Programmatic is moving beyond the buzzword in India as buy and sell-side adoption matures
The Indian economy has been boosted by digital growth, whether it is around digital payments or an increase in online shopping and digital advertising is not very far behind.
The Drum spoke to Indian industry experts to figure out how mature the programmatic space is in India and what the opportunities are for the industry.
According to a report titled ‘Digital – The new normal of marketing’ published by KPMG in India and the Confederation of Indian Industry (CII), India’s digital advertising grew by 15.5% in 2016. The report also predicted that programmatic advertising is the future of digital advertising. It said; "It will soon command a big share of the pie with traditional advertisers recognising the benefits. Programmatic content will no longer just dominate digital display advertising, but will shortly see the mass adoption of programmatic television advertising."
The Drum spoke with Sandeep Amar, CEO of Indian Express Digital who thinks the programmatic space is significantly mature in India in terms of technology adoption but that the usual suspects, or the so-called duopoly, do dominate.
"Most of the key players are using programmatic tech and there is significant buy and sell happening on programmatic. In terms of pure demand on programmatic, Google is the biggest and control a large percentage of winning bids," he said.
As to what is needed to push growth for programmatic in India, he said: "I think more demand partners on the programmatic side is the key, which is holding us back. A huge amount of agency demand is coming via Google, therefore the yields are not moving up. As one partner keeps winning 80% of the bids, the auction technology cannot increase the yields. I think agencies have also got to get direct demand partners with publishers or via SSPs, to make sure there is enough money on the table without the duopoly being involved."
Digital is projected to account for 12% of the overall ad spend by the end of 2017 in India. While this is behind digitally mature markets, such as the UK and Australia, it continues to be the fastest medium when it comes to growth in India, with a 30% growth rate.
According to the Ericsson Mobility Report of 2016, there has been a continuous growth of smartphone penetration and internet usage. The uptick in data consumption is projected to reach 7GB/month (per active user) by 2021. This provides the ad tech sector with plenty of opportunities to engage consumers digitally across all platforms to help them reach a wider range of consumers and grow more dynamically than ever.
The extensive use of mobile is also a key factor in the move to programmatic advertising in India. Mobile users are to surpass 5.5bn by 2022 fueled by growth in India, which will give programmatic space the required push.
This is leading to a new set of businesses being attracted to the country. After launching in China, MobAir, the mobile app marketing platform, has now launched in India in a bid to take advantage of the explosive growth in mobile advertising in India.
Vijay Singh, country head of India, MobAir, said: " Programmatic is already a buzzword, but I think we still have a long way to go in this direction. The pace of online data is enormous; this trend will continue, and with better policy on data privacy, advances in fraud detection and more advanced tech, we will see more implementation in the near future. The Indian market is ready for programmatic ads, marketers are more confident in the concept, and consumers recognize the brands that are active in this space already.”
In last two years the ecommerce sector has also undergone a massive paradigm shift towards focusing on unit economics rather than blindly running for gross merchandise value (GMV). Facebook report predicts that $30bn of the fashion market in India will be digitally influenced by 2020. This in turn sets up the right sentiments towards building a long term sustainable business model with a clear path to profitability.
As to why are many businesses opening now, which seems relatively late, The Drum spoke with Kshitiz Randhir Shori, country manager of European business RTB House in India, another business that has recently launched in into the country.
He said: “At this moment India presents the right opportunity for business because of several various factors. First of all, the number of Indian internet users is estimated to reach 480mn by the end of 2017 with nearly 31% online penetration (% of total population). It means it is a great opportunity for ad tech companies to build a long-term business strategy based on constant growth. Secondly, Indian macroeconomic factors should also be taken into consideration as, after a long time, India now has a stable government working towards digital initiatives. When it comes to our decision about entering the new market, it was part of our global expansion as a strategic goal for the company”
India is also well known for its IT and digital expertise and, despite all eyes turning towards India as a new growth market, this legacy of tech expertise hasn't necessarily extended into the advertising technology space.
Rohit Raj, co-founder and right brain at The Glitch, said,: "While India has been a popular destination for finding tech talent, we didn't see a lot of innovation in terms of startups in Adtech space. But with the booming success of InMobi, there has been a herd of startups lately springing up to fuel this space. A large part of them address the data mapping part and a lot of them try to solve ad delivery. There is also an increasing number of companies trying to breach the 'Influencer' marketing segment by introducing tech led solutions for the same. A fully automated technology led advertising agency of the future is not very far off from the looks of it currently."
With a few success stories to boost confidence, India is moving into a new phase of maturation and growth in ecommerce.