MSME Fintechs Steal Show as Consumer Lending Loses Fizz
Digital Lenders focused on unsecured small business loans are hogging the limelight as recent regulatory actions and changes in the macroeconomic conditions have made unsecured consumer loans — the mainstay of lending fintechs so far — less attractive, industry officials said. Players like Indifi, Lendingkart, Aye Finance, Kinara Capital are expected to benefit from the growing influence of digital lenders in MSME (micro, small and medium enterprises) loans, typically dominated by banks and traditional NBFCs, they said. Large private sector banks are increasingly opening up to working with these fintechs to tap into the underserved unsecured business credit market, they added. “Mainstreaming of fintechs in the MSME space is happening… We are increasingly working with the likes of Sidbi (Small Industries Development Bank of India) and other national institutions to help fund small businesses typically not catered to by banks,” said Jatinder Handoo, chief executive officer of industry body Digital Lenders’ Association of India (DLAI). With the simplification of registration of MSMEs through the governmentrun Udyam Registration Portal, banks are able to classify these entities easily and bring these loans under priority sector lending, industry insiders said. “There are more conversations happening with banks these days for unsecured MSME loans, a segment where private sector banks and the likes were mostly absent,” said Alok Mittal, cofounder of Indifi, an MSME-focused digital lending startup. “In the next 12 to 24 months, we will definitely see transaction-led financing going up,” he said. Industry data collated by credit bureau Experian and DLAI shows that during the first six months of the current fiscal, digital lenders sourced a total of Rs 32,566 crore loans in the sub-Rs 1 lakh business loans category, almost 85% of ₹39,225-crore worth of loans they sourced in the entire FY23. Despite the recent focus, however, business lending as a segment is much smaller than consumer lending. The total personal loan sourcing done by fintechs stood at ₹82,572 crore in FY23 and ₹59,627 crore in the first half of FY24.
Google Search may face a new ‘threat’ from Walmart
The generative AI capabilities in Google Search allows users to make purchases for a special occasion like the Super Sunday match in the English Premier League. For this, users may have to visit multiple web pages but Walmart has a plan to help users save time by offering a one-stop shopping experience. According to a report by CNBC, Walmart is working on a feature that will use generative AI to offer one solution for all things needed to execute the plan, rather than an online destination to search for individual items. During a call with analysts after its February earnings, Walmart CEO Doug McMillon talked about this feature in its app. “The thing we’re most excited about that’s already happened is the way search has improved, and the way generative AI helped us really improve a solution-oriented search experience for customers and members. And it happened pretty quickly,” McMillon was quoted as saying. According to Forrester vice president, principal analyst Sucharita Kodali, Flipkart-owner Walmart can experiment with adding generative AI search capabilities because there’s a very low cost for failure. “It establishes them as an innovator in the space. They’re better to be a leader than a follower in their shoes. They’re operating from a position of strength,” she said. The threat to Google is not existential because people rely heavily on Google for several things apart from just planning for a party, and incorporating AI in one aspect to compete with Google’s whole business may not hit the company that much. “ You get in the habit of using Google because you use it for everything,” Kodali said. “You use it for everything else (outside of shopping), and everything else is like 90% of the searches you do. So, unless Amazon and Walmart are going to get into the business of the other 90% of the searches, it’s not going to happen,” Kodali added. Meanwhile, Google has also incorporated generative AI into Search and is working to refine the search experience and investing in Google Cloud’s Vertex AI Search for retail.
