Digital Advertising for Regional Consumers: Opportunities for Advertisers and OTT Video Players

Advertising has massively evolved over the past few years. From a traditional, one-way communication strategy to telling exciting stories that resonate with audiences, the choices of media they use to communicate have evolved too. Programmatic television advertisements have made way for highly engaging and immersive video ads on mobile phones, thanks to the integration of various technologies. India being a largely mobile-first market has seen brands focus on communicating with consumers through mobile and digital platforms. According to a study titled Mobile Ecosystem and Sizing Report conducted by the Mobile Marketing Association (MMA) and GroupM, ad spends worth Rs 2600 crore and `4200 crore were channeled into mobile advertising in India in 2015 and 2016 respectively. In 2018, the figure is expected to be nearly `10,000 crore. This is due in large part to the fact that over the past two years, India has undergone a telecom revolution that began with the rollout of 4G services by operators, up to the launch of Jio, making 4G Internet greatly affordable and accessible for the masses.

OTT Video and the Rise of Rural Consumption
The OTT or video-on-demand (VOD) market in India is increasing at a CAGR of 27.3 percent, and is expected to reach USD 168 million in revenues in 2021, a phenomenal rise from the USD 64 million recorded in 2017. According to EY, by the end of 2016, there were approximately 160 million OTT viewers in the country, a number that’s expected to reach nearly 355 million by 2020, driving more than USD 500 million worth of revenues for telecom operators, advertisers, and content platforms alike. Furthermore, while content providers and advertisers have benefited immensely by leveraging digital video advertising to reach urban consumers, the urban market is fast nearing saturation. Thus, brands and advertisers are now looking toward the largely untapped rural consumer segments and markets and capitalize on the digital transformation these geographies are currently undergoing. With the OTT video ecosystem moving beyond metros and Tier-I cities, watch-times of regional content have grown by more than 4-4.5 times the growth rate of Hindi-language content.

Currently, Indian consumers spend 93 percent of the time they spend on digital video towards regional language content. In addition, more content like original web series and short films is being created in languages like Punjabi, Bengali, Tamil, Telugu, Malayalam, Gujarati, and Marathi, thereby facilitating steady and exponential growth in OTT subscriptions. Advertising spends by brands for OTT video content are also expected to rise to USD 40 billion by 2020. The enhanced native engagement offered by leading OTT platforms is also making in-app advertising a very lucrative area of opportunity for digital marketers. While the opportunities to target and reach out to rural and regional audiences is plenty for brands and advertisers, some of the key challenges that currently stand in their way include the lack of tools to measure audience engagement on digital or mobile platforms and achieving successful RoI on their digital advertising spends. A potential solution for this is that advertisers must look to incorporate analytics to easily measure the total reach of video ads using analytics, thus optimising their video campaigns for cost-effectiveness and scalability to reach new geographies and consumer segments. Due to the sheer number of individuals on social networking platforms, communicating with consumers on social media enables them to provide feedback, and for brands to measure conversion and scale of engagement, and gain valuable insights on consumers.

According to a report by KPMG, titled The Digital First Journey, advertisement video on demand (AVOD) continues to be the primary monetization model for OTT players in the country. Along with this, the subscription video on demand (SVOD) and freemium models are seeing greater traction on the back of compelling content, like premium sports, while sponsored content is a popular way for brands to reach consumers through relatable and creative content. Audiences across rural areas, Tier-III and Tier-IV cities are embracing video content and streaming services at a rapid space, and are open to experimenting with different content. This trend can be capitalized to its full potential considering that these areas have a huge number of young consumers that accesses the Internet primarily through mobile devices like smartphones and consumes a large volume of online entertainment. The future of digital video advertising in India then, is extremely promising.