Over 50% of internet users are mobile-only

Fuelled by the increasing penetration of smartphones and a whole host of mobile-only content to go with it, the Indian mobile advertising market is estimated to reach Rs 2,800 crore by 2016 from a mere Rs 180 crore that it is worth today. 

What is significant is that India could currently have as much as 50% or more mobile-only internet users — possibly the highest worldwide compared to 20-25 % across developed countries — according to a report from Mumbai-based financial advisory firm Avendus Capital. 

Keeping in mind that these mobile internet users are typically young and are highly engaged with their mobile phones, it will be imperative to create content that is very relevant and engaging for these consumers to monetize this medium, says the report titled India's Mobile Internet. 

"Until recently, the only revenues generated through mobile in the digital space came from 'on-deck' services offered by telcos through their portals, popularly known as mobile value added services (MVAS). Globally, the trend has shifted towards growth of 'offdeck' services that are offered by content developers directly to consumers without going through telecom operators. 

This has been largely driven by the advent of smartphones and third party app stores like iOS and Google Play," says Aashish Bhinde, executive director at Avendus Capital. 

Although the paid app market is small in India currently, the gaming and apps market — which is also drawing its share of growth from the frenetic use of smartphones — is expected to become Rs 2,000 crore worth by 2016, the report estimates. 

The real surprise package though is the paid-content market, the Avendus report says. MVAS was the only channel through which consumers paid for digital content. 

Now with smartphone adoption gathering pace, consumption of off-deck content is beginning to scale. Though still small currently, the paid app market from the iOS app store and Google Play in India crossed Rs 150 crore in 2012. 

"From an advertiser's point of view, we have seen the likes of FMCG players such as Hindustan UnileverBSE -0.94 % actively embracing the mobile platform over the last one year. The allocation of ad dollars by advertisers across sectors — including telecom and e-commerce — has grown anywhere between four and ten times. 

Marketers today cannot possibly ignore approximately 150 million mobile data users," says Dippak Khurana, CEO & co-founder of VServ.mobi, a mobile advertising network. 

Earlier, the PC-internet segment saw monetization through three revenue models — advertising, paid content and commerce. All three models are beginning to witness meaningful traction on mobile, according to the Avendus report. Mobile advertising is beginning to grow at a fast pace and m-commerce is witnessing early signs of adoption. 

Movie and event ticketing portal Bookmyshow and online travel aggregator Cleartrip have seen revenue through mobile devices grow to more than 25% and 12%, respectively, of their total revenue within a short span of time. 

E-tailer Myntra has also seen revenues through mobile devices scale rapidly and expects it to grow to more than 20% of their total revenues by the end of 2013.