Rediff CEO On Current Advertising Scenario, In.com, Paid Services, Apps & Content Deals

Much was expected from the Rediff.com this quarter - as the leading online media site in India, and with around 75% of its India Online revenues dependent on the Advertising - we logged on to Rediff’s earnings call for inputs on spread of the Advertising drought:

Data
– India Online Revenues: $4.04 million (72%) from Advertising , $1.58 million (28%) from Fee based services.
– Advertising revenue split: Financial Services - 15%, Jobs - 15% and Travel - 10%, account for a total of 40%
– 70% of revenue is from display based ads (CPM), and 25% from performance based ads.
– Registered user base of 72 million. Unique userbase grew by 8.4% (Comscore)
– 261 companies advertised with Rediff in Q2, up from 257 in Q1.

Q&A (thanks to @mixdev, @codelust, @ranjanv and Shashikant for their questions)

Online Advertising Scenario
– India Online advertising, which accounted for around 72 percent of revenues this quarter, was down from 75% last quarter, though “on a blended basis, the average yield and average price have not changed.”
– “There’s been no substantial change as compared to Yahoo or Google. We believe they’ve had a similar experience in the market.”
– Financial Services used to spend with Rediff for acquiring Credit Card and Housing Loans, and had contracted the most, but are improving - they’re looking to advertise to get people to deposit money again. Travel portals have cut back sharply, because commissions for them have been slashed. Job sites, which accounted for 15%, are down as well, because of their dependence in IT services for recruitment.

Display Ads over the next 3-6 months?

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Q209 Call: OnMobile Says Deployments Have Slowed; Telisma Vs Nuance; AdRBT

The Content Costs
When asked about the increase in content costs, which we’d pointed out in our analysis of their Q2 earnings, OnMobile Global CEO Arvind Rao said that this is a “fixed monthly fee that we’re paying is to a third party which is giving us some services which are used for launching a new project or a new product that a very large, but will not be rolled out until next quarter. That is a line item, which has no link to our existing revenues. It’s fixed on a monthly basis, based on certain parameters and results that they have to deliver to us.” Our sense (this is not officially confirmed) is that these are payments being made to the content partners that OnMobile has signed up in South India, and it corresponds with two significant deals they’ve struck - for powering the Ringback Tone (RBT) platform for Airtel in South India, and for du in the UAE.

Revenue Split
15-20% from data products
35-40% from voice portals etc
35-40% from RBT etc

AdRBT
Very little on the AdRBT: OnMobile expects to complete the test launch of AdRBT with Vodafone by the end of November and declined to share details of the results in the interim. They’re going slow on AdRBT in order to iron out the bugs, based on usage trends from the pilot. Results are encouraging, says Rao - “the numbers, based on consumer recall, are better than for the Internet.” Mobile Marketing SBU has around 20 odd people, who are working on two very large projects.

Impact of the slowdown?

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Q2-09 Call: Info Edge Plans Senior Mgt Job Portal; IT Contribution To Jobs Down To 25.4%

BSE listed Info Edge India (Naukri.com) is considering a senior management portal, the company disclosed during an analysts call on Friday. Details of the portal are not know - it’s just at a concept stage and they’ve not yet started work on it. Earlier this month, Info Edge had also announced another job portal targeting freshers, called FirstNaukri.

FirstNaukri will be sold to the same customer base through the same sales team for Naukri. Revenue will recruiters and campuses for branding and marketing their students to the corporates; students will not be charged. In the near term, there may be an softening in fresher recruitment, but Naukri is looking at it as a long term play.

On Competition And Market Scenario
According to Info Edge, the situation is dire for competitors - who are being hit harder. “We believe that one of our competitors may actually grow negatively, and marketshare will go up as a natural consequence. Client budgets are slashed in the following pecking order: Placement Consultants –> Print –> TimesJobs –> Monster –> Naukri

However, at 24 percent growth, Info Edge revenues grew less than previously indicated. The company feels that growth may decline even further in Q3 and Q4, though they refused to give a guidance, citing a volatile market scenario.

Pressure on Rates?
Client are asking not asking for lower prices, but they may downgrade to save on costs. The branding solutions will be hit first - downgrading from a panel to a homepage link, or take it for 3 months instead of a year. The company doesn’t see logins moving south, unless the number of recruiters in a company goes down. “The database is a bread and butter product for our clients. They’re probably going to drop competition logins first.” Info Edge is also planning to give bulk discounts, but not lower prices.

Decline In IT Hiring & The Small Accounts Team
The key concern has been the decline in IT hiring: from 29.7% in Q2 last year, to 27.16% last quarter, and 25.16% in Q2 this year. “IT is slowing down fastest, and it is an area of concern, and we expect the slowdown will last through this financial year.”

