Perspective on Vernacular Advertising Opportunities July, 2019

Vernacular
is NOW, not
the future
A $300 Bn Opportunity Today
Vernacular
is NOW, not
the future
A $300 Bn Opportunity Today
Vernacular is NOW, not the future

1. Preface 4

2. Glossary 5

3. Executive Summary 8

4. Agenda 10
• Monetizable Internet Users 10
• Monetizable Vernacular Users 19
• Opportunity for new-age full stack content players in 2023 29

IPS UM
LOREM IP

3
Vernacular is NOW, not the future

Preface
As the data prices have decreased post Jio, the growth of that not only these users have a spend capacity, they are
internet users in India has received global attention. willing to engage on digital media, given the right tools.
While the profile of an internet user 5 years ago was fairly Today, the advertisers are spending more than 90% of
uniform (English speaking, Metro or Tier-1 city, Male); digital ad dollars on English ads largely because there is a
today, it is a lot more heterogenous. The rise of multiple lack of understanding of this user base.
social media, content and OTT platforms to cater to this
diverse user base is a testament to this. Through this report, RedSeer has tried to break some
long-standing myths as well as create a greater
Today’s advertiser has to navigate through this digital understanding of the opportunity that the vernacular user
maze to reach a “monetizable user”. While, in the past, base presents for the advertisers.
advertisers have stuck to English users as a proxy; it is
no longer feasible as this user base is growing much Anil Kumar
slower than the vernacular user base. There has been Founder and CEO,
a larger tendency to consider vernacular user base as RedSeer Consulting
non-monetizable but it is increasingly becoming evident

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An Advisory firm with strong credentials

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4
Vernacular is NOW, not the future

Glossary

5
Vernacular is NOW, not the future

Glossary (1/2) – City classification and NCCS

classification definitions

City Class Definition

Tier-1 Metros (Mumbai, Delhi-NCR, Chennai, Kolkata, Bangalore, Pune and Hyderabad) and
Cities with population more than 10 Lakh (1 million)
Tier 2+ & Rural All of the following categories:
Tier-2 • Cities with population between 5-10 Lakh (0.5-1 million)
Tier-3 • Cities with population between 2-5 Lakh (0.2-0.5 million)
Tier-4 • Cities with population 1-2 Lakh (0.1-0.2 million)
Rest of Urban • Other cities classified as Urban as per Census 2011
Rural • Cities/Towns/Villages classified as Rural as per Census 2011

Economic Class Definition

NCCS A No. of consumer durables is 6/7/8+ and education of CWE is at least College (non-
grad), SSC/HSC, no formal schooling beyond 4 years respectively
NCCS B No. of consumer durables is 4/5/6/7/8+ and education of CWE1 is at least College (non-
grad), SSC/HSC, between no formal schooling to SSC/HSC, Schooling up to 9 years,
illiterate respectively
NCCS C No. of consumer durables is 3/4/5/6/7/ and education of CWE is at least College
(non-grad), between up to 4 years of schooling to college, illiterate to up to 9 years of
schooling and illiterate respectively
NCCS DE Rest of the population having up to 3 consumer durables or having lower literacy levels

1: CWE – Chief Wage Earner

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Vernacular is NOW, not the future

Glossary (2/2) – Other key definitions

Term Definition
Indian Population 1350 Mn = 500 Mn Internet Users (aged above 14 yrs) + 30 Mn internet users (aged
(as of 2018) below 14 yrs) + 400 Mn Internet Non-Users (aged above 14 yrs) + 420 Mn Internet non-
users (aged below 14 yrs)
Vernacular Users Users whose preferred language for content consumption on digital media is a
vernacular language (and not English)
Digital Ad B2C advertisements on digital platform including but not limited to social media, OTT,
content platforms, gaming and e-commerce platforms
Digital Media Internet, Online and Digital Media have been used interchange-ably in this report.
It includes: a) both wired and wireless access b) both broadband (3G, 4G etc.) and
narrowband (2G etc.) speeds c) desktop, smartphone and other internet-enabled
devices
Social Media and Content Includes Facebook, Instagram, Twitter, Dailyhunt, Sharechat, TikTok, YouTube,
UCNews, NewsDog and, other similar social media and content platforms
FB Refers to Facebook
OTT Over-The-Top players such as Netflix, Prime Video, Hotstar, Sony Liv, Voot etc.
Gaming Mobile games like PUBG, Candy Crush, Angry Birds etc.
Music Streaming Apps like Wynk Music, JioSaavn, Prime Music, Gaana, Spotify etc.
Conventional Media Non-internet media (Print, Radio and TV)
MAU Monthly Active Users
MTU Monthly Transacting Users

