Iran-AdTech-Overview-2016-TechRasa
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1) AdTech refers to advertising technology, which uses digital technologies like data analysis and advertising exchanges to target digital advertisements. It has changed the advertising industry by allowing more targeted campaigns. 2) In Iran, digital advertising has grown rapidly in recent years as internet infrastructure and penetration have increased. Digital advertising is expected to increase its share of total advertising spends in Iran from 2.15% in 2015 to over 20% by 2020. 3) Iran's AdTech ecosystem has grown locally without international players and includes over 26 companies. Investments in internet infrastructure have increased internet bandwidth and users in Iran, fueling growth of digital services and advertising.
Iran-AdTech-Overview-2016-TechRasa
- 2. TABLEOF CONTENT 1|1 2|1 2|2 2|3 3|1 3|2 3|3 1|2 What Is AdTech? Shift to Digital Iran ICT Developments Iran AdTech Stats Video Platforms Impact of Smartphone Programmatic Buying & RTB The Evolution Of Advertising ...............................................2 ...........................3 .................................................7 ....................................9 ............................................10 ..........................17 ..................................15 ............................................13 Iran AdTech Overview 1 01 INTRODUCTION ...............................................2 02 IRAN ADTECH ECOSYSTEM ................................6 03 ADTECH’S LOCAL AND GLOBAL TRENDS ...........12 04 CHALLENGES .................................................18 05 OPPORTUNITIES ........................................... . 21
- 3. 01 Based on the name, AdTech is the short term for Advertising Technology. A broad range of technologies such as Consumer Behavior Analysis, Fraud Detection, Advertising Exchange and many others are used in the context of advertising. These complex systems are designed to show digital advertisement to targeted audience. The front-end of AdTech includes items such as digital banners, social network ads, search engine ads and video and mobile ads. The back-end system helps to target the right audience. It also provides analytics and tools for both, publishers and advertisers. In the recent years, AdTech has changed the traditional advertising industry. This technology provides a platform for advertisers to plan and manage their own campaigns. With the recent developments, digital advertising is shifting from displaying banners, to new platforms such as social media, video and mobile advertising. These new content delivery platforms, may provide invaluable data about elements such as location, age and gender for advertisers. As advertisers have more valuable data about individuals, they can plan more successful campaigns as well. It is believed that these new platforms will be the key drivers of the whole advertising industry. Also the growth of interest on digital advertising has created a great potential for investing on AdTech ecosystem. In general, AdTech’s purpose is to show the right content to right audience with the most reasonable price. INTRODUCTION Iran AdTech Overview 2 1|1 What is AdTech?
- 4. INTRODUCTION Advertising has always been the main tool for businesses to introduce and promote their products and services. Therefore companies spend a considerable amount of money on advertising. Currently Many of the markets have become heavily competitive and as a result, the volume of advertising has increased. Iran AdTech Overview 3 Currently Television advertising has the biggest ad spend share with 37.5%. Digital advertising and Newspaper are in the next places with 33.3% and 12.2% respectively. Since the emergence of Internet, digital advertising and AdTech have also been developed rapidly. It is expected that by 2017, digital advertising consisting of desktop and mobile advertising will become the largest sectors of advertising. 0 500 1000 1500 2000 2010 2011 2012 2013 2014 2015 2016 2017 2018 0 10 20 30 40 50 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Digital Television Newspaper Out-of-Home Total global spending on Advertising (US $ billions). Source: McKinsey Global Advertising Shares by Category (US $ billions). Source: McKinsey 1|2 The Evolution of Advertising $1,208B $1,287B $1,365B $1,446B $1,521B $1,604B $1,681B $1,780B $1,869B