The company believes they’ll have to launch new products and look at sectors outside IT. Last quarter, the contribution from Infrastructure clients grew at 24%, though banking remained stagnant at 5% of revenues. What’s interesting is that the second rung accounts are growing faster in terms of revenue, and though larger clients have reduced spends, the company claims to have made it up by adding new customers, and more revenue from the smaller accounts team. There’s lots of churn at the bottom of the pyramid in terms of clients. To cut costs, Info Edge itself intends to go slow on hiring - at present, the sales team headcount is around the same compared to Q1. They spent around Rs. 13.7 crores across all businesses on advertising, and are also not cutting marketing expenditure.

Statistics related to specific verticals:
Naukri.com & Quadrangle

– Share of recruitment solutions - 86%
– Growth is slow, but margins have expanded.
– Naukri Revenue from recruiters grew at about 15%, while candidate services grew at 43%
– Main recruitment business grew by 19 percent, of this 15 percent growth was in databases and corporate business.
– 9% revenue is from candidate resume services
– Quadrangle grew at about 38%
– Share of IT: 25.4%, from 27.16 last quarter, 29.7% in the same quarter last year.
– Share of Banking: stagnant at 5% of revenues, same as last year
– Job posts on Naukri: 87,000 (steady above 80,000)
– Number of recruiters: 18600, up from 15400
– Top 10 percent of clients - upwards of 62 percent
– EBITDA margins in recruitment were up to 43% percfrom 41% a year ago
– Total resume database is at 15 million, adding 16500 resumes per day
– Resume updates: 37,000 per day
– Client base: 18600, up from 15400 last year.

Other verticals and Investments:

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Q2-09: HT Media Call: Internet A Defensive Strategy; Livemint-Rs. 35-40 Lakhs; Education Portal

HindustanTimes.com (HT.com)

Q2 appears to have been flat, but that’s not a bad thing given the downturn. While HT declined to give specifics, they said that the numbers are around the same as last quarter - 10.5 million pageviews, and Rs. 70 lakh per month in terms of revenues.

The management appears to be backtracking on the statement they’d made in the last earnings call, about the online business being Rs. 100 crores in a year and a half. I’d asked them about whether there’s been a change in the outlook, given the downturn. The response “We realize that Internet is the business of the future, and our strategy is very clear: as it has happened in all the global countries, classifieds will move slowly from print to the website, and we have to make sure that that business does not go to anybody else. Which is why you’ve seen the launch of Shine, the jobs site. We’ll roll out the other classifieds sites with time.

Education Portal?

We’ve heard about HT Media planning to launch an education portal. In response to my question, HT was vague - saying that they’ll get some clarity on the verticals, including education, in the next 3-6 months. They did confirm that they are “actively considering” the education domain. “We keep on evaluating these things as we go, and there are not enough revenues right now for us to be looking critically in terms of returns etc. from these business separately.

Firefly: Shine & Desimartini

Too premature to share revenue numbers, since the portal is around 6 months old. The resume database/registrations are at around 1.2 million. Update: A majority of the Rs. 33.5 crores of the investment in FireFly so far has been spent on Shine.com. I asked about DesiMartini and HT said that the “less than $10 million tag” was an error, a minuscule amount was spent on the acquisition, and almost all of the overall investment has been in Shine. They declined to state the exact amount. Incidentally, it appears that the Desimartini.com redesign went live, just in time for the HT Media Earnings call. (Full disclosure: Desimartini was acquired by HT from my cousin Vivek Pahwa)

Livemint

Has been performing very well. In terms of pageviews, obviously we are not at the level that moneycontrol is at this point in time. We’ve just started the video section where we show live videos, which has been very encouraging. At this point in this, LiveMint makes around Rs. 35-40 lakhs per month. “Unfortunately, we are in a market scenario which is challenging not just for print media. In a good time, we definitely believe it’s a good business to be in, and sooner rather than later we’ll be able to leverage that property more aggressively.

Mobile

Is still in the drawing board stage. We’ll only be able to comment on that once the business is up and running.

Mint TV?

“These are market rumours and we do not comment on them.”

Details: Financials

Q1 Details: Financials, Earnings Call | Analysis/Report

Q1 Results and more more via our Financial Results page

Related: Q2-09 Results: HT Media Profit Down 49%, Revenues Up 18%; Firefly Gets Rs. 13.5 Crores In Q2

AOL Audience & Access Business To Function Separately By 2009

AOL is in the process of splitting their Access (ISP) from their Audience business; while the Access business isn’t of much consequence to India, the Audience business is significant - AOLs international operations are headquartered in India, based in Bangalore, and led by EVP (International) Maneesh Dhir, and its operations in India are audience focused.

Time Warner CEO Jeff Bewkes said during the Q2 earnings conference call that the Access and Audience business should be running separately in 2009: it’s a fairly complicated process and so far they have classified all of AOL’s assets and liabilities into three groups - Access, Audience, and a “Share Service Group” that will support both of the operating groups. They are also “finalizing operating agreements among these groups so that they can operate fairly flexibly.” But then why is AOL separating these businesses?

