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Rediff Q3-FY11 Call: Advertiser Segments, Vubites Expansion, Mobile Deals

On Rediff.com’s earnings conference call for the quarter ended December 31st 2010, apart from saying that the company will look to enter the online deals space, CEO Ajit Balakrishnan share the following:

To Target Smaller Towns and Offer Localized Services Through VuBites

Rediff sees an opportunity for revenue growth by providing local solutions to service those businesses located and served in the same city through its advertising platform VuBites. Local advertisers that have so far advertised with Vubites are in tours and travels, health clubs, furniture stores and restaurants segments. Rediff has signed deals with two of the largest MSO’s in India, and one TV channel, and is test marketing the service in Mumbai.  It expects to extend this to two more cities and two TV channels during the quarter. Also, post acquisition, VuBites’ capex will be minor and VuButes will just add 5% to Rediff’s costs.

Rediffmail NG To Announce More Telco Deals

Although, Rediff did not reveal the number of users of the service, it feels that the future of its mobile revenues depends on fee that it collects for its paid push mail services Rediffmail NG. More mobile operators are expected to integrate the service soon, hopefully within this quarter.

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Online Ad revenues, CPM Rates See Growth

Rediff has been able to get better prices in the last quarter, compared to the quarter before. There is a price uptrend in the market. Major offline and classical advertisers coming on board has pushed growth for the Indian online market and online advertisers are in a minority now. Balakrishnan said that the Internet is not just a niche, where only online businesses advertise on each others site.

The effective CPM rate is growing. Rediff never dealt with ad networks, who tend to be bottom fishers. “We use them when we need to get inventory at rock bottom prices. We don’t have inventory to give them, and even if we did, we would not give it to them,” said Balakrishnan.

Top Ad Segments

Sector wise Financial services sector is the largest advertiser for Rediff followed by Consumer Electronics, Insurance, IT Products, Telecom, Automobile, FMCG, TV and Print companies, Education and Travel.

Online businesses are in a small proportion mainly led by Job portals, Travel and Matrimony ventures. Many e-commerce ventures also advertise, although their effect was not significant in the last quarter.

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On Partner Deals

Rediff does not plan to partner with other online players and considers it a 2000 era trend “a small site wants to get in front of our users, and we charge them a hefty one time fee, and he agrees to do that. Our experience is that it neither benefits us, nor the other property,” said Balakrishnan. In this context, we ought to point out that NDTV.com is a website that aggressively does partner deals.

No Ad Deal With Google

Balakrishnan added that the advertising pilot with Google for serving Google ads on Rediff’s US portal did not quite work out: Rediff scrapped it in 2-3 months.

User Base

At the end of December 2010 Rediff has 14 million active users in India. A growth of 38% according to marketing research company Comscore, post changes in the Comscrore methodology. The registered user base stands at 98 million, up 3% compared to previous year’s figures.

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About Profitability

On being asked about when Rediff is expected to become profitable, Balakrishnan said that its difficult to make such a forecast, as India is still experiencing the growth of broadband. He said that it’s very important at this time to retain – if not grow – market share and revenue share. And Rediff’s strategy is that the operating losses it suffers are contained in the region of no more than $2 million plus or minus 10%, while growing its user base.

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