7
Executive Summary
$3 Bn Vernacular Digital Ad opportunity is expected to
be generated in 2023, driven by growth of monetizable
vernacular users
India had an active internet user base of 530 Mn A growth in the number of vernacular monetizable
users in 2018, comprising 260 Mn “monetizable” users users is expected to create a $3 Bn vernacular digital
(NCCS A/B/C), which is expected to grow to 400 Mn by ad opportunity for new-age full stack content players in
2023 owing to expedited growth in the overall number 2023. This opportunity is also driven by the growth of
of internet users. Consumption of digital content in digital media, currently growing at 2X as compared to
vernacular language is a preference for 80% of all conventional media.
monetizable users, i.e., 210 Mn users with an annual
spending power of $300 Bn. However, the low quality
perception of online vernacular content forces a high
proportion of these users to access Facebook in English,
leading to a whitespace.
Vernacular is NOW, not the future

Monetizable Internet Users

260 Mn in 2018, and will add 140 Mn to reach 400 Mn by 2023

• Out of 530 Mn internet users, 260 Mn users are “monetizable” (NCCS A/B/C), and also
account for almost all of online transactions.
• 80% of current internet non-users are expected to adopt internet by 2023, to take the
overall count of internet users to 850 Mn by 2023.
• Driven by the growth, number of monetizable users are expected to grow to 400 Mn by
2023 i.e. 140 Mn to be added in the next 5 years.

Monetizable Vernacular Users

210 Mn in 2018 (80% of all monetizable internet users, expected to grow at 10% for the
next 5 years to reach ~340 Mn)

• 80% of all monetizable users i.e. 210 Mn prefer content in vernacular language. These
users will drive the growth of Consumer Internet with USD 300 Bn annual spending
power .
• These users are spending ~56% of their time on the internet (esp. on smartphones) as
compared to other media (TV, Print and Radio).
• ‘Social Media and Content’ drives their consumption of time in internet, with rural
consumption higher than that of urban. However:
• 80% of the vernacular user base accesses FB in English due to low quality
perception of online vernacular content. This base can be tapped if quality of
vernacular content can be improved.
• In addition, non FB media also needs to be focused as FB is losing time share to
other social media / internet media.

Opportunity for New-Age Full Stack Content Players in 2023

$3 Bn Vernacular Digital Ad

• Growth in the number of vernacular monetizable users will make vernacular digital ad
spends grow by ~10x, translating into a $3 Bn opportunity in 2023.
• This is also driven by growth of Digital media, which is growing at 2X as compared to
conventional media, and is likely to reach USD ~10Bn in 2023.
• Non Google / FB players will see a business growth by ~6X ($600 Mn to $3.5 Bn).
• Video ads will grow by ~7X, to double their share of digital ad spend.

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Vernacular is NOW, not the future

Agenda
Monetizable Internet Users
260 Mn in 2018, and will add 140 Mn to reach 400 Mn by 2023

• Out of 530 Mn internet users, 260 Mn users are “monetizable” (NCCS A/B/C), and also
account for almost all of online transactions.
• 80% of current internet non-users are expected to adopt internet by 2023, to take the
overall count of internet users to 850 Mn by 2023.
• Driven by the growth, number of monetizable users are expected to grow to 400 Mn by
2023 i.e. 140 Mn to be added in the next 5 years.

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Vernacular is NOW, not the future

Internet Users

India’s internet adoption reached 530 Mn at a run rate of 65 Mn

users per year in the last 2 years - ~8x of 8 Mn users added per
year from 2000 to 2009

Internet adoption started in India at the onset of the new and the affordability of smartphones increased the
millennium. Early adopters received low-speed internet adoption rate to 45 Mn users per year. But the biggest
(56 kbit/s) on dial-up modems. Desktop computers were disruption was yet to come.
the devices used to access the internet. The average rate
of adoption was 8 Mn users per year. The story started to In Sept 2016, internet was essentially commoditized with
change as low cost 2G enabled phones started flooding the entry of Reliance Jio in the market. Data costs fell
the market and websites became mobile friendly. On by 93% from pre-Jio rates.. A phenomenal 65 Mn users
an average, 36 Mn people per year got access to the on an average adopted internet every year from 2016
internet. onwards. With close to 530 Mn internet users, India has
the world’s second largest internet user base, presenting
Soon after, a seismic shift was witnessed on two fronts a huge opportunity in terms of digital market size.
– in internet technology with the introduction of 3G and
in internet-enabled devices with the introduction of
affordable Android smartphones. The faster 3G speeds

Digital Users

# of internet users (Mn); CY2000-CY18

No. of
Internet Million Users
Key Drivers of Adoption X added per Year
Users

530 Mn

Jio - Affordable 4G LTE

65
360 Mn

Low cost 3G enabled Smartphones

45

180 Mn
Internet enabled
2G phones

36
72 Mn
Desktop Internet
8
2000 CY09 CY12 CY16 CY18 Year

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Vernacular is NOW, not the future

Internet Users

Out of 530 Mn, 57% people are Active internet users (rest have
intermittent access), 20% shop for products online…