Says Bewkes “…we have the necessary flexibility to do something strategic with either of these businesses today.” This has fueled the notion that Time Warner is going to sell off either its Access or Audience businesses…or both. I suppose the “Shared Service Group” will be come defunct if and when that happens.

No India specific numbers, but AOL Ad revenues grew 2% to $530 million: Display advertising declined 14% to $191 Million (more units sold at lower CPM), Paid Search increased 10% to $172 million, while third-party network revenue grew 15% to $167 million. The Access business saw a subscriber decline of 604,000 subs during the quarter. AOL has 8.1 million US subscribers.

Note that Sify had modeled their business around AOL, and they restructured their operations last fiscal. Ever since, both their access business and audience business has been on the decline. Also worth noting is Google’s statement, that their investment of $1 Billion for 5% in AOL is “impaired”. (via ZDNet)

AOL launched their India portal last year, and Bewkes was in India earlier this year for the launch of Truveo.

Related:
– AOL To Bring Advertising.com To India
– Q1 Results: Sify Consumer Services Biz Continues Decline - Revenues 18% Down; Sify.com Relaunch In Q2

Q1-09 Call: HT Media - Rs. 100 Crores Internet Biz In 1.5 Years; Matrimonial Portal In Q3, Real Estate In Q1 2010

Internet
HT Media expects their Internet business to be around Rs. 100 crores in terms of revenues in around a year and a half. The company has invested around Rs. 20 crores in the Internet business so far, of a total planned investment of Rs. 150 crores over the next 3 years.

At the same time, note that key portals hindustantimes.com and livemint.com are a part of HT Media - and not a part of the Internet subsidiary FireFly E-Ventures. Hindustantimes.com got around 10.5 million pageviews during the quarter, with revenues of around Rs. 70 lakh per month - “fairly small” according to the company.

FireFly E-Ventures is expected to launch their real estate and matrimonial portals are expected to be launched around Q4 of this year - Matrimonial will be by around Q4 of this year (Jan-March 2009), and real estate by Q1 of next fiscal year (April-June). In this context, it is also important to note that Real Estate advertisers account for 12-13 percent of HT Media’s revenues - 12 percent last fiscal, and 13 percent in Q1.

Some stats on Shine - I’m not sure if the HT Media management quite understands that metrics for a job portal are different from those for a news site like HT.com, but anyway - Shine receives 14 million pageviews per month, and this number is growing at 15 percent month-on-month. The portal gets 3 million unique users per month, and has a total registered user base of 7.3 lakh

Private Treaties
Accounted for a fairly small part of the total advertising revenue this quarter - around Rs. 6 crores. In all, deals have been struck for around Rs. 70 crores, spread over 3-5 years. What’s more, HT Media did not disclosure of names treaties investments, since these are covered by non-disclosure agreements. If you know of any Internet companies that have signed up with them, do let us know.

Related: HT Media Reports Profit Of Rs. 37.72 Crores; Shine Adds 6758 Registered Users/Day

HT Media Reports Profit Of Rs. 37.72 Crores; Shine Adds 6758 Registered Users/Day

HT Media has reported a profit of Rs. 37.72 crores for the first quarter of FY09, up from Rs. 34.16 crores for the same quarter in FY08; revenues were up 17 percent Year on Year at Rs. 332.89 crores, and advertising revenues were up 19 percent. EBITDA was up 13 percent to Rs. 74.5 crores from Rs. 66 crores for Q1-08.

HT Media’s job portal Shine.com appears to have overwhelmed them - despite all the advertising spends, the number of registered users has gone up to 2.3 lakhs 7.4 lakh. They had claimed 1.25 lakhs at the end of last quarter, and that’s an addition of around 1153 6758 registered users per day during the quarter. Frankly, given all the advertising spends across Web, Print, TV and Radio - Shine’s performance has would have been lacklustre, if not disastrous at just 2.3 Lakh, but it’s 7.4 lakh in all. Update: during the earnings conference call, which I am currently on, the total number of subscribers has gone up to 7.4 lakh users on Shine.

During the quarter, HT Media paid an advance to Firefly e-ventures Ltd against an issue of equity shares amounting to Rs. 5 crores, as well as a loan of Rs. 3 crores. Remember, HT Media has intended to spend Rs. 150 crores in Firefly over the next 2-3 years.

Also note that Go4i.com shareholders have been allocated 22,600 HT Media shares of face value Rs. 2 each to shareholders during the quarter, post a court ruling.

Print - HT Media claims Mint is the number 2 paper in Delhi, Bangalore and Mumbai, in its segment. Interestingly, newsprint costs a serious cause for concern; raw material cost for HT Media increased 10 percent QoQ. Hindustan was launched in Dehradun and Chandigarh. HT Media tied up with German Media Group Hubert Burda to set up a printing facility
Radio - Fever 104, has around million listeners across Delhi, Mumbai, Kolkata and Bangalore
Music - HT Music has also received a loan of Rs. 10 crores from HT Media.

Note: Any questions for HT Media? I am currently on the earnings call. Do leave a comment or tweet on Twitter