobile cloud gaming solution is an excellent fit for the industry, allowing gamers to pursue their passion without being limited by low-end devices.”

The recent controversy surrounding Razorpay sharing AltNews donor data with the police has once again raised concerns around user privacy in digital domains. The internet has been standing divided for the past few days discussing the legalities and the impact of Razorpay’s move but could it have a lasting impact on the brand image or digital payments at large in the country? Marketing experts disagree.

Speaking to e4m, an industry expert mentioned that the agitation was not certainly only against Razorpay as a brand but about privacy laws or the lack of it. “The brand image might not get impacted in the longer run. Social media controversies die out as soon as they blow up. But yes, they must be making an effort to ensure their existing users and partners that their personal data is safe,” they added.

Rashid Ahmed, Head of Digital, Infectious Advertising had a similar response. “If there's a legally valid request by relevant authorities in India, it would be required of a business or service systems provider to provide requested user information, in accordance with the law. Most large digital enablement service providers have fairly thought through and detailed usage and privacy policies, and a request for data would likely have required a sign-off in consultation with their legal teams. Since the payment gateway provides services to a large number of businesses, it is unlikely that a volume of users who chose not to use the gateway will make any significant impact on the overall base.”

Privacy concerns to grow

However, the concerns around user privacy will only mount with increased user awareness. In fact, it’s not the first time that Razorpay or digital payment gateways have gotten into such a situation. Just a few weeks ago, Razorpay had complained that the company was unable to reconcile receipt of Rs 7.38 crore against 831 transactions as hackers and fraudulent customers stole the amount. And in May 2018, Paytm had come under fire for a similar situation after Cobrapost reported that it had shared personal data of users in Jammu & Kashmir with the Indian government. Albeit, the platform had denied any such claims.

Samsika Marketing Consultants MD Jagdeep Kapoor pointed out, “Privacy is going to be a concern but the platforms, which will keep working ethically and protecting the user data will see no harm in the long run. Brands really have to be sensitive about user data.”

Subscription-based news platforms safe

Asked if the whole controversy could bar people from subscribing to news outlets as data sharing with payment partners would be inevitable, the experts said that the decision would solely rely on the content that such publishers produce, and not on payment gateways.  

Kapoor highlighted, “Any industry these days: be it the payment gateways or publishers, or hotels, are taking a lot of user data. You cannot avoid sharing your data and therefore the onus to safeguard it lies on these companies. If a publisher is not tampering with your personal data or sharing it outside, I don’t think users will not subscribe.” 

However, Khan felt that the subscription-based model might take a hit. “Many transacting users also have their financial details such as cards, tokenized and set up with their preferred gateways. So, this may also propel businesses to opt for multiple payment gateway service providers.” 

Additionally, publishers and any such service providers might look for multiple payment gateways to give users the choice of preference. “Businesses requiring digital payment gateway services will likely opt for multiple service providers, to mitigate against service unavailability, or user preference where gateways is concerned. Many transacting users also have their financial details such as cards, tokenized and set up with their preferred gateways. So, this may also propel businesses to opt for multiple payment gateway service providers,” Khan said.

Tech giant Google has signed deals with 80 media partners representing more than 130 publications for Google News Showcase, an online news experience programme. Launched last year in India with 30 publisher partners, Google News Showcase has completed one year in the country.

The tech giant's partners include Times Group, The Hindu Group, HT Digital Streams Ltd, Indian Express Group, ABP LIVE, India TV, NDTV, Zee News, Amar Ujala, Deccan Herald, Punjab Kesari, The Telegraph India, IANS, and ANI.

"This time last year, we announced a package of investments to support India’s news ecosystem, including launching Google News Showcase - our new product experience for readers and licensing program for news publishers," Google's Kate Beddoe, Director, News Partnerships, APAC, and Durga Raghunath, Head of India News Partnerships, said in an official blog.

"Since Google News Showcase launched in India last year, we’ve signed deals with more than 80 partners representing more than 130 publications, including national, regional, and local news organizations like Times Group, The Hindu Group, HT Digital Streams Ltd, Indian Express Group, ABP LIVE, India TV, NDTV, Zee News, Amar Ujala, Deccan Herald, Punjab Kesari, The Telegraph India, IANS and ANI. We continue to work towards adding more partners."

Google News Showcase has also expanded to more languages over the past year and now supports a total of 8 languages, including Kannada, Marathi, Tamil, Telugu, Malayalam, and Bengali - along with English and Hindi. "We’ve also continued our work providing training and resources for news businesses and journalists, for example, GNI Startups Lab, GNI Newsroom Leadership Program, and GNI Advertising Lab," the blog reads. Update

Amazon miniTV announces a short film – Sorry Bhaisaab, produced by Arré Studio featuring popular actors Gauahar Khan and Sharib Hashmi in lead roles. Directed and written by Suman Adhikary and Sumit Ghildiyal, Sorry Bhaisaab will premiere on 16th December for free, exclusively on Amazon miniTV on Amazon’s shopping app. The film is a relatable humorous take on the desires, motivations and aspirations of the middle class and their eternal quest for things to make their lives better.

“At Amazon miniTV, we always try to bring fresh, engaging and relatable content for viewers. We are delighted to partner with Arré Studio once again to bring yet another heartwarming and entertaining short film. This is a great addition to our library of award-winning short films”, said Harsh Goyal, Head of Amazon Advertising.

“Sorry Bhaisaab showcases the desires and aspirations of a common middle-class family with a relatable plot. This short film is a very special project for us, as at Arré, we endeavour to narrate different and unique stories that touch audiences’ hearts and entertain them thoroughly. We are delighted to collaborate with Amazon miniTV on this since it will give the film a wide reach across see millions of Indians from all parts of the country.” said Niyati Merchant, Co-Founder and COO, Arré................