- 5. INTRODUCTION Iran AdTech Overview 4 A key factor that shows the effectiveness of each advertising medium, is the time that the audience spends on ads. Currently digital advertising has the major share with 45%. As internet services expand and mobile devices develop, digital advertising’s share will also consistently rise. Global Time Spent on Ads by Category (%). Source: E-marketer 12.5 % 25% 37.5% 50% Digital 45% Television 38% Radio 12% Out-of-Home 5%
- 6. INTRODUCTION money on the internet platforms. AdTech as an internet service is no exception. Total spending on advertising in the Middle East is also experiencing one of the fastest growth in the world. Iran AdTech Overview 5 Total Global Spending Growth on Advertising by Region (US $ billions). Source: McKinsey Economical growth in the Middle East has led to an investment increase in internet and telecommunication infrastructures. As an outcome, internet penetration is growing and smartphone adoption is on the rise. Therefore people’s lifestyle is changing, internet services are gaining more trust over time, and people spend more 4.0% 2.8% 11.5% 5.9% 10.6%
- 7. 02 Until 2007, advertising in Iran was mainly communicated through television, newspaper and environmental billboards and digital advertising was not a category to consider. Thanks to the developments in the country’s internet and telecommunication infrastruc- ture and the high internet penetration rate, digital advertising has seen a consistent growth in the recent years. Aside from these facts, the efficiency of online advertising, high ROI (return on investment) in short time and the impact of online campaigns have convinced Iranian companies to shift their advertising from non-digital to digital. IRANADTECH ECOSYSTEM Iran AdTech Overview 6
- 8. IRANADTECHECOSYSTEM With the JCPOA agreement and the lifting of the sanctions, Iran as a developing market anticipates a healthy economic expansion. This would increase the household income and will directly elevate content spending on media and advertising. Spending on media is anticipated to see a shift from traditional to digital by a rapid pace in Iran. In 2015 total spending on advertising in Iran was $1.57 billion with 2.15% digital. By 2020, Digital Advertising in the country will account for more than 20% of the overall advertising share. In 2016, digital advertising’s share is expected to increase from 2.15% to 3.5% of the total advertising, which indicates 62% growth. Also, spending on digital advertising accounts for more than $53 millions. Iran AdTech Overview 7 2|1 Shift To Digital 0 0.5 1 1.5 2 2.5 3 2014 2015 2016 2017 2018 2019 2020 Non-Digital Digital Non-digital and Digital Ad Spend in Iran $1.43B $1.53B $1.65B $1.69B $1.72B $1.8B $2.13B $0.017B $0.04B $0.053B $0.144B $0.256B $ 0.34B $ 0.426B
- 9. IRANADTECHECOSYSTEM Because of the economical sanctions in the past years, Iran’s AdTech ecosystem was shaped within the country. Iran’s AdTech ecosystem has been shaped locally without international player presence. Currently there are more than 26 active players in Iran’s AdTech ecosystem. Iran AdTech Overview 8 Iran AdTech Ecosystem Players AD NETWORK Anetwork Saba Vision Clickyab Adtube Netbina AdNegah Adad +17 More SSP ADRO ADRO AD EXCHANGE DSP RASANEX RETARGETING RASANEX MEDIA AGENCY & HUB CARAT DMCMCG
- 10. IRANADTECHECOSYSTEM Heavy investments on Iran’s ICT sector in the recent years has helped with the developments of the country’s internet infrastructure. Today, Internet Penetration has just reached 52% which means Iran has more than 42 million internet users. As a result, internet based services are more highlighted in people’s daily lives which eventually would have a positive impact on the digital advertising ecosystem. In 2013, Iran’s internet bandwidth was 624 Gbps1 . Currently it's 14,000 Gbps and is planned to be 120,000 Gbps in 2017. With these changes the growth of internet bandwidth will shift consumer behavior towards a digital lifestyle. Iran AdTech Overview 9 2|2 Iran ICT Developments 0 15 30 45 60 2010 2011 2012 2013 2014 2015 2016 52 46 40 30 22.7 19 16 42 36 30 23 17 14 11 Users (Million) % Population Iran Internet Users Iran Internet Bandwidth Growth 1 Gigabits per second 2015 2016 2017 624 Gbps 4.000 Gbps 120.000 Gbps