Although India’s internet population is about 530 Mn, the ones who utilize smartphone based applications for
~57% of them (~300 Mn) access internet regularly. The food, grocery, medicinal and commute solutions. They
rest are intermittent users who lack continuous access to are concentrated in the top cities but service providers,
internet for reasons such as insufficient data plans, especially food-tech companies and cab aggregators, are
unreliable network connection etc. Of the 300 Mn active aggressively expanding into non Tier 1 cities. This set of
internet users, about 2/3rd are online service transactors users is expected to see the maximum growth going
– the ones who use the internet for booking tickets, forward.
recharging phones/DTH, paying for utilities, and making
payments via UPI, mobile wallets, mobile banking and A deep understanding of the online transaction behaviour
others. of users would enable companies to advertise on relevant
online platforms basis the type of user and traffic volume
More than half of the online service transactors are on the platform.
product shoppers who make at least 1 transaction on
any e-tailing platform in a year. Hyperlocal users are

India’s Digital Funnel Description of a Typical User

(Mn Users, CY18)

Device: Desktop/Feature Phone/Smartphone

Access To¹ 530 Age Group: 7% of 400 Mn below 14 yrs2; rest are 14+ yrs.
Internet 100%
Usage: Both intermittent and continuous

Active Only continuous usage and may or may not transact

Internet 300+
Users ~57% online. Typically accesses for social media, search and
WhatsApp.

Online
Service Books tickets online from IRCTC or Travel Aggregators,
200+
Transactors ~40% recharges, makes payments. May or may not shop online.

Products Performs at least one transaction on any online retail

110
Shoppers ~20% platform in a year. May or may not be a hyperlocal user.

Hyperlocal 50
~10%
Orders food, cabs, grocery and medicines online.

Note(s): 1.Access to internet includes users who use internet on a shared device
2. Assuming only 7% of people below 14 years of age have uninterrupted access to internet

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Vernacular is NOW, not the future

Monetizable Internet Users

…, and 260 Mn users are “monetizable” (NCCS A/B/C), who

drive almost all online transactions

All active internet users may not be monetizable as some to internet. A significant bulk of the online transactors
of them may have limited spending ability. Hence, a socio- belong to urban areas. We expect this picture to evolve as
economic segmentation of all internet users paints a businesses expand to reach more of the rural population.
clearer picture about the monetizability of the users.

Such a segmentation shows that ~260 Mn internet users

are NCCS A/B/C classified – the ones who have higher
spending ability – and are monetizable. Also, almost all of
the online service transactors are NCCS A/B/C classified.

When it comes to geography, we observe that there’s

a 60%-40% urban-rural split in people having access

Socio-Economic Segmentation of Internet Users

(Mn Users, CY18)

Smartphone Internet enabled
feature phone
NCCS A/B/C ~240 Mn ~20 Mn
NCCS D/E ~140 Mn ~100 Mn

Aged
below
14 Years¹
30
NCCS D/E

240
Aged above 14 years

Monetizable
90
NCCS A/B/C

260
210 200

110
50

Internet Active Online Product Hyperlocal

Users Internet Service Shoppers Users
Users Transactors

Note(s): 1. The population below the age of 14 years (~30 Mn) has not been considered under monetizable population

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Vernacular is NOW, not the future

Growth and Monetizable Opportunity

On the other hand, there are ~400Mn non internet users who
face different barriers to adoption…

Currently, there are ~400 Mn adults who do not have the financial means to purchase and maintain a internet
access to internet. While there are a variety of reasons for supported device
the same, all of them can be broadly characterized by 3
barriers: Aspirations: There is a certain section of people who

Access: This is the biggest barrier in terms of number » either do not know about the benefits of internet or
of people affected by it – people living in regions where
infrastructure hasn’t developed enough for internet access
» do know about the benefits of internet but don’t
perceive those to be beneficial enough to them
or people who belong to the marginalized sections of the
society
This is the segment of non-internet users who are most
Affordability: There are people who may be living in likely to become users as the value proposition for internet
areas where there is adequate infrastructure, but they lack usage grows due to wider use-cases.

Barriers to Internet Usage

Descriptive

Major Barriers User Characteristics

Not in mainstream economy

1. Aspirations
No perceived benefits
40-60 Mn Reside in far-flung areas
from internet
(10-15%)
-

2. Affordability Low income

Lack of internet 80-100 Mn
enabled device (20-25%) Aspiring internet users

Low aspirations
3. Access
Lack of access 220-240 Mn
(55-60%) Low awareness of use-cases
to internet

XX Population (Mn)

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Vernacular is NOW, not the future

Growth and Monetizable Opportunity

…and as the barriers are lowered, ~320 Mn are likely to adopt

internet by 2023, out of which a significant number is likely to be
of active internet users

As the barriers are lowered, the internet penetration will a longer time to overcome as it needs to be solved
gradually grow. Most of the people who may not currently at a policy level. India, along with assistance from
perceive benefits from the internet will eventually become large corporates, is making progress in developing
users as essential systems (like banking, insurance, infrastructure.
passports, utilities etc.) gain mass online adoption.
Recent trends in the market shows that certain telecom
players like Jio are adopting novel customer adoption
mechanisms. Jio is essentially cross-subsidizing low
priced devices by engaging customers through data
or content. This phenomenon is expected to pan out
sufficiently in the next 5 years such that affordability of
internet devices may not be a barrier any more.

