Local languages are going to be the key for the next billion users as well as marketers to join the Internet. With every passing year the statement has become louder but still has a long way to go. “Hindi content consumption on Internet is growing at 94%,” said Google India in 2015. Earlier this year a study done in collaboration with management consultancy KPMG India and search giant Google found that nearly 70% of Indians consider local language digital content more reliable than English content. “By 2021, an expected 201 million Hindi users — 38% of the Indian internet user base — will be online.”
A golden opportunity waiting to be grabbed by someone and that’s when I came across Adgebra owned by Inuxu Digital Media Technologies Pvt. Ltd. Headquartered in Pune, last year Ant Farm India backed digital media company Fork Media had acquired a majority stake in the company. The mixed cash-and-equity deal of $3 million gave Fork Media 51 percent equity in Inuxu, which continues to work as an independent entity developing products for Fork Media.
Adgebra, quite boldly on its website, claims it is India’s largest regional language native ad platform. Rather than assuming it as fact, I decided to ask the Founder and CEO Rohit Bagad. “We cover 10 plus regional languages that are served on Adgebra native platform. We translate them and then the ads are language targeted to the sites. No other platform to my knowledge right now does this in India.” He further added that going forward the platform would be in a position to serve customers from international markets such as the South East Asia and African nations.
Native advertising market is scaling year on year. According to a latest estimate from eMarketer, spending on native digital display ads will make up more than half of all digital display ads spending in the US this year. “US native digital display ad spend will grow 36.2% this year to reach $22.09 billion. At that level it will make up 52.9% of all display ad spending in the US.”
Native advertising isn’t alien to Indian markets. While there are no reports on how big the market is but the state of mobile ad blocking could be a good indicator. Last year PageFair reported at least 419 million people are blocking ads on smartphones. China leads the monthly active users by 159 million and India stood at 122 million, followed by Indonesia and Pakistan.
Seated across his desk, sipping a glass of buttermilk with me, Rohit shared Adgebra’s interesting growth story, a story that begins in its parent company Inuxu. Founded in 2013, Inuxu was built with an aim to create some interesting products around digital marketing. Audience segmentation engine was one of the very first products, which was layered with in-house built ad formats. After a year and half, the company started getting inquiries from publishers on how can they make use of the data that Inuxu has been collecting via audience segmentation engine. “This gave the birth to recommended article widget. We knew consumption behavior of users, so we built a widget that would recommend an article.”
It wasn’t an easy start; few publishers thought that the market already had free WordPress plugins that solved the problem. Inuxu decided to do a pilot with a regional publisher, which believed that editors do a better job in recommending articles. A test was done for a month; the recommendation widget of Inuxu did slightly better than the in-house recommending method of the publisher. Over the next three to four months, with a larger pool of data, the widget became smarter. “Not only the page views, time spent drastically increased across devices and so did the advertising revenues for the publisher. This led to inquires from other publishers,” he recollected.
At this point the startup had data, intelligence and ad formats. The only missing piece was tying everything around a business model. “We thought of replacing the recommended article with targeted ads based on the data from audience recommendation. Out of 10 recommended articles, we introduced 3 ads in it with 7 articles. That’s how we started our journey of working on native ads.”
Over the next few months with the product maturing, the startup also felt the heat from players like Taboola, Outbrain, Columbia, among others. “We could see that all the big players were signing up large publishers for huge amounts on minimum guarantees. For these players ad is the core business and not the recommended articles. We decided to stay away from this model.” Rohit added that they don’t sign any minimum guarantees. “Our pitch to publishers is two-way equation – article recommendation will increase the page views, we don’t make any money here. But we do native ads where we have strict decided revenue shares.”
All this was good, but Inuxu had to be different to stay strong in the market which was occupied by large competitors. “The idea of being different, forced us to think about native ads in the regional market. We also had an upper hand against our competitors as our data management platform understands all the regional languages.”
BEFORE ASKING FEW MORE QUESTIONS, Rohit ordered one more round of buttermilk (what a relief from the regular coffees and teas!). Rather than posing new questions, I preferred to dig deeper into his mindset. One of them is the ongoing debate on who is better in recommending articles – the editor or the system. Rohit accepts the fact that a system might take some time to understand that a certain news could be hot news but an editor might look at it in real time and make a recommendation that it could go viral. But on a longer run, system will be more effective in understanding the user behavior.
An editor places all his users under one bucket and produces content according to it. Whereas system buckets users depending on their consumption behaviour.
To keep a balance between both, Inuxu has given a way by which editors can push one article of their choice in the recommendation widget. This feature also helps large publishers to push articles from their sister sites in this slot.
