As part of our #Outlook15 series, we asked heads of mobile advertising companies – Vdopia and Vserv about their focus areas for 2015, and the challenges that the mobile advertising ecosystem needs to address. Answers have been shortened for brevity.

Which according to you were the top developments and roadblocks with respect to the mobile advertising segment in 2014?

Preetesh Chouhan, Vdopia

– Emergence of native advertising due to increased focus on user experience.

– India’s mobile first population. India is the fastest growing smartphone market in the world today. We are witnessing an exploding mobile-first generation who are accessing internet for the first time through a mobile device as opposed to PC/laptop.

Dippak Khurana, Vserv

Dippak Khurana

– Mobile ecosystem is moving at such a rapid pace that the agency ecosystem is still playing a catch up role. A point to note is that many agencies still do not have dedicated mobile teams. Agencies will need to scale up their operations very quickly in order to keep up with the ever-evolving mobile ecosystem.

– Marketers view mobile as part of digital. Marketers need to view mobile and desktop as independent channels

– Mobile marketing ecosystem is extremely fragmented, however marketers want simplicity in terms of their marketing activities and campaigns.

What is your take on the Indian government’s decision to bring back mobile advertising under the service tax regime? How do you think it will affect the segment in 2015?

Preetesh Chouhan, Vdopia

– It will help digital players understand whether the medium has arrived or not.

– Tax levied will not affect how brands are allocating spends on digital media. It could be a good opportunity to see if we have made the final transition from niche to mainstream advertising.

– We are witnessing a robust organic growth of both online and mobile audience and service tax is not going to change this.

Dippak Khurana, Vserv

– It could hamper innovation efforts of the entire ecosystem comprising of mobile development start-ups, advertisers and publishers.

– This reflects a discrepancy in the ‘Digital India’ vision with respect to the treatment of traditional print media and new digital media. From a tax purview standpoint, traditional print media remains unaffected while new digital media that is actually driving innovation will have to unfortunately bear the brunt.

– While e-governance initiatives are in favour of small scale set ups and entrepreneurs, the provision for taxation is contrary in nature for budding developers and publishers.

What are some of the consumption patterns that you observed during 2014?

Preetesh Chouhan, Vdopia

– Mobile-first connected users are increasingly watching their favorite TV shows during their leisure time on their smart devices throughout the day. For instance, 21% Indian smartphone users are now watching TV on mobile by streaming or downloading.

Dippak Khurana, Vserv

– Mobile apps and app ecosystems were one of the top drivers for smartphone purchases.

– There has also been an increase in app and mobile data usage as tariffs rates and prices of smartphones have reduced tremendously. The arrival of 3G and 4G in India has increased the usage of data on the mobile platform.

What was something in the mobile advertising segment in India that surprised you in 2014?

Preetesh Chouhan, Vdopia

Emergence of specialized mobile apps. We are watching live TV on TV apps, catching up on missed shows on catch-up TV apps, enjoying comedy breaks with comedy nights with Kapil app, catching a dose of reality shows via Bigg Boss app, tuning into our favorite music via Gaana app, live cricket, news, and the list goes on.

Where according to you was mobile advertising most effective in 2014? Where do you see it being most effective in 2015?

Preetesh Chouhan, Vdopia

Preetesh Chouhan

– We saw tremendous growth in mobile ad spends from Consumer Electronics, FMCG, Auto and E-commerce verticals this year. Ad spending by companies in the consumer electronics category has quadrupled and FMCG has almost doubled in Q3 2014, as compared to the same quarter last year.

– In 2015, mobile will become an integral part of marketing plans across verticals. Brands will be able to create better targeted native video ads with real time insights into campaign performance and audience demographics. In short, advertisers will now pay only for the impression they want to buy and not the entire website.

How do you see mobile as a medium affecting the entire digital industry in 2015?

Preetesh Chouhan, Vdopia

– Consumers are using multiple connected devices simultaneously to consume media, which has made mobile the most powerful medium of advertising.

– Mobile-first generation, smartphone penetration and amount of time spent consuming media on smartphone surpassing TV and online will have major impact on the digital industry.

Dippak Khurana, Vserv

– Redesigning ads and formats keeping in mind the way users consume content and interact with their device. It is not merely restricted to clicks but also includes user data such as location, preferences, etc. and native gestures such as swipe, pinch, tilt, etc.

– Once the mobile-only approach starts seeing widespread adoption, given the already large number of users and the rate of growth, there will be huge ramifications for the entire digital industry.

What are the likely trends that you expect to see in 2015? Why?

Preetesh Chouhan, Vdopia

– From prime time to my time: Mobile as a medium is now placed at the center of all activity (media consumption), which is offering convenience and flexibility. Now we see videos, search, TV content, social media, music, everything being accessed via smartphones.

– Tier II & Tier III cities emerging to the top: Vdopia video insights showed that 43% of all videos watched in India are coming from Tier II & III cities. This is very surprising specially when we always believed that infrastructure is quite poor in these developing cities.

– Non-intrusive, programmatic advertising.

Dippak Khurana, Vserv

– E-commerce spends will shift from app installs to SKU re-targeting to their existing app consumers. E-commerce players majorly ran app install mobile advertising campaigns, when m-commerce was in its nascent stages. We now expect to see e-commerce spends shifting from attracting new app users to SKU re-targeting where unique IDs are created for products based on user browsing history.

– Conventional brands will start leveraging native advertising.

– Media buying will be driven by smart data, and online & mobile-first ad campaigns will scale up.

– Mobile will be the primary medium of customer relationship management (CRM), but not restricted to the traditional methods of CRM on mobile such as the SMS or email.

– Monetization of mobile games will be driven by a combination of video ads, reward formats and ad re-targeting.

What are the challenges in the mobile advertising segment that would need to be addressed in 2015?

Preetesh Chouhan, Vdopia

– Mobile advertising will lag behind the accelerated growth in smartphone adoption in India. Few companies will be ready to serve these technology-empowered customers on their smartphones in their moments of need. Mobile will remain small in terms of spend – particularly advertising spend.

– Adoption of non-intrusive ad formats needs to increase. Intrusive ads lead to lower publisher revenues, high bounce rates, lower conversion and lost users who never return.

– Telecom infrastructure needs to be developed at a faster rate.

What do you think will not happen in the mobile advertising segment in India in 2015?

Dippak Khurana, Vserv

– Marketers and advertisers will find it challenging to keep abreast with frequent innovations. We feel that the rate of adoption of this new medium is most likely going to be slower than expected.

Note: This post has been edited to modify certain answers that had been misquoted earlier.