The advertising-led streaming game in India is no longer a monopoly. While YouTube is still a big force in the segment, it's not the only one.
In the month of April, YouTube CEO Susan Wojcicki visited India to attend the video on demand platform's marquee event 'Brandcast' in Mumbai. There she announced that YouTube has 265 million monthly active users (MAU) in India, which makes it the largest player in the market. Couple of weeks later, Uday Shankar, president, The Walt Disney Company Asia Pacific, and chairman, Star and Disney India, at Disney's Investor Day, announced that Hotstar crossed the 300 million MAU mark in March. A press note released by Hotstar after the end of the Indian Premier League also pegged the platform's user base at 300 million MAU. Not far behind is Times Internet's video on demand platform MX Player, which claims to have 175 million MAU streaming content on the platform.
These revelations clearly signify that one no longer needs a telescope to spot the No.2 video streaming platform, somewhere far behind YouTube, the category creator. The battle for a slice of the digital advertising pie has now intensified. Sample these numbers: If we rewind to August 2017, Hotstar said it had 66.7 million MAU, while YouTube had 180 million tuning in from mobile only and a total of 225 million. In August 2018, Hotstar claimed to have 150 million MAU while market leader YouTube had 245 million in India. In April 2019, Hotstar said it had 300 million MAU versus YouTube's 265 in India. There are other large players in the market; SonyLIV says it has 70 million MAU, while ZEE5 claimed 56.3 million at the end of December 2018. Viacom18's Voot claims to have 55 million MAU.
As per an EY report published in March 2019, 325 million people viewed videos online in 2018, 25 per cent more than they did in 2017. About Rs 5,000 crore of advertising money was spent on digital video in 2018 and the number is estimated to touch Rs 10,500 crore in 2021. The digital ad spend in 2018 stood at Rs 15,400 crore and EY expects it to reach Rs 30,090 crore by 2021.
OPPORTUNITIES ARE PLENTY...
This explains the ad-renaline rush we're witnessing in India - a country that can break all records when it comes to scale and volumes. Whatever Hotstar claims its MAU base is, fact is YouTube continues to be the largest player in the market. "Fifty-five per cent of the digital video advertising money is spent on YouTube; Hotstar would command around 30 per cent and all other players fight for the rest. We are not including Facebook in the mix of AVOD estimates as it is largely a social media platform," says a media planning expert.
YouTube is seeing massive growth in the number of daily active users (DAU) - more than any other online or offline platform today. In fact, India is home to YouTube's biggest audience base and is also among its fastest growing markets worldwide. The OTT space in India has witnessed 3.5X growth in the last six years, from just nine players in 2012 to 32 in 2018. With increasing mobile penetration in non-metros and rural areas, there will be many OTT-first consumers, who have never consumed content on TV. "However, with so many players in the market, the biggest challenge will be to create stickiness for the platform," says Vikas Agnihotri, country director, Google India.
Akash Banerji, head, advertising, video-on-demand business, Voot, recollects boardroom presentations from early 2015 when the total number of online video viewers was estimated to reach 200 million by 2019. But then came Reliance Jio, and the game changed. All of a sudden, the number of viewers consuming digital video shot up, resulting in disruption of the ad economy. While the cost of fixed price inventories has gone up, auction-based properties have come under stress. YouTube's marquee property, the masthead, was sold at Rs 75 lakh per day last year and Google doubled it to Rs 1.5 crore in 2019.
Last year, advertisers were paying around 60 paise per view (600 CPM or cost per mille/cost per thousand) to YouTube, while Hotstar was selling at 50 paise per view (500 CPM). This year, both platforms have priced their regular buys at 40 paise per view (400 CPM). Digital media planning experts estimate a 30 per cent decline in CPM inventories compared to last year. Advertisers targeting reach (impressions) through YouTube were paying Rs 180 (CPM) in 2018, while this year, the figure has dropped to Rs 120, as per industry sources.
"Last year, 30-second ad slots during the IPL were sold between Rs 650 and Rs 1,100 CPM; this year they were sold between Rs 360 and Rs 700. Advertisers that committed Rs 5 crore got special rates... many such parameters were obviously there," says a senior planner.