But inclusion is a more complex barrier that will take

New Users Added to Digital User Base

(Millions of Users, CY18-CY23)

180 850
Very likely to be
‘Active Internet
Users’.

90
50
530 Likely to be
intermittent
internet users
initially.

1 2 3

2018 Aspirations Affordability Access 2023F

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Vernacular is NOW, not the future

Growth and Monetizable Opportunity

Therefore, number of active internet users will double in the next

5 years, with growth down the funnel expected to increase even
faster (2 to 3X)

With the growth of internet penetration, the number of A high proportion of the growth in active internet users
active internet users is expected to double in the next 5 can be attributed to the first time users in Tier 2+ cities
years. However, the growth down the funnel is expected and rural areas. As the active internet user base
to be higher; with online service transactors growing at increases, users are understandably keen to explore the
2.1X, product shoppers growing at 2.5X and hyperlocal enhanced efficiency and convenience that various online
users growing at 3X. services such as shopping, banking, utility payments,
hyperlocal services offer to them. This explains the higher
growth rate down the funnel. The affordability of
smartphones and deeper internet penetration will also act
as enablers for onboarding the new users.

India’s Digital User Base

(Mn Users, CY18) (CY23F)

CAGR Order of
(18-23) Growth

Access To Internet 530 10% 850

100% 1.6x
100%

Active Internet Users 300+ 14% 580+

~2x
~57% ~68%

Online Service 200+ 16% 420+ 2.1x

Transactors ~40% ~49%

Products Shoppers 110 20% 270 ~2.5x

~20% ~32%

Hyperlocal 50 25% 150 3x

~10% ~18%

CAGR
# Smartphone Users (Mn) 400 ~730
10-15%

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Vernacular is NOW, not the future

Growth and Monetizable Opportunity

Growth in online shoppers will be driven by Tier 2+ & Rural/

vernacular users – they are expected to grow by 3.5 X to
become ~1.6 times of Tier 1 users by 2023

Owing to increased internet penetration and the advent of online shopping. User preferences are also expected to
affordable internet-enabled smartphones which support evolve, especially with the younger population in Tier 2+
various E-tailing applications, the growth in the number of cities, who are open to experimenting with the enhanced
online shoppers in Tier 2/3 cities and rural areas is options that online shopping provides them.
expected to outpace that of urban areas. According to
estimates, almost 70% of E-tailing GMV would come from E-tailers are also trying to capture this growing market
Tier 2+ and rural areas by 2023, compared to 40% in by improving last mile connectivity and offering deep
2018. discounts to onboard new users, with the expectation of
converting a high proportion into repeat customers.
The rise in disposable income and increased penetration
of smartphones and internet access in these areas is
expected to be the primary growth driver for the advent of

Number of Annual Unique Online Product Shoppers E-Tailing GMV by Customer Type

(CY18-CY23F, Mn) (CY18-CY23F, USD Bn, Descriptive)

Tier 1 Tier 2 + & Rural

~270
Mn

~180
Mn

170 28%
3.5x
~110
97 ~$22 ~$40-45 ~$70-75
Mn
Bn Bn Bn

50 40
65 70
83 100 11%
60 60
35 30
CY18 CY20F CY23F CY18 CY20F CY23F

# of Tier 2+ and # of Tier-2+ and

Rural shoppers to Rural shoppers to
be more than be 1.6x of # Tier 1
# Tier 1 shoppers shoppers

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 Vernacular is NOW, not the future

Growth and Monetizable Opportunity

All in all, India will add ~140Mn monetizable users to reach

~400Mn by 2023, as more people adopt internet, and transition
from NCCS D/E to NCCS A/B/C

The number of monetizable internet users will grow Presence on digital platforms will give the brands ability
by ~140 Mn to reach ~400 Mn by 2023 owing to high to micro-target these users, which is difficult on traditional
internet adoption amongst the non-internet users and advertising platforms such as TV, Print etc. Also, the
the transition of several users from NCCS D/E to NCCS growth in non-monetizable users during the same period
A/B/C. Out of 140 Mn, 100 Mn (~70%) will come from non is expected to be 70%. This makes it important for
Tier 1 cities. This translates to a large spending power. advertisers to understand the platform’s reach in a more
nuanced manner, to ensure efficient targeting.