- 11. IRANADTECHECOSYSTEM In 2016, 365 billion impressions were generated by publishers through Iranian AdNetworks. With the developing AdTech ecosystem, it is anticipated that 474.5 billion impressions to be generated in 2017, which shows 30% YoY growth. Digital advertising’s impressions in Iran shows that desktop computers are still slightly dominant with 55% share. But with the deployment of 3G and 4G networks and the 1900% growth of smartphones in the past three years and the fast pace of mobile penetration, it is predicted that mobile advertising share will increase to 55% by next year. Iran AdTech Overview 10 2|3 Iran AdTech Stats 0 100 200 300 400 500 2015 2016 2017 365B 294B Total Advertising Impressions in Iran Iran Digital Advertisings Impressions by Device Desktop Mobile 2016 2017 45% 55% 45%55% 474.5B
- 12. IRANADTECHECOSYSTEM As AdTech industry is developing, the process of buying and selling ads is changing from traditional to the automated form. The programmatic method is the algorithmic buying and selling of advertising spaces in real time. In 2016 programmatic method has 81% and direct buying has 19% share in Iran. Iran’s programmatic spend share shows that most of the expenditure is on desktop ads. While considering video ads separately, mobile advertisement has a bigger share. It is conceived that online video-sharing is a rising sector on mobile devices. As a matter of fact, with the increase of streamed videos and mobile internet speed, mobile video advertising’s share will constantly rise. Mobile impressions are divided into two sectors, in-app ads and ads displayed in the mobile browser. Another interesting fact for these kinds of networks, is the generated revenue from either the supply or the demand side. In other words as more users interact with the ads over the web, more ad networks would be persuaded to enter this market. Iran AdTech Overview 11 Iran Digital Advertisings Impressions by Device Iran Programatic Advertising Spend Share by Device 2016 Estimated Publisher’s Revenue Based on Iran’s Alexa Traffic Ranking In-App Browser2016 40% 60% 6% 8% 21% 65% 35,000 70,000 105,000 140,000 175,000 210,000 Alexa 10-30 Alexa 31-50 Alexa 51-100 Alexa 101-200 Alexa 201-300 Desktop Banner Mobile Banner Mobile Video Desktop Video
- 13. 03 Today online advertising is growing faster than ever and each day new trends become the source of innovation in this industry. In this part, the important factors that are changing the AdTech scene in Iran and the world will be discussed. ADTECH’S LOCALAND GLOBALTRENDS Iran AdTech Overview 12
- 14. ADTECH’SLOCALANDGLOBALTRENDS bigger than 2011. Based on statistics provided by Aparat, Iranians consume 9.72 Petabytes of video content on their platform per month. Iran AdTech Overview 13 0 2 4 6 8 2011 2012 2013 2014 2015 2016 60k 199k 756k 2.2m 4.47m 7.5m 3|1 Video Platforms In 2015 the amount of videos produced in the world was 516 petabytes per month.This number has increased about 89.7% considering the 272 petabytes of video content which were produced in 2014 per month. According to Tubular Insights, In 2015, 67% of all the world's internet traffic (39 thousand Petabytes) were dedicated to video content per month. Cisco also predicts that this amount will increase to 80% in 2019. Aside from this, McKinsey predicts that online video advertising will grow 20.1% year by year between 2015 and 2018. We estimate that people in Iran watch around 16 Million videos each day on Iranian video-sharing platforms. Considering the 42 Million internet users in Iran, this is a great ratio. In this estimation we have only considered popular Iranian video platforms such as Aparat, Varzesh3, Shuttle Land and Namasha. Aparat a YouTube-like platform in Iran, had 60 thousand daily views in 2011. It recently reached 7.5 million daily views which is 125 times Aparat Daily Views