When it comes to digital display advertising, close to 85 per cent of the ad spends go to Google and Facebook, while rest fight for the remaining 15 per cent. But when it comes to digital video, the gap has narrowed down and one of the big reasons for this is the environment. "A lot of advertisers are now very particular that their ads appear in a brand safe environment. When we advertise with OTT players, we're 100 per cent sure because it is all created content and not curated or user generated content. But in the case of platforms that depend on user generated content - like Tiktok, for example - it is clear that there is a problem - there will be advertisers on such platforms, but most of the big advertisers today want a guarantee that their content will not appear in an unsafe environment," explains Shamsuddin Jasani, group MD, Isobar South Asia.
In fact, MX Player CEO Karan Bedi considers that a competitive advantage: "Unlike Facebook and YouTube, we are a premium platform; most of our content is longform and premium, be it TV shows, webseries or movies. That is a huge advantage when you compare us with YouTube or Facebook, where most of the content is either short-form or user generated."
Team YouTube is trying hard to protect its users, advertisers and creators. The team has taken steps to protect advertisers from inappropriate content and to ensure their ads run alongside content that reflects their values. YouTube's efforts include: creating a more rigorous approach to address controversial content on the platform (roughly 10,000 employees are tasked with this), updating its advertiser-friendly content guidelines to help creators make more informed decisions, establishing stricter criteria for monetisation on the platform (previously, channels had to reach 10,000 views to be eligible for the YouTube Partner Program or YPP; now channels need to have 1,000 subscribers and 4,000 hours of watch-time within the past 12 months to be eligible for monetisation, including ads). Developing better tools to help its advertising partners select content that is suitable for their brands, while understanding potential reach trade-offs.
If the lack of a closed and controlled environment is a challenge for YouTube, the data that it can give advertisers access to is its biggest strength. "You can marry Google data with YouTube and come to an understanding... a lot more data is available with YouTube at the moment, compared to other OTT platforms. As an advertiser on OTT platforms, I am targeting only content, while on YouTube, it is content and consumer," says Isobar's Jasani.
The digital media planning expert believes YouTube has become as big a search engine as Google. "You want to buy a smartphone, you go to YouTube and watch an unboxing video, you want to buy a TV, you go to YouTube. Two years back people did not do it because they were afraid it might drain their data, now that fear does not exist anymore. An e-commerce platform on a Hotstar or a SonyLIV will only talk about the brand, while on YouTube, it is brand plus performance - the video will have a 'buy now' link embedded in it."
While Hotstar was unavailable for comment, a source close to the development tells us that Hostar tied up with Flipkart to get access to its database. The OTT platform uses Flipkart's database to better customise its content for different target groups.
Over the last five years, the emergence of mobile video has opened a huge opportunity for marketers. "With the massive growth of YouTube in India, brands now have the opportunity to leverage it for full-funnel growth, and not just upper funnel brand metrics, as has traditionally been the case," says Google's Agnihotri.
Over the last few years, YouTube has launched several new ad products, including Bumpers, Director Mix, TrueView and Video Ads Sequencing. With formats like TrueView for Action, advertisers can now create ads with interactive functionality. This helps performance advertisers looking to optimise video for a specific user action, like signing up for a service or buying a product. In fact, over 30 per cent of the advertisers who used TrueView for Action were new to buying video ads on YouTube. Further, TrueView for Action delivered more revenue in the first six months after its launch than any other YouTube ad product did in a similar time frame. ...
AND CHALLENGES TOO
While the headroom for growth is huge when it comes to AVOD ecosystems, there are plenty of challenges too. Presently, there is no definition of 'a view' that all platforms unanimously agree on. Facebook considers three seconds on a video to be a view, while YouTube believes seven seconds is the sweet spot. There are no common viewability metrics, no third party measurement body nor is there any standardisation for brands to do an apple to apple comparison across platforms. The conundrums are plenty and some experts believe it is the digital agency's responsibility to help the client understand and navigate through the plethora of numbers. Turns out, agencies are discussing ways to experiment on video platforms with their clients and are also trying to establish common metrics - after all, a common thread across all of the platforms will help matters for all parties.
