Who Stole my Lunch?
Programmatic and direct digital eCPMs are facing significant challenges, especially when it comes to the Hindi market where eCPMs are as low as Rs. 10.
- This scenario becomes even more problematic when considering the revenue distribution model, where ad networks, including giants like Google, claim as much as 50% of the top line.
- Google primarily operates on a performance-based buying mechanism, utilizing cost per click (CPC), whereas media purchases typically hinge on impression-based models (CPM). This dichotomy leads Google to reverse calculate CPC to CPM when making payouts to media, which invariably affects the bottom line.
- Additionally, the situation is compounded by the involvement of Supply-Side Platforms (SSP) and Demand-Side Platforms (DSP), which are in the business of constantly trading ads. These platforms further erode the margins, taking away a significant portion of the revenue in the process.
Based on the discussion within the cohort, we’ve come up with some rough estimates regarding India’s digital advertising market.
- It is valued at approximately Rs. 30,000 crore, which translates to about $4 billion.
- A substantial majority of this market, about 85% or Rs. 25,000 crore, is dominated by digital behemoths Google and Meta.
- In contrast, news publishers in the digital space have a much smaller slice of the pie. Their total digital advertisement revenue potential through direct sales stands at around Rs. 1000 crore, with a more optimistic estimate reaching up to Rs. 2000 crore.
- This estimation aligns with insights from Ashwin Padmanabhan of GroupM.
Changing scenario: With third-party cookie deprecation, Google’s revenue is expected to drop, and so is that of news publishers.
The direct sales pie is degrowing.