- 15. ADTECH’SLOCALANDGLOBALTRENDS The chart below depicts the platform distribution of Aparat’s users. As it’s shown, Aparat’s users are more willing to use mobile devices while watching online videos. The age distribution for video-sharing platforms shows that the younger generation (between 25 to 34 years old) spends more screen time watching online videos. Iran’s Ministry of ICT has set policies to increase Persian content in cyberspace. Improving infrastructure, increasing internet speed, decreasing the internet prices and specifically decreasing the price for internal internet bandwidth will boost domestic video content on the web in the upcoming years. Iran's Ministry of ICT has stated that it is planning to ensure that 80% of the mobile internet bandwidth in the country is spent on watching online videos via mobile in the next 4 years. Iran AdTech Overview 14 0% 10% 20% 30% 40% 24-18 34-25 44-35 54-45 64-55 65+ 4.5%5.5%7% 16% 40% 27% Platform Distribution of Aparat’s Users Iran Online Video Viewer Demographics Desktop Mobile & Tablet71%29%
- 16. ADTECH’SLOCALANDGLOBALTRENDS According to E-marketer, $68 billion has been spent on mobile advertising and its been predicted that in 2019 this amount will increase to $195 billion which shows 187% growth. In 2015 mobile advertising had 40% of digital advertising's share and it’s expected to grow by 70% in 2019. Iran AdTech Overview 15 3|2 Impact of Smartphone With the rise of smartphones and the amount of time which people spend on their devices, mobile advertising has become an attractive field in the digital advertising industry. According to Statista’s 2016 report, there are 2.087 billion smartphone users in the world and people spend 81 hours per month on their mobile devices. Smartphones are accounted for 8% of the total IP traffic in 2015 and experts estimate that this amount will increase by 30% by 2020.
- 17. ADTECH’SLOCALANDGLOBALTRENDS The number of active smartphones in Iran in 2016 have become 20 times more than 2013. Mobile internet is constantly growing in Iran and operators are shifting their network from 2G to 3G and 4G. Regarding these developments, online mobile services and mobile advertisement will also grow Iran AdTech Overview 16 0 15 30 45 60 2014 2015 2016 40 20 2 0 15 30 45 60 2016 2017 28 16 Iran Mobile Internet Users (Million) Iran Active Smartphones (Million)
- 18. ADTECH’SLOCALANDGLOBALTRENDS Programatic buying and RTB are two of the subjects shaping the future of the AdTech ecosystem. Programmat- ic buying is the algorithmic buying and selling of advertising spaces in real time. RTB is an algorithmic method in which advertising inventory is bought and sold based on impressions, via programmatic instantaneous auction, similar to financial markets. Initially direct advertising was the only approach, but with the emergence of AdExchange, a new era of programatic advertising has begun. Iran AdTech Overview 17 3|3 Programmatic Buying & RTB Iran Status of Buying Programmatic, RTB, Direct & PMP Direct Programmatic RTB PMP 2015 2016 2017 60% 40% 26% 19%55% 40% 20% 5%35%
- 19. 04 Iran AdTech industry is still at it’s early stages. Like any other emerging industry AdTech in Iran also has it’s own challenges. Some of the challenges that Iran’s AdTech ecosystem is facing are the following. CHALLENGES Iran AdTech Overview 18
- 20. 0 15 30 45 2015 2016 CHALLENGES Telegram messenger has become the main source for multimedia content in Iran. Research shows that on average, 60% of Iranians use Telegram as an entertain- ment source. Iranian officials have also stated that more than 40% of Iran’s Internet bandwidth is used by Telegram. This app has almost 20,000 Persian broadcast- ing channels, which in total have more than 90 million users. Advertisements on Telegram channels have become a major revenue source for many businesses. It’s estimated that Persian Telegram channels’ revenue by the end of 2016 will be $28.6 million which compared to the $53million of Iran’s AdTech industry it is considerable. Nevertheless there’s no reference price for advertising and no analytics, systematic implementations and measurements for advertisement’s efficiency. AdBlocking is one the major threats to the AdTech industry and continues to build strong growth in recent years. Based on a report by Pagefair, AdBlocking usage grew by 90% during 2015. It is predicted that by the end of 2016 there will be 230 million desktop and 419 million mobile AdBlock users. The estimated advertising revenue loss due to AdBlocking in 2015 was $21.8 billion and is expected to reach $41.4 billion by the end of 2016. Currently 16% percent of U.S. online population use AdBlocks. This amount for Iran is about 7% which means there are almost 2.8 million AdBlock users in Iran. Iran AdTech Overview 19 Telegram Messenger AdBlock Revenue Losses from Adblock $41.4B $21.8B
