When AIM listed Asia Digital Holdings Plc launched its DGM India operations a little over two years ago, they were the first affiliate network in the country, providing Cost-Per-Acquisition based advertising solutions to advertisers. The company had targeted break even in less than a year, by March 2008. The market has changed dramatically since, with the economic downturn having afflicted advertising over the past year, with spends from Internet and Finance sector having reduced. Over the past two years, only one other affiliate network has launched in India. We discussed with Adrian Moss, CEO of Asia Digital Holdings and Anurag Gupta, MD, DGM India, these issues, impact on CPA advertising and rates during the recession, and the companys progress and plans. Excerpts:
How has it been for DGM in India since you launched two years ago? You had estimated break even by March 2008…
Adrian Moss: We are really pleased with our progress here. DGM India has been able to set its stall out very well, with a leadership position in performance advertising, initially with the introduction of affiliate marketing which just wasn’t here before. We managed to get to a positive contribution – we’ve been profitable here since March 2008 and despite the recession – we’ve been profitable and there’s been strong growth. What’s more exciting for us is that from where we stand now, we feel well positioned for material growth. We’ve been following advertising with a return-on-investment mantra for 10 years now, and that’s the way the market is moving. Advertisers and agencies are demanding demonstrable results.
In India, publishers like Rediff have said that the returns from performance based advertising returns for them have been flat or declined; Internet and financial sector companies have reduced spends. What has been your experience?
Adrian Moss: We have a strong base in Finance and Travel, to the extent that consumers aren’t participating in those products, but we’re pleased that we stayed in the black through the whole process haven’t lost any clients. It’s the consumers that may have driven a small decline.
Anurag Gupta: Online Travel and Finance categories saw a slowdown, but there was an upsurge from Insurance clients. Even in the recession, Insurance – Bharti AXA, ICICI Prudential, Metlife – stepped up their advertising. Also, new categories emerged in the recession – Auto became more active and increased their spends. The overall spends, despite the recession, went up in India. Education is a category that was stable and growing, consumer electronics grew with Nokia spending significant marketing dollars online. We weren’t very active in Auto, but Insurance did well for us. We did a couple of campaigns for FMCG clients for brand activation as well.
What does an FMCG advertiser market on an affiliate network?
Anurag Gupta: We did a campaign for Lipton. They launched an online campaign for a jigsaw puzzle called Stay Sharp. We drove significant number of user registrations for the puzzle. It was about driving registrations and getting people to solve the puzzle.
Adrian Moss: The obvious low hanging fruit there (for FMCG) is registrations, trial coupons, and the ability to build a platform for interacting with their target audience is a valid use of performance advertising. It creates exactly the sort of dialogue which helps brand value, positive association message recall and propensity to purchase.
You had 20 advertisers on board at the end of your first quarter in India. How has that changed? What kind of publishers do you have on board?
Anurag Gupta: In our two years of our existence in India, we have serviced around 125-130 advertisers, and at any point in time, we have around 50 advertisers live for various services, which is significant from an Indian ecosystem point of view. We have over than 4000 publishers and 6000-7000 websites on the network. We categorise publishers into various categories – there are horizontals or news portals, niche websites with specific audiences, then you have long tail websites, which are very small. You also have SEO specific sites like those for travel and PPC affiliates – people who buy traffic from various search engines. Then there are email marketers with significant opt-in databases, who use that to drive action on a CPA basis on our network.
Did we see any impact of CPA rates over the past six months?
Anurag Gupta: In some cases, it declined some cases it went up. Online Travel increased rates for customer acquisition on our network. In terms of drops, we saw drops in registration based campaigns where there was pressure on advertiser bottom line.
When DGM India launched, one got a sense that competition from other affiliate marketing companies would emerge. The only other player we’re aware of is – ShooGloo (by LD Sharma, previously the Director of Search & Affiliate for DGM India). Why do you think no one else has launched here yet? Wouldn’t more players help grow the market?
Adrian Moss: That’s an interesting one. Affiliate Marketing is not a simple business. For people coming in from scratch, it’s difficult to get a critical mass in place. Launching an affiliate network, client education…but you’re more likely to see the evolution of performance advertising players in a multichannel format, with affiliate marketing as one of several routes to deliver for clients. The fact that there haven’t been too many affiliate marketing channels launched doesn’t change the fact that ROI is going to be the biggest driving force behind the return to high level of spends, but also the massive increase in digital spends over the next two years.
There are loads of search companies around, they’re educating clients about the component of performance based advertising, but not many people who can deal with the complexities that come when you use multiple channels together. We have 10 years of experience of dealing with this – for example, if you use search, affiliate and display, and you have three different technology platforms in use, all of them will potentially report on the same sale and say it’s theirs. Duplicated tracking is an issue. We know how to deal with it.
What are your expansion plans?
Anurag Gupta: We opened an office in Bangalore six months ago, and we’ve seen growth in number of advertisers and spends. We’ve seen rapid growth in Mumbai in terms of number of advertisers. Delhi has been reasonably stable. We have clients in Chennai and Kolkata being services out of these offices. We’re definitely looking at expansion to Chennai. We’re also keen on Kolkata, Hyderabad, Pune and Ahmedabad, but no firm plans there yet. There are large advertisers sitting out of tier two towns – for example, Bajaj Auto sits out of Pune. We’re also looking at SME and Retail route for local leads.
(Updates: Corrected the parent company name: Deal Media Group is now Asia Digital Holdings Plc.)