Can local digital advertising networks take on Google?

Can local digital advertising networks take on Google?

Local digital advertising networks are expanding by leaps and bounds. They are now gaining greater importance as a slowing economy prompts advertisers to tighten their belts and better target clients. Venture capital and private equity firms are also looking at the sector.

From L-R: Siddharth Puri, Business Head, Tyroo Direct, Nitin Chowdhary, Business Head, Tyroo Audience, and Manish Vij, Founder-CEO, Tyroo Media From L-R: Siddharth Puri, Business Head, Tyroo Direct, Nitin Chowdhary, Business Head, Tyroo Audience, and Manish Vij, Founder-CEO, Tyroo Media, a daily deals website that started just 16 months ago, does not have a marketing team or the necessary technology infrastructure to analyse its sales and tap advertisers. Still, the number of advertisers has jumped to more than 100 now from 10 a year ago. How did that happen? All thanks to Tyroo Media, a digital advertising network.

"Working with Tyroo has helped us in various ways. We get their marketing expertise and it has also helped us drive sales higher," says Sneha Khaitan, the deals site's founder and CEO. Business has been growing 25 per cent on average month -on-month and the site now gets two lakh visitors a month, she adds.

Digital ad networks have also been the force behind online retailer . The e-commerce portal says that ad networks have expanded its reach, helping drive sales higher. "Almost seven to eight per cent of our revenue is generated by these networks," says Ashutosh Lalwani, co-founder,

The portal conducts about 9,000 transactions a day with an average value of about Rs 1,400 each. So what are these ad networks and how do they work? Ad networks are the middlemen of the digital world. They act as brokers between advertisers and web publishers, connecting sites which want to sell ad space and want to reach potential customers. The networks stitch together ad space from many small websites and from the less visited pages of large sites that otherwise go unsold. As Mahesh Murthy, founder of digital marketing firm Pinstorm, explains: "Ad networks are the Walmarts of the advertising business. They work with all the remnant inventories which they sell for dirt cheap rates."

Kiran Gopinath, CEO, Ozone Media
We gained understanding of some verticals and built on our expertise: Kiran Gopinath
Growth in digital advertising is benefiting ad networks. The online advertising market is expected to expand 25 per cent to Rs 1,561 crore in the year through March 2013 from Rs 1,250 crore in 2011/12, as per the Internet and Mobile Association of India, a group of online and mobile value-added service players. Of this, display ads accounted for Rs 769 crore in 2011/12 and search ads the remainder. As per industry estimates, 85 per cent of this amount went directly to large websites and 15 per cent to ad networks.

This year, the share of ad networks in total display ad spending is likely to rise to 20 per cent. Ad networks have been around for some years but are now gaining greater importance as a slowing economy prompts advertisers to tighten their belts and better target clients. Venture capital and private equity (PE) firms are also looking at the sector. Recently, Norwest Venture Partners, Nexus Venture Partners, Draper Fisher Jurveston and Western Technology Investment jointly invested $39 million in ad network firm Komli Media.

"Companies such as Komli, which have technology leadership, strong domain and significant scale are very interesting to invest in. The market size is large and large players such as Komli will be able to gain a sizable share in this fastgrowing market," says Niren Shah, Managing Director, Norwest Venture. PE firms and strategic investors are said to be in talks with Smile Vun Group, a digital media firm that owns ad networks such as Tyroo Media and DGM, to make an investment but the company is not looking to raise funds as of now as it claims it is profitable.

Manish Vij, co-founder and CEO of Smile Vun Group and founder CEO of Tyroo Media, says the industry is growing because of its wide reach and flexibility, and compliance with the changing digital media sector. Ajit Balakrishnan, CEO,, gives an economic reason.

"Typically, in any market there are five or six large websites, which account for 70 per cent of the time spent surfing or getting unique visitors. The balance 30 per cent accounts for more than 10,000 other sites. Ad networks do business with this balance 30 per cent."

