eCPM (effective cost per milli impressions) rates have not decreased for NASDAQ listed Rediff.com in the last two quarters, Rediff CEO Ajit Balakrishnan told MediaNama on the companys conference call on Friday. “The real decrease is lower activity; for us it has not been a rate issue. I think the issue is not really about pushing rates up as much as making sure we help advertisers get the results they want.” We had asked Rediff is there is any indication of publishers coming together to increase rates in the market. Perhaps Rediffs eCPM has not been impacted – or so has been claimed – but the sense that we’ve got from discussions with industry executives is that there has been tremendous pressure on rates over the past few quarters, and rates have been beaten down.

Balakrishnan said that key advertisers from jobs, consumer finance, travel and real estate categories continue to face challenges, and lower consumer spending has impacted Rediffs fee based revenues as well. He is, however, “cautiously optimistic”. “Since September,” he said,” things are looking better than in the last 4-5 months. The number one players in Jobs, Finance and Travel are starting to wake up, but the problem has been with number 2, 3 and 4 players, who have not recovered in terms of their spending.”

With a cash balance of $48 million, Rediff can perhaps afford to take a hit from removing advertising from its homepage. Balakrishnan had told MediaNama last quarter that the company expected a “high single digit percentage reduction” in revenues on account of the redesign, but the overall impact on revenues has been much worse: quarter-on-quarter revenue decline in revenues was in double digits at 16%, and of 22% on its India Online revenues. Nevertheless, that cash in the bank allows Rediff to take a step as drastic as removing ads from its homepage, ensure that “ads on the other pages don’t intrude into the user experience on the site” and, just as importantly, reduce the amount of content accessible from the homepage.

Rediff, Yahoo & Cult Following

It’s also interesting to juxtapose Rediff’s initiatives with those of Yahoo: Rediff too plans to continue to invest in product development and brand building, though much smaller amounts at $1-1.5 million over the next few quarters, and focus on making its website increasingly social, giving users access to both content within Rediff and social networking sites via its MyPage, which it claims has had “good traction”. We think social enabling of Rediff & Yahoo products helps increase usage, content discovery and user retention, while the campaigns target both new users and brand managers, knowing that when the market recovers, Rediff & Yahoo will be a key destination for Advertisers.

What is missing is a truly unique product from either company that will give them competitive advantage, strong word-of-mouth…not just a site where you get a little bit of everything. Usability and mobile-readiness as a differentiator aren’t sufficient. Cult following does matter, as Facebook, Twitter and YouTube have proven in the past.

Related:
Rediff’s Losses Double, Revenues Down 15.5% QoQ