New in Influencer Marketing: De-Influence
After years of telling you — and posting videos — about what to buy, some content creators and influencers have changed the script. They are now telling us what not to buy — and they call it ‘De-influencing’. According to Statista, the global influencer marketing industry is worth almost $21.1 BN, and recent data shows that Gen Z is most likely to respond to influencer marketing efforts. According to a 2023 report by the US-based International Council of Shopping Centers, 85% of Gen Z shoppers said social media sways their buying decisions, with at least 45% naming TikTok and Instagram as the top platforms to do so. So, is this ‘de-influencing’ trend, aimed at ending a rampant and vapid consumer culture, threatening to upend the digital marketing campaigns by retailers and brands? Harsha Razdan, CEO South Asia, Dentsu, doesn’t think so. “The emergence of de – influencing represents a new direction in influencer culture, driven by a desire for authenticity and a shift towards more mindful consumerism. In a landscape where sponsored content is prevalent on platforms like Instagram , TikTok and YouTube, users have become more discerning about the credibility of influencer marketing.” Counter-consumerism German personal stylist Olesya Schuler, who has 372,000 followers on Instagram, posted a ‘De-influencing: Fall-Winter ’23 Fashion Edition’ reel when she realized how much stuff people were being influenced to consume on TikTok. While de-influencing is still technically influencing, it’s under a different name. These are not negative reviews or myth busting videos. Rather, they are a countereffort to the tidal wave of influencers pushing products across every sphere. The most popular de-influencing categories include beauty, fashion and tech, says Rahul Titus, global head of influence, Ogilvy. “It also tends to be more prevalent on the two ends of the price spectrum. Lower-priced FMCG products that have multitudes of alternative options —makeup, cosmetics — and higher-priced tech products that have little competition, such as noise cancelling headphones, hair dryers, etc,” he adds. Razdan explains , “De-influencers are a unique breed of content creators who engage in critiquing products they perceive as overhyped, harmful or environmentally wasteful. Simultaneously, they also advocate for more sustainable and ethical alternatives to their audience, such as dupes or DIY options.”
Phonepe’s Indus Appstore gains traction amid Google-developer spat
In the tussle between Google and Indian app developers, Indus Appstore, seems to have benefited. Meant to be a competitor to the Google Play Store and Apple’s App Store, Indus Appstore by PhonePe has witnessed impressive user adoption within the first two weeks of its launch. Since its launch with 200,000 apps last month, Indus has climbed to over 500,000 downloads within two weeks and is on track to crossing the 1 million-user mark soon, the company said. A senior executive of the company also said that the Appstore will be in 250-300 MN smartphones by the end of the year. “A growing number of app and game developers have started listing their applications on the app store. Thousands of developers have listed their applications in the last couple of weeks,” Akash Dongre, Chief Product Officer and co-founder, Indus Appstore. PhonePe had, last month, announced the launch of Indus specifically for the Indian market to create “a more competitive and localized mobile app store economy for India.” The increase in users and app listings on Indus come amid an ongoing spat between Indian developers and technology major Google over its billing policy. On 1 March, Google announced that it had removed apps from 10 developers from its Play Store for alleged non-compliance with its user choice billing (UCB) system. These included over 200 apps, such as Shaadi, Bharat Matrimony, Balaji Telefilms’ Altt (formerly ALTBalaji), audio platform Kuku FM, dating service Quack Quack, and Info Edge group’s Naukri.com and 99 Acres. App developers alleged that Google was using its dominant position to charge exorbitant commissions of 15-30 per cent for its services. Amid this tussle, Indus’ promise of zero listing fees for the first year, and no in-app commissions for payments made through third-party gateways, has put it in the spotlight. “Discussions around the need for an alternative Appstore have intensified in the last few weeks, recommending Indus Appstore as the alternative,” Dongre said. However, experts say that Indus is likely to face a rocky road ahead if it aims to become a viable alternative to market leader Google.
6 in 10 smartphone gamers game daily
The Gaming industry is among India’s rising sectors growing rapidly on the back of digital technologies. To further equip these businesses with consumer trends that are influencing gamers in India, today we unveiled findings from a Meta-commissioned study by online insights platform GWI. These findings show the impactful role of Meta platforms, especially that of Reels, video ads, and influencers in helping gamers discover and purchase new games. The findings were revealed at Meta’s inaugural Gaming Summit in India, where the role of AI-powered ad tools in driving growth for gaming brands was also highlighted. Gaming is becoming more prevalent across India: The study revealed that 6 in 10 smartphone gamers game daily, and almost 90% of real-money gamers play real-money games at least weekly. The study also showed that nearly half of casual gamers and 43% of Real-money gamers come from non-metro geographies. Key moments for Gamers: The festive season and sporting events impact game types played, according to the study. 88% say they’re more likely to switch from playing other real-money games to playing fantasy sports games during tentpole sporting events such as IPL and World Cup. Technologies that Gamers love: Artificial intelligence (AI), Virtual Reality (VR), and Augmented Reality (AR) are the top three gaming technologies that most interest casual gamers in India.