Socio-Economic Classification of Digital Users

(CY18) (CY23F)

Tier 2+ Tier 1
& Rural
Monetizable Users

260 240 30 400 410 40

20 30
Tier 1

0
10

5
15
60 100

20 25
Tier 2+ & Rural

200 220 300 380

0
43

5
69

10 15

NCCS NCCS <14 Yrs, NCCS NCC <14 Yrs,

A, B, C D, E All NCCS A, B, C S D, E All NCCS

>14 Yrs >14 Yrs

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Vernacular is NOW, not the future

Agenda
Monetizable Vernacular Users
210 Mn in 2018 (80% of all monetizable internet users,
expected to grow at 10% for the next 5 years to reach ~340 Mn)

• 80% of all monetizable users i.e. 210 Mn prefer content in vernacular language. These users will drive
the growth of Consumer Internet with USD 300 Bn annual spending power.
• These users are spending ~56% of their time on the internet (esp. on smartphones) as compared to
other media (TV, Print and Radio).
• ‘Social Media and Content’ drives their consumption of time in internet, with rural consumption higher
than that of urban. However:
» 80% of the vernacular user base accesses FB in English due to low quality perception of online
vernacular content. This base can be tapped if quality of vernacular content can be improved.
» In addition, non FB media also needs to be focused as FB is losing time share to other social
media / internet media.

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 Vernacular is NOW, not the future

Research Methodology

We conducted 3000 surveys in 121 cities across India, with

the samples spread across geographies, and internet usage
patterns

A Pan-India survey was conducted by Redseer, spread monetizable internet users. An important aspect of this
across demographics and internet usage patterns to wide-reaching survey was understanding the preferences
determine the importance of the vernacular user in the and consumption patterns of English-first Vs. Vernacular-
present day digital space. This was one of the largest first users.
surveys designed to try and understand the impact of

Areas Covered Research Coverage

22 cities
121 2400
26 cities Cities & Towns Internet Users

24 cities
26 cities

5 600
Geographies Non Internet
23 cities users
West India
North India
South India
East India
North East India

Note: This map is intended only as an indicative representation of the country and may not have been prepared for or suitable from a legal/geo political standpoint

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Vernacular is NOW, not the future

Vernacular User Base

There are ~210Mn internet users who prefer consuming content

in vernacular languages, and are monetizable

Vernacular users can be classified into three broad as the basic phone usage language, while social
segments: engagement and online content consumption is in
the vernacular language. They comprise 30% of all
Vernacular Pure: These users have a strong preference monetizable users.
for their vernacular language and their basic phone
usage (phone settings, keyboard), social engagement Vernacular First: These users prefer English for basic
via phone (social media, communication, etc.) and online phone usage and social engagement, whilst preferring
content consumption is in their vernacular language. They to consume online content in their vernacular language.
comprise 20% of all monetizable users. They comprise 30% of all monetizable users.

Vernacular Intermediate: These users prefer English

Classfication of Users (CY18)

(Basis propensity to use Vernacular Vs. English)

Vernacular Vernacular Vernacular First Mostly English

Pure Intermediate Users
Basic Phone Phone Settings
Usage
NCCS D/E Keyboard1

Engagement Social Media

SMS/WhatsApp
Content Videos
Consumption
News
Movies
Music
% of All Monetizable Users (Mn Users) 20% (52 Mn) 30% (78 Mn) 30% (78 Mn 20% (52 Mn)
Vernacular Monetizable Users ~210 Mn (80% of all monetizable users - 260 Mn)

Note(s): 1. Can switch keyboards between English and Vernacular

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Vernacular is NOW, not the future

Economic Value of Vernacular Users

These vernacular-monetizable internet users have a total

spending power of ~USD 300 Bn i.e. ~2x when compared to
English Internet Users

Vernacular monetizable internet users have a 3X total This highlights the importance of the vernacular user in
spending power when compared to monetizable English the evolving digital space. While advertisers are reaching
internet users. With approximately 210 Mn monetizable English users, it is only 25% of the total spend capacity.
users in India, with a per capita average annual spend Almost 75% of the spend capacity is still untouched
of $1400-$1500, the total annual spending power of this as Vernacular-first users are less likely to engage with
segment translates to ~$300 Bn. In comparison, the total English ads.
annual spending power of monetizable English users is
$155 Bn.

Segment-wise Total Annual Consumption

Monetizable English
Internet Users -50 Mn $3000-$3200 $155 Bn

- ~2x
Monetizable Vernacular
-210 Mn $1400-$1500 ~$300 Bn
Internet Users

Non Monetizable
or Non Internet -750 Mn <$500 ~375 Bn

Users
Population Per CapitaAverage TotalSpending
(Mn People) Annual Spends Power
(USD) (Mn People)

Note(s) and Assumption(s):

1. Children below 14 yrs of age are excluded in this analysis
2. Income inflation 2015-18 is 6%
3. Average Savings rate of 30%
4. Effective tax rate of 25%,15% and 5% for relevant income bracket
5. 1 USD = INR 65

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Vernacular is NOW, not the future

Vernacular Digital opportunity

Growth in number of vernacular monetizable users will make

vernacular digital ad spends grow ~10x, translating into a $3 Bn
opportunity in 2023

The projected growth in the vernacular monetizable user English platforms. This, in combination with maturing
base would create a sizeable monetizable population, vernacular platforms translates into a $3 Bn opportunity
boosting vernacular digital ad spends. Vernacular for vernacular digital ad spend.
platforms offer higher engagement as compared to

Monetizable Digital Population 2018-23 Digital Ad Spend - Vernacular v English

Vernacular monetizable users will increase … which will drive 10x growth in vernacular
to ~340 Mn in 2023… digital ad spend

(Mn. Users) (USD Bn.)

