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As India's digital user base steadily grows thanks to higher penetration of smartphones and lower data costs, digital advertising prospects are also increasing for companies at the same time. Firms now appear to be ready to shell out big bucks to be visible on this medium.
Sources said Vivo and Maruti-Suzuki had coughed up an estimated Rs 15-20 crore each as sponsorship money this year on Hotstar, Star's India's digital platform, which has the digital rights of the Indian Premier League (IPL), the annual T20 tournament organised during April-May.
While Vivo is a first-time advertiser on Hotstar, Maruti-Suzuki is advertising on the digital platform for the second time. But the money Maruti-Suzuki is forking out now was three times the amount it paid earlier, sources said.
"Apart from Vivo and Maruti-Suzuki, we are talking to 40 other advertisers to invest in IPL this year," said Ajit Mohan, chief executive officer, Hotstar. Oppo and Dell are also in talks with Hotstar for sponsorship this year.
Last year, Hotstar had Flipkart, Raymond, Axe Deos and Volini among its sponsors. Lloyd, Hindware, Hero Fincorp, Airtel and Amazon had also advertised on the platform during IPL, giving Hotstar a cumulative advertising revenue of around Rs 70 crore, according to industry sources.
This year, Hotstar is targeting over three times last year's advertising revenue, or Rs 220 crore. Mohan declined to comment on revenue numbers, saying he was not authorised to give out such details.
Video-streaming services Hotstar, Netflix and Amazon Prime Video have helped enlarge the digital user base in India owing to the convenience they bring to consumers. While industry estimates peg India's video-streaming market at nearly Rs 1,400 crore, subscription services are barely 2 per cent and the balance 98 per cent is dominated by service providers who are primarily subscription-free and supported by advertising.
Though Hotstar does have a subscription-led service for premium users, the bulk of its traffic and downloads takes place on its subscription-free service.
The platform is looking to reach 130 million viewers this year during the IPL, a jump of 30 per cent over last year. In 2015, Hotstar reached almost 41 million viewers.
Amardeep Singh, chief executive officer of digital agency Interactive Avenues, which is part of the IPG Mediabrands, says while television advertising will continue to be the largest advertising medium in India, digital advertising with a growth rate in excess of 30-35 per cent will fast catch up with it.
"While TV advertising is about Rs 18,000-20,000 crore, digital advertising is almost Rs 8,000 crore now," he says.
