[Startup Bharat] How long will it take for regional content apps to explore alternate revenue models?

According to a report by BBC, India has over 125 million English speakers - a very small number in a country of 1.3 billion people. This shows that a majority of our population consists of non-English speakers. 

With increasing internet penetration and surge of smartphones across India, regional content apps are increasingly gaining popularity and stirring investor interest as well.

YourStory research shows that from 2015 to 2019, over $610.88 million was pumped into Indian language content apps, across 49 deals. A bulk of this funding was in 2018 and 2019. While 2018 saw around $270.90 million investment across 18 deals, this year around $247.06 million has already been pumped in across eight deals. 

From apps like Vokal, a peer-to-peer content platform, and videos from ShareChat and TikTok, to news aggregator platforms like Dailyhunt and China’s News Dog, most of these platforms have raised funding in recent years. 

These language content platforms are also targeting a new segment - consumers from Tier II and Tier III cities. With over 530 million internet users, India has the second largest internet user base in the world today. 

However, most of the content at present is freely consumed and shared. But how will these startups be able to create a strong differentiation?

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A strong audience base

At present, the paying use case of this audience is sporadic. Virendra Gupta, Founder and CEO, Dailyhunt, told YourStory: "Monetisation channels are strongly emerging for the regional content apps. On our platform itself, over 500 companies with national presence and emerging businesses from small towns are interacting with their target audience. Overall, we are seeing ads in vernacular languages getting more engagement than those in english. Today, we have an Annual Recurring Revenue (ARR) of almost $100 million with these revenue models. Hence, we believe that there is definitely potential for regional content apps to monetize, but success depends on application of technology to serve ads well"

There is no doubt about the usage of the platforms as each of these apps have seen high engagement rates. While Vokal has notched up two million active users in a span of two years, TikTok, on the other hand, is arguably India’s fastest-growing and most-downloaded app today, with 200 million users. In Q1 of FY19, TikTok, which is available in 10 Indian languages, added 88.6 million users in the country. 

The Dailyhunt group also boasts of 252 million monthly total active users. The time spent per daily active user is 27 minutes per day, with over 19 billion pageviews and 2.4 billion video views per month. But the monetisation plan for these platforms are yet to pan out. 

Advertising to the rescue

Naveen Tewari, Co-founder and CEO, InMobi, which recently launched Glance, its content platform, says, Glance is still exploring monetisation avenues but is clear the company will never run an ad directly on the platform.

“There are ways in which we can monetise through driving traffic to certain places that our personalisation system feels you should see, and if you go there, we can make some money,” he added.

Dailyhunt, like other platforms, derives most of its revenue from advertisements. According to reports, India’s eCPM (effective cost per thousand impressions) is Rs 120 for digital advertisements in Sec A and Sec B (close to 70 percent of the digital spend is taken by Google and Facebook). India’s digital advertising market is estimate at $2 billion (compared to $70 billion in China and $104 billion in the US) but is growing at over 30 percent per annum. 

The Vokal team has also come up with a monetisation plan. Aprameya Radhakrishna, Co-founder and CEO, Vokal, says, there can be a paid version of Vokal for those who want long-form video content “beyond the free two minutes”. 

Matrix Partners India, an investor in Dailyhunt, has been closely watching the space since late last year. After raising its Fund III in January this year, the team said it is planning to explore Indian language apps. 

Apart from Dailyhunt, Matrix has also invested in Indian language news app Awaaz. Vikram Vaidyanathan, Managing Director, Matrix Partners, said in an earlier conversation with YourStory that digital media follows an age-old revenue model of advertising.

"Ad led revenue models start working at large scale. When you get a consistently large user base you can get the advertisers to buy into your platform. Also, it isn’t a ‘winner takes it all’ market for eyeballs yet. As users grow and their mobile time spend increases, the question is if can you can capture large share of incremental time spend by targeting and collating different value propositions e.g. devotion only, astrology only, agriculture only” Vikram says.

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A storehouse of data and information 

Today, the large volume of content uploaded and shared on these platforms every minute has become a goldmine of data and information for users. As with any social media platform, the data thus generated on a daily basis makes algorithms more intelligent, and it becomes easier to customise and curate different offerings and services to the user. 

“This works brilliantly when it comes to understanding user base and what targeted advertising can be done for these audience,” says an analyst of a consultancy firm. 

Currently, most of the firms are just working to onboard consumers and get the much-needed data and information. 

According to a RedSeer report, digital advertising spends in the regional media is set to grow from $300 million in 2018 to $3 billion by 2023. As Indian language users continue to grow, the report predicts that up to 30 percent of advertising spend is expected to come from Indian language ads. 

So at present, the focus is clearly on wooing the consumer. The next 12 to 18 months will be interesting to see which ones will win and start on the monetisation game. 

(Edited by Megha Reddy)

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