“We’ve observed heightened interest from local and regional businesses seeking impactful yet budget-conscious advertising,” Sunil Kumar Mohapatra, Chief Revenue Officer, VerSe Innovation, told ET.
“Over the past 2-3 years, our local and regional business sector has experienced significant growth. Year-on-year, we’ve witnessed a 2x-3x increase in clients and a similar growth in average order value from repeat clients. Our clientele in this vertical surpasses 5000.”
VerSe Innovation, which runs DailyHunt and Josh, said it had a substantial volume of advertisers from the local and regional business segment. These companies typically spend between Rs 30,000 to Rs 50,000 per month on advertising, with some spending even more.
The company said it has established partnerships with several local brands like Chandigarh Ayurved Centre, Nimbus Academy, portable cabin manufacturer Sagar Cabin, among numerous others.
Also read | India’s digital advertising revenue is on a rise
Discover the stories of your interest
“Graphic Hearing Aids entrusted VerSe with their entire digital media mandate, to drive awareness and engagement at a localized level,” Mohapatra said. “The campaign illuminated specific pin codes, sparking heightened regional awareness. This tactful approach yielded an upswing in customer inquiries.”Industry watchers said the short form video boom that India has been witnessing is what is fuelling this growth. Gaurav Jain, head of emerging business at ShareChat and Moj, believes that it is what will drive the next set of users who come online in India.
He said that it will not only grow in terms of users and engagement time but also in how advertisers can use the medium to reach out to their prospective customers.
“We have been reaching out to these small and medium businesses for the last six months extensively and the response has been extremely positive,” Jain said. “We are very bullish about the enterprises in tier II India and there’s no reason why they would not want to reach out to customers in other cities through digital platforms. Large tech players are expensive and don’t have a designated point of contact, so they come to players like us.”
He said that the requests range from doing a 10-second video sponsored ad, a hashtag challenge on Moj or a branded share on WhatsApp. ET reported on July 30 that ShareChat was looking to monetize the very real tendency of wanting to share a piece of content with friends and family on WhatsApp.
With their new feature – ‘Branded Shares’ advertisers can target customers through WhatsApp every time a user shares their favourite content from ShareChat to contacts on WhatsApp the company’s ad pre-rolls before the actual video plays.
Also read | Indian short-video apps see $19 billion monetisation opportunity by 2030: report
“The skew of advertiser revenue is still more towards large businesses but the sheer growth we are seeing in small and medium sized businesses is very high. The low base effect and our drive to onboard more businesses of these sizes are contributing to this growth,” he explained.
In Q1 of 2023, ShareChat’s ad revenue grew by 20% year-on-year in Q2, this figure was about 35% and in Q3, Jain said the company was looking at year-on-year growth north of 60%. He added that there has been an 80% decrease in their expenses the last 12 months and that if things continue this way, ShareChat is confident of turning contribution margin positive by the end of the year.
Also read | Focus is on profitability, growth at all costs never sustainable: ShareChat CEO
Mohapatra of VerSe Innovation observed an impressive growth trend in this segment and that the combined effect of higher client numbers and increased average order values indicates “a potentially significant upward trend in ad revenue from these companies in the near future.”
Hipi is yet another short video app that has many local businesses using its platform by collaborating with local content creators who are well known in their towns or cities and make them sport a certain outfit or accessories and the respective shoppable links for the users to shop from their website, right from the video.
“The shopping from the short video space is entertainment first,” GBS Bindra, chief business officer at Hipi explained. “Users are not using it as a typical e-commerce platform where they’re opening the app with the intention of purchasing something but rather are scrolling through the videos, getting entertained, spending time and in the process just might find something they love from the creator whose video they were enjoying and decide that they would like to purchase it, in a very serendipitous way.”
Like Jain, Bindra too said that large businesses constitute more in terms of ad revenue, but he feels that as time passes, this will begin to reverse. “It is still early days for short video. Any ad-driven platform must first be embraced by larger comapnies and only then does it percolate to smaller companies. Short video platforms will be no different. We will see more small and medium size companies opening up to the prospect of advertising on platforms like Hipi, once they see success of well known brands on it.”
It isn’t just social media apps that are banking on local businesses but also platforms like Knocksense, which provides users with hyperlocal privileges and entertainment in cities like Lucknow, Kanpur, Indore, Goa, Mumbai, and Ahmedabad. Vibhore Mayank, founder of the content commerce platform said over 90% of its ad revenue comes from local businesses.
“Most of our advertisers see merit in being able to create content surrounding their brand as an effective way to market,” he explained. “Local restaurants, cafes, bars and eateries are looking to get people to walk in and have a meal at their venue and they use our app for hyperlocal targeted advertising to reach customers in their city. Apart from food and beverage (F&B), which is a top spender, those in the services space too like salons, boutiques and others advertise on Knocksense.”
Venus Dhuria, co-founder at AppyHigh, said while this is certainly a trend that is taking off and that there are several companies that are experimenting with this format, he said the results are yet to be seen. The RoI has still not been assessed.
“We are seeing a lot of interest amongst homegrown apps to tap this segment, but large businesses are where they get most of their revenue from,” he said. “It is certainly an interesting proposition, but we still don’t know how effective it is in terms of conversions – in this case, clicks and purchases. But for apps like Krishify, which is a social media network for farmers, it is extremely beneficial to have a seed company advertising there rather than on Instagram because this guarantees targeted advertising.”
Like Dhuria, others too are not fully convinced. Kalyan Kumar, cofounder, and CEO of KlugKlug, said most of these homegrown apps that saw a flurry of downloads after TikTok was banned in India are now facing a slump. With Instagram launching Reels and YouTube bringing out Shorts, it is the homegrown apps that took the biggest hit. When it comes to advertisers too, Kumar said, they would prefer to put their money on Instagram.
“The big boys are still ruling and growing significantly,” he said. “All the others are struggling to find a good model. We have not had a single request for a campaign outside of Instagram and X. Most of the homegrown apps have degrown and are surviving and if one looks at their active users, the numbers would be worse off.”
