According to Jehil Thakkar, partner, Deloitte India, even as the digital adex is growing at 30% year on year, there is not enough digital advertising revenue for all digital players. Hence, alternative revenue models are inevitable.
In an effort to improve unit economics, digital media companies are going beyond traditional revenue streams and branded content. In addition to native advertising, display and content marketing, digital publishers are exploring events, syndicated content, brand licensing, video and even e-commerce.
According to Jehil Thakkar, partner, Deloitte India, even as the digital adex is growing at 30% year on year, there is not enough digital advertising revenue for all digital players. Hence, alternative revenue models are inevitable.
While alternative media platforms like POPxo, WittyFeed and LBB are exploring new revenue streams, digital news publishers are actively chasing commerce dollars and supplementary revenues. For example, Moneycontrol.com has launched an app through which mutual funds can be bought; BTVI has syndicated its business news content to various websites; Times Internet is working on creating private label brands in the fashion and beauty category for its MensXP, iDiva, Whats Hot and Indiatimes verticals; and Jagran has launched an education portal, Jagranjosh.com.
The common thread among these players is that they all have community-centric offerings. “Content is just one of the needs of the community; after that comes interactivity, e-commerce, services, video, etc. The future business model of digital publishers comprises advertising, subscription and transaction,” says Ashish Pherwani, partner and M&E leader, EY India. He believes that since advertising and subscription revenues are yet to reach significant scale, transaction-based revenue, such as commerce and content syndication, will be key for growth in the near future. Take BTVI’s online syndication model for example: its English business news content garnered airtime of 40,000 hours on television in January 2019, but managed more than double of that across online platforms.
Content, community, commerce
Creating communities and generating revenues from them through e-commerce, events and other transactions is the route digital publishers are taking. For instance, POPxo, which has 43 million MAUs, sees commerce as a natural extension given its large community of millennial women, and focus on the fashion and lifestyle space.
“Content is an effective way to acquire and retain users. But how do you monetise those users since a majority of brands prefer to advertise on Facebook and Google? It is difficult to have a business model based on advertising alone,” says POPxo’s founder and CEO, Priyanka Gill. The platform launched commerce in 2018 with products like cushion covers, cups, watches, diaries, laptop sleeves, phone covers, etc, aimed at millennial women. POPxo now plans to launch a skincare and makeup collection.
Times Internet has advertisements, classifieds, subscriptions, transactions and services as its key sources of revenue to prevent “over-reliance on a single vertical”. “In the next couple of years, the gross merchandise value (GMV) of our e-commerce vertical is expected to exceed our advertising revenue,” claims Gautam Sinha, CEO, Times Internet.
Meanwhile, LBB is looking to scale by integrating discovery with commerce for SMBs. It has 3.5 lakh MAUs and claims a 20% conversion rate — where users read about a local business and reach out to the merchant. “With 60,000 local brands on our platform, commerce was a natural offering. Also, multiple service providers in e-commerce have made it easy to foray into commerce and manage logistics,” says Dhruv Mathur, co-founder, LBB.
Staying the course
Not all digital publishers see commerce as an organic extension to content. According to MK Anand, CEO and MD, Times Network, which runs Timesnownews.com, media is in the business of content. It can be monetised through subscription, syndication or advertising. “Anything beyond this is diversification.”
Media platform WittyFeed is looking at increasing its digital revenue pie through sponsorships and video, instead of commerce. At present, programmatic and content marketing are its key revenue streams. It has launched a social infotainment offering, CatchUp, to look at additional revenues such as brand sponsorships. “CatchUp will be an OTT platform for micro-consumption with audio and visual content served to users in nuggets. It will have TV-like offerings where brands can sponsor the show,” says Vinay Singhal, co-founder and CEO, WittyFeed.
Although digital media sites have started to explore commerce, it requires them to ace a different domain altogether. While it will add to revenue, it will also incur cost. Thakkar says it is not easy to convert a community into buyers, just like it is not easy for newspapers to sell online subscriptions to readers. Besides, commerce is a logistics-heavy and hard assets business, which could impact margins.
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by Ankita Rai
source: Financial Express