CAGR
~32%

$10Bn

~400 Mn

15%

~260 Mn
70-75%
$3 Bn
English
Monetizable Opportunity
User
20%
85%
90-95%
Vernacular 25-30%
Monetizable CAGR
User 80% ~75%

5-10%

2018 F2023 2018 F2023

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Vernacular is NOW, not the future

Media Engagement by Vernacular Users

These users are spending more time spent on the internet

(esp. on smartphones) as compared to other media (TV,
Print and Radio)…

The media consumption pattern of these users highlights The growth in internet consumption at the expense of TV
their viability as a target segment for digital advertising. It and Print can be attributed to a combination of content
was abundantly clear that the internet was the main mode and convenience based factors.
of media consumption in 2018, with users spending 56%
(189 mins) of the time. This translates to a 19% growth in • Ability to view more personalized content.
the time spent on the internet for media consumption over • Convenient availability of a larger assortment of
2015. content.
Smartphones have enjoyed a rapid growth in the Indian
• Better control over viewing time.
market in recent years and this is highlighted by the fact
that smartphones emerged as the preferred medium • Higher mobility.
of consumption for most internet-based activities such
as social media and content, OTT Platforms and online • Real time news and updates
shopping. Television viewing could be increasing on overall base
owing to low-income population spending more time on
the same.

Internet has surpassed all other media … with Smartphones emerging as the preferred
consumption modes… consumption medium.

308 337
mins mins

14
-16% Smartphones is the preferred
26
medium

For social media

30 and content
-5% 6%4% 90%
38
For OTT
Platforms
15% 1% 84%
+19% 56
(189 For shopping
36 mins) online
36% 2% 76%

2015 2018

Internet TV Print & Radio Desktop Desktop & Smartphone

Smartphone

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Vernacular is NOW, not the future

Media Engagement by Vernacular Users

…, and most of the share of their time spent on internet is on

Social media and Content, with rural consumption higher than
that of urban

While music streaming, gaming and OTT platforms

together accounted for 31% of the time spent on the
internet (across both rural and urban areas), social media
and content took up a staggering 69% of the daily time
spent browsing the internet by vernacular users.

Rural consumption of social media and content is ~18%

greater than that in urban areas, fueled by a markedly
high non-video consumption. Approximately 30% of
India’s internet has been online for less than 3 years.
This new user base is increasingly addicted to consume
content online. The sheer amount of time spent daily on
these platforms gives advertisers an opportunity to target
these users. The higher video consumption in urban areas
is due to higher internet speeds and a more evolved user
base.

Average Daily Time Spent on Internet

(Mins per Day)

187
mins
Music Streaming 6%
149
6% mins
Gaming
126
19%
mins
OTT
56

59
Short-Format
Videos
Social Media
and Content
69%
93
A largely similar
Non-Video 67
trend is observed
in urban as well as
rural areas.

2015 Urban Rural

Note(s): 1. Non-video means content browsing, news and photos on platforms like Facebook, Instagram, Dailyhunt etc.
2. Short format videos are defined as videos with duration <10mins – could be on the above platforms or different.

25
Vernacular is NOW, not the future

Media Engagement by Vernacular Users

Vernacular users are spending significantly lower time on

FB, which is being replaced by mostly vernacular platforms

Vernacular users are spending significantly lower time on started their online journey with Facebook. As users are
Facebook. From spending 80% of the time spent on social evolving, they are looking for more personalized and
media and content on Facebook in 2015, users were engaging content. Users still perceive Facebook to be
allocating only 43% of their time on Facebook in 2018. an English-first platform and hence, find other avenues
for vernacular content and social media needs. This
Another issue is the negative perception of vernacular represents a huge opportunity for other social/content
content quality. This has forced almost 80% of the platforms to attract the vernacular user base.
vernacular monetizable users to use Facebook in English.
Facebook was one of the first popular social media
platforms, and a lot of newly onboarded internet users

Share of FB is going down as most of the 80% of vernacular monetizable users use FB
vernacular users are moving to vernacular in English driven by negative perception of
platforms. vernacular content quality.

111 Mins 189 Mins 210 189 Mins

per day per day Mn per day

Others* Disagree
21%
20% 56%
U s es F B in English

Mostly
Vernacular
platforms

80%
Agree
80% 67%
U s es F B in
vernacular

43%
20% Strongly
12% Agree

2015 2018 2015 2018

Vernacular Monetizable you agree that quality
User B as e vernacular content is not
available online?

