MediaNama hosted a panel discussion on the “Monetization of Mobile Apps” at the mBillionth Awards South Asia 2012 on July 21st at the Eros Hotel, New Delhi. We had Dr. Abhinav Mathur (Spice Labs), Ashay Padwal (Vserv.mobi), Dev Khare (Lightspeed Ventures), Jonathan Bill (Vodafone India), and Rajiv Kumar (RockeTalk) on the panel, with Nikhil Pahwa (MediaNama) moderating the session. We had a riveting discussion, with a large part of the session focused on responding to audience Q&A. We’d be posting excerpts from the discussion in parts. Here’s the first instalment, where panelists presented an overview of the Indian market, and also talked about their role in the eco-system:
Nikhil: Java apps seem to be getting the highest number of downloads. What is it that you are seeing in India, in terms of trends on your network?
Ashay: We are seeing increased usage from Android devices. Last month, we did 12% of ad requests on android, which four months back would have been around 4%. There is increase usage of android. In terms of unique users, it’s not that skewed, but in terms of usage it is. The number of feature phone devices is also increasing, people who are browsing. The feature phone market using devices has also grown. In terms of SEA, Singapore is an iPhone market. Indonesia, blackberry penetration is high. Thailand, Malaysia, Phillippines, Vietnam are similar to India.
Nikhil: What’s the eCPM (effective cost per thousand impressions)?
Ashay: Over the last 1.5-2 years, we have been consistently giving $5 eCPM for global inventory. Most of the time, developers deploy on multiple app stores, and you get downloads across the globe, and inventory gets generated across the globe. In different markets, the rates differ. It’s somewhere between $4-6 eCPM that we are able to deliver. In India, it would be about $3 eCPM for India only inventory. Whatever app you make, there is an NRI crowd, and you’ll be surprised with the extent of usage outside India.
In India, if I take a possible click number, it would be 3 cents, and in malaysia and thailand goes up to 10 cents on an average, and in Brazil, Argentina and Mexico it goes up to 18 cents, and 30-35 cents in south africa. We’re focused on emerging markets: India, Malaysia, SEA, LatAm and Middle East. We don’t go into the developed markets. It’s spread. Different markets have different rates.
Abhinav: Revenue is coming from International markets. At one point, we were looking at around 70% of our revenues coming from South Africa, US and Canada. In terms of revenues, $5,000 is a good day. Not saying that the Indian market hasn’t worked out, but we’re focused on the Blackberry ecosystem. It’s spread. These are stronger markets for Blackberry. Of the 52 million downloads that we have been able to generate, 10-15 million would have been from India.
Nikhil: How have you integrated advertising?
Abhinav: Essentially, most ad networks are competitors, and you have to figure out what works for you. We have an ad aggregator inside our system, which is aggregating ad aggregators. We work with VServ, Adfonic, InMobi, Millennium Media. We try to work with each of these guys, and there are some decent campaigns with them. We are able to move our traffic dynamically.
Rajiv: We work directly with agencies, and we take branding campaigns, not CPC, mostly CPM. Brands like Perfetti get interested because of our reach, and we have 17 million users, across the tier two, tier three cities. These are mobile Internet users who are typically mobile. We approach advertisers and sell directly. Our sales team is just two people, and one is more of a creative guy. The pitch is just showing the numbers and the engagement. It’s like- “Here is an app that is a media channel for these users. They do social discovery and engagement.”
We try to remain away from display advertising, and we look more at engagement campaigns. Antakshari is built around content creation and engagement rather than consumption. Most of our campaigns are around what the user is already doing. For example, for Fanta, people were sending Holi greeting cards, and these happened to be fanta greeting cards. Net CPM to us comes to around $2.5 to us. This is only India, and monetization is only India.
Nikhil: So, what I’m hearing from you guys is that it is about scale, and the net CPM in the Indian market isn’t that great.
Jonathan: The issue in India is not scale, but it is quality of sales and quality of buying. If you look at growth of Internet advertising in the rest of the world on fixed, that took an awful lot of heavy listing of sales. Agencies are inherently lazy, but they don’t have a lot of time to experiment too much. You have to give them easy models. Experimental models like RockeTalk, if you have a campaign that works, the next years budget is ten times of this year. Worrying too much about CPM’s and CPCs is wrong. Inventory is not an issue, and quality of sales is an issue. We are suffering a bit from a fast attempt to monetize.
On transactions, if there is no closed look transaction, then digital advertising is only going to be brand advertising. Unless I can see an ad, click on an ad, find out more and buy, the whole thing doesn’t work. The transaction model is symbiotic and fundamental to advertising. We have recognized this, and dramatically changed revenue share in favor of developers. Unless we can get developers in India to make money, there will be no developers. If I can’t have developers in India create content that is India relevant, then I cant grow beyond the english speaking, smartphone only market. The scale of that business, we’ve gone from zero in that business, with limited partners, and it is already in the tens of crores in revenues per month. The appetite is that people are shifting. They have grown up with mobile services that are paid for, so the propensity to pay for access to great services is much higher than the rest of the world. India should not go with free only. We’ve done two things with Vserv: not only can advertising come into applications, but we can also charge. Just be careful about writing off transactions.
Nikhil: The transactional part of the business – is there more of a propensity to pay, or propensity to charge? Is that going to be a situation where you’ll have complaints?
Jonathan: The entire industry in India is moving from a process of push to a process of pull, and no longer can you rely on distribution through operators or other partners as a business model. You have to rely on creating a service that is reliable, relevant and contextual enough, so that customers want to go and consume it. Unless you do that, it’s a waste of time. If you look at the opportunity for developers, is to develop a relationship on a feature phone, so that when they do make that transition to an android device in the next 1-2-3 years, they will seek out your service. If you only build for smart phones, then you’re competing on the play store, with a million app developers, who are way better than most of you guys, and have world class UX and UI, and world class VC backing, who have created that experience. Compete in a more easy to compete environment, and get people to invest in a relationship with your brand so that they seek you out later.
Nikhil: Dev, would you invest in a feature phone app in India?
Dev: We would, as long as they have world class smart phone ambitions. I think there are companies that say that we are really focused on feature phones and we’re the best, and that’s all we’re going to do, and I see that market as limited in terms of monetization. If you look at the 7-800,000 smartphones sold per month in India, among the 15-16 million devices that are sold a month in India, that percentage has doubled in the past year. Monthly unique smart phone users in India are around 7-8 million, and we could have 20 million by the end of this year, and 50-60 million by next year, so that number is going to expand pretty fast. Jonathan was saying that are more than 100 million mobile web users in India per month. That number could go to 200-250 million by next year. You think of those numbers, the opportunity is to build, focus on product market fit, don’t spend tons of money on customer acquisition, and then in a year or a year and a half, you can go nuts on customer acquisition.
We’ll have more from the panel discussion in Part 2, tomorrow.
*Disclosure: VServ.mobi was the panel sponsor