While digital agencies are doing their bit, Voot's Banerjee believes nothing but a third party measurement body can help matters. "Till a third party measurement body comes into play, the entire AVOD category will continue to be challenged. We need an industry body, like the IAMAI for instance, to intervene. There are platforms like us who are willing to welcome it with open arms. We know there are platforms that claim 10X the viewership they get..." goes his argument. MX Player's Bedi concurs, "Measurement is a concern, yes. In general, overall metrics of the OTT space needs to be defined more clearly. There is already some work happening in BARC; centralised metrics are important and more so because video, unlike display, will not be a two player market. Instead, there will be five or six of them operating at scale," he asserts. Another challenge for the AVOD space is advertisers' perception. Banerjee explains, "Even now, they look at digital as the means to reach out to the 'top end' of the consumer pyramid - the top four metros where people have high end smartphones. They still think TV will help them reach the masses. But reality is quite different - Our platform gets 10 billion minutes of watch-time from 55 million monthly active users... that is not happening on the back of the top four metros only."
He feels platforms need to secure higher retention rates in order to build scale. "Retention is the new acquisition," as he puts it.
MILES TO GO...
In 2018, Rs 35,500 crore of advertising money was spent on video, of which online video constituted Rs 5,000 crore and Rs 30,500 crore was spent on television. "Money from TV will gradually start coming to digital," says Bedi.
Experts and analysts feel the gap between YouTube and the rest will narrow down even more as OTT players invest more in content, which will remain the key. In 2017, large advertisers witnessed their ads running on ISIS' videos and decided to go off the platform... a major 'ad-pocalypse' was thus evangelised. But YouTube did manage to win back trust gradually; it still continues to get challenged every now and then, though. Speaking of challenging claims, the industry continues to debate Hotstar's '300 million monthly active users' claim made by Uday Shankar a month back.
Overall, it is certain that the digital video market is not as duopolised as the display ad space, where most of the spend goes to Facebook and Google. But in terms of data and targeting mechanisms, YouTube is miles ahead of the rest, given the fact that it can borrow from Google whenever necessary. In terms of content, YouTube is finding it difficult to 'catch-up' as in this context it has lost to broadcasters' own OTT platforms. EY finds that 70-90 per cent of consumption on OTT apps of large broadcasters comes from catch-up TV content.
Overall, Hotstar has managed to establish itself a big challenger to YouTube on the back of live cricket content, but the latter continues to stay ahead. The question is - for how long?
Based on additional interviews with Vineet Sodhani, CEO, Spatial Access, and Sumeet Batra, AVP, Spatial Access, among other industry experts.
(This interview was first published in our magazine afaqs!Reporter on May 15, 2019)
A Note From the Editor
Can an advertiser run an online video-led campaign without YouTube in the media plan? About 12 months back, the answer would have been a resounding no. But today, maybe, just maybe, a brand can successfully run a digital campaign without using YouTube at all. Sure, no advertiser would, but one could. The fact that we can even fathom this as a plausible digital plan is a big deal. And that's the clincher our cover story this issue is based on - the monopoly YouTube hitherto enjoyed is coming to an end, as other video streaming platforms enter the big league. The challengers, as we like to call them, have arrived.
There are many theories about how and why YouTube and the online video streaming segment reached this point. While some believe YouTube's trajectory is unremarkable and in line with the laws of a free market, others feel the platform might just have missed a trick or two but aren't quite able to pin point exactly how. Still others point to facts that have more to do with the ecosystem and realities therein than with YouTube per se. For instance, as the head of one of YouTube's challenger brands stated in the story, in any discussion around brand safety, platforms - and consequently, their advertisers - that run on curated or user generated content are at a higher risk than those with more regulated content.
What makes all this hyper-competition between YouTube and other video platforms even more intriguing is the fact that there is no universal consensus on what constitutes 'a view'; presently, there are as many definitions as there are platforms - and the range is laughable. In such a scenario, each platform's elevator pitch to advertisers is based on a different set of promises around the kind of reach it affords. Consequently, the each platform's conversation around advertising rates and a brand's return on investment is based on an entirely different foundation.ASHWINI GANGAL