26
Vernacular is NOW, not the future

Vernacular Monetizable Users Key Takeaways

Vernacular users are bulk of the monetizable users and will

drive the growth of Consumer Internet with USD 300 Bn annual
spending power

Population Engagement Spending Power

Monetizable Social media vs.
Population size other Internet
(2018) Total spend
Time spent on Per capita annual
potential
CAGR social media Growth in media average spend (USD Bn.)
(2018-23) consumption
(2015-18)
English 50 Mn 1.7x
Monetizable 130 Mins $3000-$3200 ~155
4% 13%
Vernacular 210 Mn 150 Mins 2X
Monetizable $1400-1500 ~300
10% 9%

Note(s) and Assumption(s): 1. Income inflation 2015-18 is 6%

2. Average Savings rate of 30%
3. Effective tax rate of 15% and 5% for relevant incomebracket
4. 1 USD = INR 65

27
Vernacular is NOW, not the future

Vernacular Digital opportunity

Also, digital ad spend is significantly expected to increase

for non FB / Google internet platforms (6X), and video ads
across platforms (7X) by 2023

Non Google/FB internet platforms are expected to see for scaling up. Another important enabler for the growth
a high rate of growth in the next five years. Owing to the of these platforms is highly engaging and personalized
English-first perception attached to Google/FB, other content such as hyperlocal content, news etc., enhancing
platforms with a focus on the vernacular-first user base the relatability of the platform for the vernacular user.
are poised to fill this gap. Additionally, these platforms
already have a sizeable existing user base (100 Mn+
MAU for certain platforms), thereby having a strong base

Digital Ad. Market (Google+ FB v Others) Digital ad spend (Video v Non-Video)

Non Google / FB players will see a Video ads will grow by ~7X, to double their
business growth by ~6X share of digital ad spend
(USD 600 Mn to USD 3.5 Bn)
(USD Bn.) (USD Bn.)

$10Bn
$10Bn

35%

CAGR
~10%
60%

$3 Bn 65%
$3 Bn
20%
CAGR
80% ~45% 40%
80%

20%
2018 2023 2018 F2023

Google + Other Players Video Ads Non Video Ads

Facebook

28
Vernacular is NOW, not the future

Agenda
Opportunity for new-age full stack content players in 2023
$3 Bn Vernacular Digital Ad

• Growth in the number of vernacular monetizable users will make vernacular digital ad spends grow by
~10x, translating into a $3 Bn opportunity in 2023.
• This is also driven by growth of Digital media, which is growing at 2X as compared to conventional
media, and is likely to reach USD ~10Bn in 2023.
• Non Google / FB players will see a business growth by ~6X ($600 Mn to $3.5 Bn).
• Video ads will grow by ~7X, to double their share of digital ad spend.

29
Vernacular is NOW, not the future

Vernacular Digital opportunity

This is also driven by growth of Digital media, which is

growing at 2X as compared to conventional media, and is
likely to reach USD ~10Bn in 2023

Digital media has a current reach of 530 Mn users, in The time spent on digital media is higher than other media
only 18 years of existence (computing from 2000). In forms.
comparison to ad spends on traditional forms of media
such as TV, Radio and Print, digital ad spends are Compared to other media forms, digital has witnessed
projected to grow at almost double the rate in the next 5 the fastest growth in reach, thereby improving its efficacy
years to reach ~$10 Bn. The faster growth in digital ad targeting a larger set of the population.
spend can be attributed to the following broad factors:

Consumer Internet, which is a large contributor to digital

media ads, has witnessed a steep growth curve in recent
years.

With 530 Mn users reach already, Digital media …and is expected to grow at ~2X when
is expected to grow the fastest… compared to other media (27% vs. 14%)

Ad spend (Digital v Others)

(USD Bn.)

CAGR
~14%
Medium CAGR of Ad-Spend Reach Years of ~$23Bn
Reach on Medium (Mn users, Exis-
( CY18-23) (CY18) CY18) tence
18
Digital 14% $3.0 Bn 530 (Since
2000)
60-65%
59
~$12 Bn
TV 8% $4.8 Bn 835 (Since
1959)
Digital
91
Radio 7% $0.4 Bn 700 (Since 70-75% Other Media
1927)
CAGR
238 ~27%
35-40%
Print 1% $3.4 Bn 350 (Since (~$10 Bn)
1780) 25-30%
(~$3 Bn)

2018 F2023

30
Vernacular is NOW, not the future

Key Takeaways

As internet becomes the most preferred medium, specifically

with significant rise in vernacular users, digital ad spends on
vernacular platforms will rise significantly

(1) Internet Users

CY18 CY23F CY18 CY23F CY18 CY23F CY18 CY23F

300Mn 580Mn 260Mn 400Mn 210Mn 340Mn $300Bn $650Bn1
Active Internet Monetizable Active Internet Spending power -
Users Users Users Vernac Monetizable