Native advertising intent was a brilliant one but by the time it came to the business desk it lost its definition. Ideally it was content that resembled an online publication’s editorial content paid by an advertiser to promote a product. Content is the core for native and it is sold such that users love consuming it rather than posting irritating ads. Today native is all about ads, however. No one considers user consumption behavior or her preferences. It is all about clicks and driving a user to a landing page somehow!
For instance – I am a regular visitor to NDTV for my dose of political and current news. I wanted to know what’s Supreme Court’s take on privacy. I read the news on NDTV, at the end I am supplied a list of articles from the web by Taboola. What should be my next reading preference – ‘property project in Juhu’ or ‘5 things about Moto Mods’ or should I be concerned with ‘Priyanka Chopra’s latest achievement.’
Clearly, the recommendation engine failed to show me relevant content and this isn’t the case with Taboola alone but with all other major players. This is my biggest concern with the entire content discovery networks, at a time when publishers are already struggling to keep readers happy. Rohit thinks that this is a problem created by the industry. “The major problem is due to the massive signups with huge minimum guarantees and they have to make money. The whole cycle is a problem – to on-board a site I overpaid, now I have to get ads but traffic comes only on the content that are negative sentiment and hence I can’t ignore these ads to make money.”
This entire cycle has also forced ad qualities to drop drastically. BFSI as a sector has been experimenting with native but is yet to get any returns like affiliates. So it is left to sectors, which are playing around with images, fooling readers and making money.
There is no monitoring system for native ads, so they just get approved without any questions!
Inuxu, on the other hand, has its own internal monitoring system for Adgebra. “We have decided not to signup huge minimum guarantees but do revenue shares. Additionally, we have decided to stay away from all kinds of shady ads.”
At this point there isn’t much of a competition for Adgebra in the regional space. Hindi and English, however, remain the large chunk of business for the company. “English site volumes are great but our margins are bit skewed when compared to regional sites.”
Talking about innovations, Rohit told me that the company is working on introducing native ads in video. “There is very limited scope of innovations in native but we are piloting with integrating in video. We are using a simple image and a text without getting in the rich media space with a very matching look and feel to the site.” Rohit wants to stay true with the native game and he predicts that going forward rich media interactive content will play a big role.
EVERY OPPORTUNITY COMES WITH CHALLENGES. Regional market also has its own set of challenges that have stopped players from venturing into the space. Talking about them he said that insurance is the largest spender on digital advertising but they have to follow IRDA guidelines and then there is share-trading firms who come under SEBI guidelines. “Whatever advertising they do they need to get approved which is an internal challenge and then the concern for ROI.”
Further, he shared about the challenges beyond closing a lead. Citing an example – if he closed a lead of insurance in Tamil language and sent a contract paper in English, the process fails. “They have their own challenges to solve. It’s a long shot – first step is ad in regional language, second is landing page in regional language, then call center in regional language. It will be solved over a period of time.”
Regional language problems will be solved over a decade and not in a year or two years time.
My next question to him – Did Google AMPs and Facebook Instant articles affect his business? Rohit understands the challenges of publishers but as an ad technology business they have been ignoring it. However, Google AMP did hit his business when the search giant announced that it would not allow any third party code on AMP. “Publishers were left with no option other than being AMP compatible. Suddenly most of my publishers were on AMP and my ad revenues started dropping, as we were not serving on AMP.” Inuxu solved the problem and is now AMP compatible.
Speaking about Facebook and its Instant Articles, Rohit isn’t excited yet as he thinks that the quality of traffic is debatable and isn’t consistent to a lot of publishers. “Most publishers are keeping Facebook in the scheme of things, hoping to get viral one day. However Google is the consistent source for quality traffic.”
BEFORE I WRAP UP MY CONVERSATION, he told me that going forward the native business is going to be survival of fittest. According to him the story has similarities with the eCommerce market. “Every one burnt cash, every one gave discounts in eCommerce. Similar things happened in native market. eCommerce is consolidating and native will also follow the same path. Players who have deep pockets will keep giving huge maximum guarantees. But we have taken a stand of ‘let product do the talking‘. We might be slow but we want to be steady and survive little longer.”
Going forward regional will play a huge role but at the same time the CEO is well aware that tomorrow a Google or any other large player might jump in to grab a bigger pie of the regional business. “It is bound to happen but we are fine with it since it is the core behavior of competition.”
As I moved back to my base after a fruitful conversation with Rohit, one thought of his got stuck in my brain for the next few days –