Carving niche with contextual advertising

BANGALORE, INDIA: Today, Internet marketing has spawned whole new genres of advertising and promotional activities. And one of the hottest methods is search marketing – contextual, which is showing a 214 percent growth over the past two years.

Communicate2, a leader and an early mover in the contextual advertising space in India, is growing at 400 percent year-on-year. It has the largest team of Google Advertising Professionals (GAP) in the country purely focused on search.

With this backdrop, Vivek Bhargava, CEO, Communicate2, shares a few word with Deepa Damodaran – CIOL in an interview.

Excerpts from the interview:

CIOL: How does contextual advertising differ from traditional advertising modes?

VIVEK BHARGAVA: If a person defines contextual or search advertising from Google's point of view, it is either displaying ads next to the relevant content or displaying ads based on what the user searched for on the search query box.

My definition of both search and contextual advertising is much broader. For me, search advertising is related to identifying or finding content and then serving ads on a real-time basis, based on that content. The content could be text, but it also could be audio or video (for example, a video feed being recorded from an outdoor hoarding-car being identified and advertisement being served on the outdoor).

Context also takes into account the target user's gender, their socio economic status, their state of mind, the time of the day, the day of the week, other environmental factors such as Rajasthan Royals winning the IPL. All of the above create a context – if one has the ability to identify this context and serve ads based on this context, I would call it contextual advertising.

CIOL: How do you evaluate the MS-Yahoo bid?

VB: I evaluate the bid positively. I feel that if any partnership gives consumers/advertisers more choice, it is positive for the industry. I believe it is positive for the industry and allows increasing the industry pie.

From a commercial stakeholder of Microsoft and Yahoo point of view too, I believe that this kind of merger would be positive to both companies. A merger of these two companies would allow one to identify more context of the user visit, which in turn would result in better contextual advertising.

Yahoo may be able to help take the Microsoft Office package online, as well help in making contextual advertising enabled inside office programs, which I believe would help in democratising Office in most emerging markets of the world. The growth for Microsoft is in the emerging markets. However, the current method of distribution is a challenge for Microsoft.

CIOL:  Communicate2 is an endeavor to remove advertising as an expense from the Profit and Loss accounts and replace the same with the term Cost of Sale. Can you please substantiate on this?

VB: One of the reasons for the rapid growth of SEM is the ability to measure cost of sale. When we work with our customers, we measure the cost of disbursal of the loan, we help them by training their call centre employee to use lead generation information to improve sales. For example, if a person is searching for a quick loan, the call centre agent must focus on speed of disbursal. I think there are some parts of advertising, which will move to cost of sale matrix, while the others may remain awareness, interest and desire related. I think that all mediums are complimentary to each other and have their roles to play in the sales process. Search obviously has proved itself as the most effective sales oriented medium. 

CIOL: How has the advertising vertical evolved during the past decade, especially the Indian market?

VB: I see a major shift of clients moving from non-measurable medium to measurable mediums. The paid search medium has grown from $100 million to $14 billion in less than five years. In India, online advertising is growing even more rapidly. As technologies leapfrog, India is also leapfrogging the evolution of advertising. For example, in the developed countries, conventional mediums moved from visibility, share of voice, and branding, and finally, closer to cost of sale.

In India, people are moving straight to cost of sale skipping the evolution process. Many of our clients that used to spend an X amount just a year ago, are now ready to spend 3x-4x with us. Even this year, most of our clients are expected to spend thrice than their last year’s spend.

CIOL: What is your current taking in the market and who are your rivals for this space?

VB: We are the leading SEM company that is focussed only on Paid Search with a 150-people team. So, in a way there are no rivals. However, if we take a broader perspective of digital advertising, we still think each one of us is a partner in growth. As I said earlier, there is an open sky to explore and expand.

CIOL: Do you have plans to venture into mobile phone as well as the bloggers’ segments?

VB: Communicate2 is often asked why we have built a 150-people team focused only on Search Engine Marketing. Our answer has always been that we are a contextual advertising firm. Today, only search offers contextual advertising opportunity in the real sense and so Communicate2 is focused on Search.

Once the other media starts offering an opportunity of contextual advertising, I don't see why Communicate2 shall also not gain a leadership position in that space as well. At Communicate2, we are building capabilities that allow us to understand and excel in a dynamic-pricing and measurement-oriented environment where people need to create advertising units on a real-time basis. Our endeavour is to build these skill sets. We are media agnostic – these skill sets would be equally valid in all mediums that shall become contextual.

CIOL: What are your other future commitments?

VB: Technology. Processes. People. In a nutshell, grow to a 1,000 people contextual advertising team that has great technology and process to make advertising more effective.