Ajit Balakrishnan CEO Chairman Rediff.com

Rediff.com has increased its investment in Tachyon Technologies to 26% percent, Rediff Chairman and CEO Ajit Balakrishnan confirmed to MediaNama, exercising an option that Rediff had. Rediff had picked up a minority stake in Tachyon in 2006. Tachyon has a transliteration tool called Quillpad, and allows emailing and messaging in Indic Languages. Last quarter, we had reported Rediff’s investment in mobile application company Eterno Infotech, which also has an Indic Language transliteration application. “Both are in line with our move into mobile and Indian languages,” said Balakrishnan.

On the status of Vakow, a Twitter-like startup that Rediff has invested in, he said that they wanted another round of investment, but Rediff told them to find another investor in order to price the investment, as is normal practice. Vakow is struggling, though.

In a brief conversation with MediaNama over the weekend, Balakrishnan spoke about the state of advertising, the launch of localads, scaling down of the P4C advertising business, game development, and also shared his views on the Indic Language space, which had sparked off quite a discussion, earlier in December.

Q. You’ve seen a significant decline in advertising revenues for the quarter…

AB: The online advertiser category, as a group, is where we’ve seen the maximum decline – of more 60%. This is essentially because those industries right now are going through a very difficult time; I was told on good authority that the online travel sites alone have collectively have lost more than $100 million dollars in the last 12 months. I don’t believe though, that they are going through will be permanent. The online case on travel, jobs, matrimony and shopping remains strong. But the reality is that they are going through difficult times, and are are cutting back on expenditure. We are one of the many people who have suffered on this account. Offline advertisers have declined only slightly.

Q. Have you seen any growth in the offline advertisers segment?

AB: In the October-December quarter we saw a slight decline in that, but there is definitely a trend that more and more are coming online. The mainstream offline clients have started to view online as a real alternative, but their decision making ability tends to be a bit slow. I am optimistic that this recession will result in one or two things, such as the offline people will start looking much more strongly at online advertising. Personal education is a problem because for many of them who have not heard about this online advertising as a plausible method. They don’t understand the click based advertising method – how we can they use click based advertise their toothpaste.

Q. What is the split between display and performance based ads: it was 75:25% in Q2, has there been a change there?
AB: Yes, display is 2/3rd and performance is 1/3rd for us, and the market as a whole is half and half. The performance people tend to gravitate first to Google.

Q. You’ve launched LocalAds: what is the idea behind that? And in that context – we’ve heard that you have restricted P4C (Pay4Clicks) operations to Mumbai and Delhi…

AB: P4C has been renamed LocalAds, though right now, you will see both. The reason for this is the average advertisers are not getting the idea of P4C. We restricted P4C operations to Delhi and Mumbai a quarter or two ago – we had a reseller force that use to operate nationally. We did a study and found that Mumbai and Delhi provide 70% of all ads that we get, so we scaled it down. So while we are refining the model and converting it to LocalAds, I think in a week or two you will see that p4c has completely disappeared.

Q. The game development write-off that you mentioned in your Q3 Earnings came as quite a surprise: what was going on and how much had you invested in it?

AB: We had subcontracted the coding to an entity in Beijing. It is run by two young Americans with a pool of Chinese programmers. I think that company got acquired by a French company in the middle of all this, and that French company did not see offshoring as a great priority. They started to slow down on things. By the time we get those games into the market, it might take a year or two and who knows what the technology might be there by then. We are not going to spend more management time on it, and have our hands full for the next 9 months.

Q. How much have you written off there?

AB.  I think it’s around a million dollars

Q. You’ve made two investments in the Indic Languages space (Tachyon, Eterno), and yet you made a point at the Internet Governance Forum that Indian users are not moving to Indic Languages; there’s a contradiction there…

AB: A lot of people ask me that…it is actually a paradox not a contradiction. You know that English is an inspirational language for many Indians, however there are many people who, for example, program in English, send messages in English, but they are talking in Hindi or Tamil as the case may be. So there is a duality of use; it is not that they need a pure Hindi site offering. But most of our services…there is an instructional field inside, if you click on the video piece and you go to the iShare part there and you set your regional language to be Hindi or Tamil, then you will see that there is enough Hindi and Tamil there.

I think that the use of language is going to be in the navigational element. Will it translate into mail? We have offered mail in regional language, but there is a consumer problem – there are not many Multilanguage keyboards. I have not seen even one Tamil keyboard and even when I went to Lucknow I went to 30 cyber cafés and there was not even 1 Hindi keyboard. So English keyboard had to now deal with spattering of languages. Tachyon addresses that market where you can use an English keyboard and then type in Hindi or Tamil or Malayalam.

Q. But then you are only targeting the bilingual users…

AB: It is a big issue, since I chaired a government committee on that called the Internet Governance Committee. The real issue there is that English knowing people are about 30 million in India and the internet uses a majority of that number. Then we have another 70 million who know English – they can read the basic things in English, like the numerals and for example the destination of a particular bus. But they can hardly ever speak it much and almost never write it. This is the next market, but till we have 70 to 200 million people (on the Internet), we don’t have to worry about this pure language market. So what we are trying to do is solve the problem for this intermediate group.

P.s.: We weren’t able to get a question in on the Rediff earnings call; greatly appreciate Ajit Balakrishnan taking out time to answer our questions.