It’s almost four years since Ravi Kiran, the then CEO (South East & South Asia) for Starcom MediaVest told Shabir Momin, founder of mobile video company Zenga, that he would have a tough time trying to sell mobile advertising for the next 5-8 years: that building acceptance for the medium among marketers will take time. “Marketing people, whether we like it or not, don’t move as fast as we want them to. Ten years after creation of digital advertising as a medium, that medium is still struggling. It is still 3.5 percent of the Rs. 21-25,000 crores that this country spends on advertising. If you think that people will get evangelized in six months or one year, it is naive,” Kiran had said at an ASSOCHAM conference in 2009, after Momin had asked him why marketers are unwilling to spend to advertise on a niche, paying-capable audience, that is more targeted.
Zenga is still around, still doing video, and at the Mobile NXT conference yesterday, I asked Momin how things have changed, especially with the growth in mobile data consumption, and . “Ravi was right”, Momin said, acknowledging that things have been tough the last four years, but also that “It’s taken off now. (In the last four years) it was a stage where unless you had an extremely high value property, like a Cricket Match, it was difficult to go and sell ads. You couldn’t sell ads for every day spots and banner ads. It was a trickle of revenue and ads, and not good enough to run a company. So what we did was that, in the last four years, we developed different revenue streams – we made money from handset manufacturers, from different sources. We still make money from those sources, in addition to the advertising revenues. Those became our survival mechanisms while we waited for the day that advertising revenue becomes what we dream’t it to be.” Note that in 2009, Zenga had taken the mobile live streaming rights for the Indian Premier League, and, more recently, for the US Open. It has tie-ups with TV channels for streaming video content as well.
Things are changing now. “The last eight months, there’s been a significant change. It’s as if it (Mobile Advertising) has suddenly woken up and started running. It’s changed at least eight folds in the last 7-8 months itself. We see that the growth is happening extremely fast, and I’m facing the challenge of hiring more sales guys, because there are more sales opportunities than I have people to sell. Eight months back, I had more people and less opportunity. Some of the predictions in the market about the industry growing 20-30 folds higher in the next two years, might actually be true. A lot of brands are moving into this space. People who were investing Rs 5 lakhs are now investing Rs 50 lakhs. The TV industry going to 10+2 (minutes), and rules that are changing will make dollars shift from mainstream advertising. Overall, the mobile advertising industry is shaping up.”
The tricky part, of course, is the model adopted for mobile advertising. Web advertising created a problem for itself by aggressively pitching cost-per-click and cost-per-acquisition deals. Will video paint itself into a corner as well? I asked Momin about the model that they’re selling with on the mobile: “It’s similar to the web. We have banner advertisng which is static in nature, which is click to action advertising. And then you have a video ad which can be clickable and non-clickable. Those are TrueView ads, where you deliver the whole ad and make money on that. That is where you make the ad revenue. Most of them are CPM because we as an organization also believe that we should not run a CPC campaign or a CPD campaign. I don’t control the product, the creative or the gratification that we’re giving to the user. If I’m not responsible for any of that, why should I be responsible for the end result of the click on Mobile? If Mercedes decides that you click here and buy that car, and gives me Rs 1000 per click, I don’t know how many people will click. My job is to deliver impressions and reach out to people. The conversion is dependent on the product offering.”