Commerce & Media: A match made in heaven?

Today around 45% of the total Indian population has internet access, making everyone a digital and tech-savvy content consumer. Each person while sitting or working from home finds themselves engaging with an endless scroll of content or swiping across different e-commerce platforms. Working hard online as well as playing hard online is now the new normal.

This evident and unprecedented consumer behavior brings us now to the present which was once just a prediction. Owing to the lockdowns of 2020, audiences that once used to visit theatres and shop at malls now find themselves more comfortable with online experiences.?

Thus with the massive scale of consumer uptake businesses across media (OTT, Short Video Apps, etc.) and commerce (Food delivery, shopping, education, fitness, etc.) are now working towards both an improved customer experience and a monetization model that suits all.

The Blurred Lines Of The Media Revenue Model

Let’s have a look at Disney+ Hotstar that boasts a mammoth base of 300Mn+ Monthly Active Users with 46Mn+ Paid subscribers globally. The platform offers free content with an advertising-based model (AVOD) allowing users to watch selected & limited content for free. At the same time, they also have a subscription-based model (SVOD) for audiences to watch all the content that the platform hosts, ad-free. When it comes to LIVE sporting events such as the much loved IPL, Disney+ Hotstar applies a mix of both the AVOD & SVOD models where even the Premium and VIP users of the app are showcased targeted ads.

Leading the AVOD-model is another home-grown OTT platform, MX Player that offers its 200Mn+ Monthly Active Users thousands of hours of premium, exclusive and original content for free with ads. Following the suit, Zee5 and Sony LIV are streaming & video-on-demand apps that have both free and paid content available for their users. These apps enable their users to watch certain ad-supported content for free (AVOD) while other ad-free exclusive content can only be accessed with a subscription plan (SVOD).?

Consumers on Sun NXT, a leading regional OTT, can today access premium and ad-supported content with a 30-day, monthly subscription plan at an affordable rate. These subsidized subscription plans act as a great starter pack for consumers who want to get a taste of the OTT experience. Along with this the OTT app also offers its users quarterly and yearly ad-free subscription plans.?

What we have seen is the rise of the Hybrid Monetization model. In this strategy, businesses adopt a mix of different models like the AVOD, SVOD, and subsidized SVOD (with ads) model. The different plans offered by platforms signify the type of hybrid monetization model adopted by it to cater to their diverse consumer base. The end goal of businesses is to maximize ARPUs and to invest it back into offering great content to in turn serve their consumers better. This approach can be seen in Media and Commerce businesses alike.?

The Sweet Monetisation Spot For Commerce Platforms?

Take Amazon, for example, the popular e-commerce platform which was once just online shopping now features ads from different brands. These ads which are in the form of sponsored product ads or product display ads are showcased by brands to increase favourability for their product amongst Amazon users. Their ad-based revenue model, surprisingly, is now one of their biggest revenue streams reporting a 64% growth in 2020 Q4 compared to Q4 previous year, as reported by CNBC . For the first time, Amazon's advertising revenue total has surpassed its subscription services, which includes Amazon Prime, and has grown at a higher rate than any other Amazon vertical, per its quarterly earnings report .

Zomato, a food delivery app along with having a transaction model for consumers also has a media model for restaurants to boost their sales by placing ads within the app itself.

From travel apps to ticketing platforms and from grocery delivery apps to fintech apps, currently, advertising-based revenue is omnipresent on nearly all online commerce avenues along with transactional-based revenue models.

Win-win-win for all!

One may wonder what is the reason behind the favourability towards a hybrid monetization model from commerce and media companies? It is the large scale and wide variety of consumers that the platforms have to cater to. From low frequency, low-value consumers to high frequency, high-value consumers, the platform has to appeal to and adapt to a range of customers in today’s day and age while keeping their unit economics in check. Hence, to serve the consumers and to achieve higher ARPUs the brands find adopting a strategic blend of both -? media & transaction models - strategically more profitable in the long run. And the mill continues churning revenue that in turn facilitates improved customer experience

Hybrid Monetization is the way forward also because it is a win-win-win situation for all! Businesses get to increase their ARPU by serving consumers of different strata and consumers can easily pick & choose plans to suit their needs. Additionally, as the ARPU of businesses maximizes, they can scale their business by investing back into it, making the hybrid monetization model highly lucrative.?

Conclusion: Commerce & Media is a match made in heaven!

With bigger players in both commerce and media categories already driving business with hybrid-monetization at scale, it is safe to say that today a commerce company is also partially a media company and vice-versa. Some companies might have started as a commerce company and have added advertising in this mix along the way while others might have started as a media company and have similarly added transaction/subscription to their model. For example for short video platforms (MX Taka Tak, Moj, etc.) the way forward is imbibing video commerce. The early instances of video commerce can be seen on these platforms where consumers enjoy engaging with short videos while also getting shoppable actions for the products being showcased in the video.?

In conclusion, no digital company we think of today is a media company or a commerce company; they are all technology-based companies that implement hybrid monetization models by amalgamating their existing revenue models in different proportions. The primary beneficiary of hybrid-monetization be it commerce or media platforms still remains the same i.e. the consumers. Generating revenue from the transactions made by consumers or from the consumers’ time spent engaging with the platform, Hybrid monetization is there for every digital business to play with.