If there are two sources of revenue or two types of business model that have been long prevalent in the digital media space they have been either content business models i.e. provide content and charge a fee or monetize via advertising and the other is product or service commerce models i.e. provide online services and products and charge a fee.
There are umpteen examples of both types of businesses. There is Rediff.com which is an out and out content business monetized via ads. They do provide products through their ecommerce portal as well but its largely their ad driven model that drives the business. Then there is Naukri.com (Infoedge) which relies heavily on commerce i.e. recruiters and HR folks buying database services or job postings for hiring.
The challenge has been on both these business fronts. Let me take them one by one and explain the challenges we face.
Challenges in Content businesses
The core challenge in any kind of content business is advertising monetization. In India advertiser access is limited to the big media buying agencies and that is the main reason that digital hasn’t penetrated further than 5% of the media spend budgets. The other big issue is ROI. While I do believe that tracking is a great USP of the digital medium it is also its biggest enemy as it makes every click as well as conversion accountable real time unlike the traditional media where its almost impossible to track things real time.
So if you are a content player then you are either left at the mercy of Google adsense or other networks like Komli, Tyroo or Networkplay (all of whom offer dismal returns) or you are left on your own to find advertisers for your own niche. Advertiser access is the most painful exercise if you are small to medium publisher in the internet or mobile space. The reason is that advertisers don’t have time to deal with smaller publishers and there is a lack of a large enough aggregator who can provide a good return to these publishers.
Challenges in Commerce Businesses
The commerce business suffers from the low payment options problem where in the credit card penetration is dismal and there is a lack of large scale alternate payment options. Yes the mobile payments is one area where in a lot of ground has been made but largely its still early days to predict successful mobile payments will turn out to be. All in all the challenge still remains one of adoption across the board. Unless you are fine with building a sales team that collects payment on your behalf the online/mobile payments still remains to be a serious challenge.
Exceptions to the above two scenarios
Mobile is a big exception to both the above scenarios especially when the user can pay via operator billing. This is possible both incase of content i.e. VAS and product i.e. Apps. The only issue with the mobile industry is the revenue share but even that I feel isn’t the issue if you have content that sells. Its a known fact that ABCD – Astrology – Bollywood – Cricket – Devotional content sells big time and thats what most of the VAS players have been riding their fortunes on for now.
Cumulative Impact Of 3G, BWA & MNP On These Businesses
While individually 3G, MNP and Broadband wireless access may not make the earth move for digital media industry but cumulatively they do mean a lot for both online and mobile companies. Their combination could empower content and product creators and get a fair share into place for them. It could also mean rising users and lowering tariffs for mobile operators and internet providers alike.
All in all there will be a light at the end of the tunnel for companies who have toiled hard over the last 3 years but it may take another 2-3 years atleast for digital to grow up both on content monetization and ecommerce usage. Would love to know our readers take on how optimistic they are on growth?