Rajesh Sule, Country Head, Exponential, promoter of Tribal Fusion
We track the consumption pattern of the audience that comes to websites: Rajesh Sule
The ad network market is worth about Rs 300 crore, according to industry estimates. The top four players - Tyroo, Komli, Tribal Fusion and Ozone Media - account for almost half of the market. These networks are also growing faster than large web publishers. According to data from web analytics company comScore Inc, the number of page views at Yahoo India grew 9.4 per cent from a year earlier in July, while that at Rediff fell 6.3 per cent. In contrast, page views at the websites that Tyroo and Tribal cater to surged 60.5 per cent and 31 per cent year-on-year, respectively.

Prashant Mehta, CEO, Komli Media, says the company's wide reach is evident from the fact that it works with 75 of the top 100 traditional advertisers in India. He refuses to divulge any revenue numbers, saying only that the company's business grew about 100 per cent last year and as much as five times in the past three years.

For Tyroo, growth is being driven by a boom in the e-commerce segment. "We have 225 unique advertisers. We partner almost all the major e-commerce players and represent almost 10 to 15 per cent of our clients' ad spends," says Siddharth Puri, Business Head, Tyroo Direct, the display ad network of Tyroo Media. "We drive approximately 4,000 transactions daily to our e-commerce clients."

Ozone Media has benefited by focusing on a few verticals. "We work with 3,500 publishers. At a very early stage, we gained understanding of the financial, education, travel, lifestyle, entertainment and Internet verticals, and we've built on the expertise over the years," says CEO Kiran Gopinath.

Tribal Fusion works with more than 2,500 publishers, says Rajesh Sule, Country Head, Exponential, a digital media company that owns the ad network. "We understand the audience that comes to these websites and we track their pattern of content consumption. We look at more than 20,000 parameters. Based on these we create buckets of behaviour and accordingly get brands and publishers on one platform," he says.

Ad networks bring enormous cost savings for advertisers. The cost per click for a standard banner advertisement at a large website such as or, for instance, is between Rs 150 and Rs 200, but an ad network could cost 35 per cent lower.Working with an ad network has other benefits as well.

Typically, media buyers looking for online space use ad networks to target potential customers for the brands they represent. Krishna Kumar, CEO of Media2Win, a digital media agency that represents brands such as Tata Sky, says ad networks help in niche marketing. Adds Meghna Godkhindi, Business Director, Digital, DDB-Mudra Max Media, a media buying agency, "The ad networks buy ad space in bulk and targeting (potential customers) is possible. It also saves the agency the hassle of talking to many sites."

Trivikram Thakore, Chief Marketing Officer, FashionandYou. com, says ad networks help increase advertisers' reach by tapping potential customers based on their interests, and also allow web publishers to drive traffic to their merchant partners' websites. "For ecommerce players such as us the marketing plan is incomplete if you do not associate yourself with an affiliate network," he says.

Lower ad rates are hurting many popular websites that had been able to charge higher rates based on their sizable audiences. Some large websites, such as Rediff. com and, and a few media companies that also own newspapers, magazines and TV channels say they do not work with ad networks as they want to avoid driving down the rates of their main pages.

Most of these large websites have sales teams which sell the inventory first to top advertisers. "We do not work with ad networks on a regular basis. But, if and when we have remnant inventory we sell it to ad networks very opportunistically," says Rediff's Balakrishnan.

Rishad Tobaccowala, Chief Strategy and Innovation Officer at media marketing company VivaKi, says price pressures in the online display advertising segment in India will remain as supply is higher than demand.

But can these local ad networks compete on their home turf with global giants? Google has its ad network Ad Sense operating in India too, while Yahoo is said to be in the process of starting its own. "The overall display ads industry has been growing at about 40 per cent annually and Google's display ad business has been growing faster at 60 per cent," says Praveen Sharma, Head of Media Sales at Google India. Home-grown ad networks need to watch out.