- 21. CHALLENGES Ad fraud is the other global threat to the AdTech industry. It happens when bots (or automated scripts) make fake impressions or clicks on ads. Proving that a click on an ad is a fraud or not is a tricky and challenging process for Ad exchangers. Based on a research by ANA (Association of National Advertisers), in 2015 23% of video impressions and 11% of display ads impressions were counted as fraud. Ad fraud costs the industry $6.3 billion and is projected that this amount increases to $7.2 billion in 2016. Currently the fraud ratio in Iran is between 10%-15%. Iran AdTech Overview 20 0 2.5 5 7.5 10 2015 2016 Ad Fraud Most of the popular social networks except Instagram are blocked in Iran. Also due to international sanctions, AdTech service providers restricted their services to Iran. This two way restriction has made the deal harder for Iranian players but the lifting of the sanctions would help ease this process. Reliable data is hard to come by in Iran. Understanding the local market, consumer behavior and media landscape would be a serious challenge for foreign companies to enter Iran. Lack of transparency is one of AdTech ecosystem’s main challenges. As the process is complex and there are numerous middlemen, the payment model for both publishers and advertisers are not clear and the most efficient. Revenue Losses from Fraud. Source: ANA $7.2B$6.3B
- 22. 05 Each country’s situation reflects some unnoticed or untapped opportunities that open the field for innovative startups to satisfy the customer’s specific needs. Iran with 80 million population 42 million internet users, 52% internet penetration, more than 41 million smartphones and 53% social media penetration has a good potential for startups targeting the AdTech industry. Key factors that are driving the digitalization of advertising industry are the growing number of the internet users, expansion of smartphone penetration and boost in mobile internet speed. These changes would also have structural impact on the advertising industry and would redefine the business models. The development of AdTech in the country is an example of these changes. With all the infrastructural developments, consumer behavior has already been affected and the landscape shows that the AdTech industry is ready to be monetized in Iran. Due to the absence of international players, the whole AdTech ecosystem was built within the country. Although the AdTech industry is growing, there are still many gaps that can be filled by new local and international competitors. OPPORTUNITIES Iran AdTech Overview 21
- 23. By becoming the first Iranian AdExchange, Adro has revolutionized Iran’s online advertising landscape. Due to the sanctions, Iran’s local AdTech scene only kicked off a few years ago, and a local ad exchange could be considered a metric of growth of this industry. The emergence of an Ad Exchange is considered the most revolutionary thing that has ever distrusted Iran’s online advertising industry. Adro Ad Exchange’s services consist of an RTB platform, DSP and SSP. Adro is currently the only source of Iranian ad inventory and a gateway for international brands to advertise to Iranians. Iran AdTech Overview 22 ADRO TechRasa is the leading tech & startup media and analysis platform in Iran and the bridge connecting regional and international startup ecosystems together. Since its launch in June 2015, TechRasa has become the primary source for investors, entrepreneurs, startups and financial firms in research and strategy to enter Iran. We create data and research driven reports for our readers and clients to get the best insight on the newly opened and highly fertile market. TechRasa ABOUTUS contact@adro.cohi@techrasa.com
- 24. RasaInsight Iran AdTech Overview NAIME PAKNIYAT Graphic Designer naime.pakniyat@gmail.com Market Research Analyst omid@TechRasa.com OMID GOLCHIN Market Research Analyst soroush@TechRasa.com SOROUSH ALAVI Co-Founder hamed@TechRasa.com HAMED JAFARI