~2x ~1.5x ~1.6x ~2x

Growth Growth Growth Growth

(2) Digital Ad Spends

CY18 CY23F CY18 CY23F CY18 CY23F CY18 CY23F

$3Bn $10Bn $0.3Bn $3Bn $0.6Bn $3.5Bn $0.6Bn $4Bn
On Internet On Vernacular On Non- On Video
Internet Platforms Fb/Google platforms2
Platforms2
~3.3x Growth ~10x Growth ~6x Growth ~7x
Growth

Note(s): 1. $650 Bn in CY23 = 340 Mn Vernacular monetizable users (CY23) x ~$1900 per capita annual spend ($1450 annual spend in CY19, increased at 6% yearly inflation until
CY23);
2. For both English and Vernac content / ads;

31
Vernacular is NOW, not the future

Case Studies

Some have already taken the first steps in the vernacular

route and others will follow – Vernacular opportunity isn’t in
the future, it’s NOW

A number of new age businesses have already taken the first steps towards incorporating vernacular users and tap into
this high potential digital advertisement market. A few use-cases being implemented are as follows:

• Growing transactions from customer

• Growing engagement with partner

• Engaging users through vernacular content assortment

User Base Vernacular Reach User Base Vernacular Reach

Support for 12 25% PayTM users

Transactional
10 Mn+ languages which
covers majority of
40 Mn+ interact in regional
language
(MTU) (MAU)
Service Ola’s Tier-2+ users
Providers Success Factor Challenges Success Factor Challenges
WhatsApp like Consistency of user Multilingual App 3rd party extensions
booking experience experience in low- which supports 11 and Payment
through integration cost phones languages Gateways are still in
with IndusOS English

User Base Vernacular Reach User Base Vernacular Reach

14 Languages – Content in 10+ languages

160 Mn+ potential to reach 234 100 Mn* – ~60% of content
consumed is Hindi (~20%
Content (MAU) Mn Indians (MAU)
in other vernacular)
Providers
Success Factor Challenges Success Factor Challenges

Good quality Monitoring content- Native vernacular Fragmented labels,

vernacular experience (insensitive, fake) in users acquired onboarding
on mobile device different languages through Jio’s netwrok

Source(s): Redseer Analysis

* As reported in media

32
Vernacular is NOW, not the future

Authors

Anil Kumar is Founder of Redseer Consulting. He has been part of engagements in Internet, Private Equity, Retail CPG and
Healthcare among others. He specializes in growth and investment strategies. Anil is a believer of the data-driven approach
in solving business problems. His consulting approach leverages Data IP, sector expertise and the client’s core hypothesis.

He holds B.Tech from IIT-Delhi.

Anil Kumar
Founder and CEO
[email protected]

Abhishek heads the Consulting and Diligence practice at Redseer for the Indian Market. He brings in ~13 years of
strategy and consulting experience in Technology, Telecom, Insurance / Insure-tech, Automotive (Mobility), and
consumer Internet Sectors, both in Indian as well as Global markets.

He is a SP Jain Alumnus

Abhishek Chauhan
Associate Partner
[email protected]

Ujjwal is an Associate Director at RedSeer. He is a big believer in the power of technology to disrupt
the status quo. He specializes in due-diligences especially in the consumer internet space. Prior to
joining RedSeer, Ujjwal co-founded and exited a healthcare start-up. He can be can reached at
ujjwal@ redseerconsulting.com.

He is an IIT Delhi alumnus

Ujjwal Chaudhry
Director
[email protected]

Raunak is a Senior Consultant with RedSeer and has 5+ years of experience in management consulting and corporate
strategy. He has extensive experience working across a gamut of strategic engagements including due diligence, business
growth strategy, market entry and process transformation across infrastructure, government, education and energy
domains.

He is an ISB Hyderabad alumnus.

Raunak Sinha
Senior Consultant

33
Vernacular is NOW, not the future

Authors

Rishik is an Associate Consultant with RedSeer and has 3+ years of experience working across
Consumer Internet, Media, O&G and BFSI in Data Science, Sales, Marketing, Research and
Strategy roles.

He is an IIM Ranchi alumnus

Rishik Debnath
Associate Consultant

Abhijit is an Associate Consultant with RedSeer and has 3 years of experience working across Consumer
Electronics, Automobiles, FMCG and BPM in Corporate Finance and Marketing Strategy roles.

He is an IIMLucknow alumnus

Abhijit Routray
Associate Consultant

Eshan has conducted extensive research for market sizing and competitive bench marking across multiple verticals
in the consumer internet sector, he has developed a deep understanding of the supply chain and logistics. He can
be reached at [email protected]

He is a BIT alumnus

Eshan Tyagi
Business Analyst

Shashank is a Business Analyst having experience e-commerce, e-logistics and has expertise in in due diligence across the
consumer internet verticals. He has worked on strategy engagements with many leading start-ups and VC firms. He can be reached on
[email protected]

He is a BITS Goa alumnus

Shashank Subramaniam
Business Analyst

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Vernacular is NOW, not the future

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