During the company’s conference call announcing its Q4-2012 results, Rediff CEO, Ajit Balakrishnan informed that Rediff had seen during last few quarters, substantial uptick for search advertising but has now noticed substantial decline in spending by ecommerce companies almost at 50%-70% levels. On the display advertising side, the growth of ecommerce spending did not come to Rediff as startups wanted instant results which doesn’t happen as it happens in long term, according to Balakrishnan.
– On reduction in ad revenues from BFSI & traditional advertisers entering online: He also added that insurance companies, which were on expansion mode, have clamped down on ad spends, and the online stock trading companies were going through a ‘baptism of fire’. However, traditional advertisers coming through agencies seem to be excited about the online medium and the uptick covered reduction in ad spends from the BFSI sector. “But the uptick from that group would accelerate during the current recession like situation that we’re going through now,” he said.
– On Mobile: On mobile offerings, the company sees subscriptions as a better revenue model than an ad based one and intends to push its paid mail, Blackberry like services to the SME segment in a big way. A small single digit percentage part of its ecommerce business and deals also comes from mobile, said Balakrishnan. Rediff is still in discussions with major mobile operators for expanding the service. “In the next quarter or two we’ll see significant action on the mobile front,” he added.
– Decline in Mobile VAS segment – Saw a decline of 68% because of the TRAI’s guidelines on Spam SMS. the company plans to shut down that part of the business.
– Eterno Sale: “We had a 40% stake in Eterno and we sold it for about $1 million,” said Balakrishnan.Rediff had recently exited Eterno Infotech, the Bangalore based company behind the popular mobile news application NewsHunt, in which it had acquired a stake in 2008.
– On E-commerce business: “We don’t plan to hive-off e-commerce business and don’t plan to raise any capital on that. We essentially believe in the marketplace model.We are working to improve the efficiency of the e-commerce system,” said Balakrishnan. He said that the company was grateful to PE players to create so much interest around e-commerce. He informed that Rediff did not do any hiring in the e-commerce business during the last 12 months.
When we asked about revenue from the segment, he said that he promises to report e-commerce revenues as a separate segment starting next quarter, and that it’s sizable with Rediff as the third ranking player in the segment.
When we asked him, why the company was reporting losses despite of investments since the last few quarters, Balakrishnan blamed the low broadband userbase for it. He said that Rediff wanted to be patient do the right things and wait for the market to take a turn. He said that the Indian government’s plan to build a fibre optic network will take 18 months and had been approved.
Active users: Balakrishnan claims that Rediff has 16.7 million active users with a 30% reach across 56 million connected homes and offices, growing at the rate of 31% YoY.
E-Commerce: Rediff, which follows a marketplace model in e-commerce increased the number of merchants on the site from 230 to 400, and the number of products available to 100,000. The company says that it further improved search and browse quality, and added voice call center support. It started seeing improvement in key metrics like ‘add to cart’ to order placement ratios, and average value per order in the quarter, and improved efficiency of its 3rd party logistics system such that 40% of orders from the 4 top metros are delivered within 24 hours and in less than 5 days in 535 cities in india.
Deals Business: Rediff says that it continues to invest in daily deals across multiple cities and now covers 8,000 merchants, investing strategically in the business until it attains critical mass, in the near term. The company feels that its main competitors are local ads and classified ads businesses dominated by newspapers and search engines like Google. It feels that the service is still in a test market phase, and is available in 40 cities, offering discounts in the range of 30% to 70%. The company’s efforts are directed ta improving usability, customer service and achieving the right price point.
Paid mail & web service for SMEs: Rediff says that the company sees two contradictory trends in the segments – with the decline of free webmail, as social networking and mobile messaging experience a major growth. Secondly, it says there’s been a spurt in the growth of premium paid mail for businesses. It had introduced a new product for SMEs which it had said would enable them to create a website for their business with a domain name of their choice without any IT support. Additionally, customers can offer email on mobile for their employees while retaining administrative controls, get the email on their business domain and many other useful features like photo sharing, ecommerce enabled site with payment gateway and logistic support. The service was priced at $50 for a 3 year period.
It is also in talks with telecom operators for strategic tie-ups for its paid mail service and inked an agreement with Loop Mobile.
Vubites: According to the company, Rediff Local TV ad network is now live across three TV channels and across 12 MSOs in 7 cities, namely – Mumbai, Delhi, Pune, Ahmedabad, Surat, Bangalore and Baroda – with an average coverage of 70% in these cities.