Mobile Magic on a High

By Indrani Sen

Last week, two interesting reports on usages of mobile and mobile advertising were released prompting strategic planners in media agencies to do quick reviews of the mobile advertising strategies recommended for their clients for the current year.The first one, the  ‘Mobile Internet Report 2017’, jointly published by Internet And Mobile Association of India (IAMAI) and Kantar IMRB predicted that the number of mobile internet users will reach 478 million by June 2018. The second study by InMobi surprised us with the insight that programmatic advertising expenditure on mobile has grown by more than 500% from Q1 2017 to Q4 2017.

The writings on the walls, in this case the small screens, were there for the last few years, but the positive indications started coming from last year. Kleiner Perkins Caufield & Byers partner Mary Meeker descried India as the “most fascinating markets for the internet on the planet” and “an incredibly fierce battleground right now for hardware and software companies” while predicting on the trends of 2017 at the Code Conference on May 31, 2017. https://www.recode.net/2017/5/31/15720378/mary-meeker-india-annual-internet-trends-report-code-2017. Meeker highlighted in her presentation the dramatic and accelerated changes in Indian mobile market from 2016. She said that “Excluding China, Indian users spend the most time on Android devices. People in India spent nearly 150 billion hours on Android devices in 2016. They’ve also become the biggest downloaders of Google Play apps.”

She further commented that Indian wireless data prices are still relatively high but they have been falling steadily over the years and was down about 50 percent from Q1 2016 to Q1 2017, after the Reliance Jio Launch.  Cheaper wireless data has accelerated the growth of smartphone ownership and has caused data consumption to jump year over year.

The FICCI-EY report on M&E Industry 2018 showed that internet penetration in India is being driven by Mobile Internet. It estimated that 75% of the overall wireless internet base and 90% of the broadband subscriber base are mobile users, which supports the prediction of IAMAI.

According to the media release by IAMAI, the number of mobile internet users increased by 17.22% from December 2016 to reach 456 million users by December 2017. Urban India had 18.64% Y-o-Y rise, while Rural India 15.03% during the same period. The report predicts with 59% mobile internet penetration, Urban India will witness a slowdown, while Rural India with only 18% penetration will be next area of growth. The report further confirms that Mobile Internet is predominantly used by youngsters, both in urban and rural areas.

Programmatic advertising was still in its nascent stages in India in 2016. However, with the growth of digital advertising, it is inevitable that programmatic advertising would also grow in India. The FICCI-EY Report on M&E Industry 2018 estimated that 10% to 15% of all advertising expenditure was through programmatic advertising in 2017. It predicted that by 2020 its share may grow to 50%. The In Mobi report seems to differ from the FICCI-EY Report as it indicates an accelerated growth of mobile programmatic advertising spend by 534% (by ten times) from Q1 to Q4 of 2017.  https://www.exchange4media.com/digital/mobile-programmatic-ad-spend-grew-5-fold-in-2017 study_89173.html. The InMobi report indicates high growth of video content through mobile programmatic advertising has led to an acceleration of the process.

The “Mobile Magic” is rewriting the script of media planning strategies in India and we may be witnessing major disruptions sooner than predicted by EY in the FICCI ME Industry 2018 Report. EY indicated (Digital Media – Page 42) that overall changes can be expected once programmatic advertising crosses 25% share of the advertising spend as Programmatic advertising then would put pressure on advertising rates which in turn might put pressure on advertising led models.