Google’s AI-driven Search Generative Experience could slash publishers’ organic search traffic by 20% to 60%
Industry experts report that Google’s May rollout of its AI-driven Search Generative Experience (SGE) could slash publishers’ organic search traffic by 20% to 60%, sparking fears of significant digital ad revenue losses. Raptive, which runs ad sales for a number of publishers, suggests the industry could face up to a $2 BN annual shortfall in ad revenues due to SGE’s impact. Traffic declines could be even more drastic, exceeding 60% for some. Analysis reveals varied effects across different sectors, with Raptive’s network possibly witnessing a 25% traffic reduction. Particularly hard-hit areas include the food sector (20% decline) and travel and family verticals (29% drops). In many ways, SGE is Web Snippets on steroids—poised to significantly alter the landscape for publishers, potentially diminishing their traffic and, by extension, ad revenues. High-profile failures like The Messenger’s shutdown have put a new spotlight on the woes of being a modern digital publisher. The response strategy includes forging partnerships, such as those between OpenAI and publishers like The Associated Press and taking legal action to protect intellectual property, as demonstrated by The New York Times. Publishers are also diversifying their editorial strategies, incorporating newsletters, subscriptions, and AI chatbots to mitigate the potential downturn in search-driven traffic. The shift toward SGE highlights the importance of adaptability and innovation in digital publishing. As platforms like Google continue to refine their algorithms and search experiences, the ability of publishers to anticipate changes and strategically pivot will be paramount. Google needs SGE to save its search experience, whose quality has declined, according to researchers. This explains its haste to roll out SGE broadly. Ecommerce, banking and financial services, social media, and paywalled services (including streaming) won’t suffer a large hit in the same way publishers will.
Apple is testing an AI-powered ad product to optimize App Store ad campaigns
According to reports by Business Insider, the company has initiated trials of a new advertising product among a select group of advertisers. This product employs an automated system that autonomously determines the optimal placement for ads within the App Store, mirroring the functionalities of Google’s Performance Max and Meta’s Advantage+. In a bid to enhance its advertising offerings, Apple is reportedly venturing into the realm of AI-powered ad placement within its App Store, drawing inspiration from strategies employed by Google and Meta.
Majority of marketers want to diversify adspend away from big tech
Diversifying adspend away from big tech is a high priority for more than three-quarters (77%) of senior marketers, with nearly a third (30%) saying it is their top priority. According to a survey by global marketing technology platform Awin, in partnership with Forrester Consulting, affiliate marketing can help businesses achieve objectives, diversify adspend and develop a more balanced, ROI-driven marketing programme. The study, which polled 650 senior marketers and directors, found that nearly half (46%) stated their key objective is investing in emerging technology, which is driven by a desire to stay ahead in a rapidly evolving landscape and advancements in AI. Equally, 46% are also focussed on improving measurement capabilities, with 45% moving towards first-party data strategies for customer retention due to changing privacy regulations. To meet these marketing objectives, when it comes to budget allocation, the top priority was diversifying adspend and reducing the business’ reliance upon big tech such as Meta and Google, with two-thirds (68%) citing a lack of personalized strategic guidance and insufficient reporting as key frustrations. A further 67% also highlighted the ability to forecast results is hindered by a lack of detailed insights; which is compounded by unresponsive customer support affecting 64% of respondents and an inflexible commercial model. The survey found marketers are also prioritizing investing in the integration of data across various digital channels (27%) and improving customer experiences across their online platforms (27%). Affiliate and partner marketing was identified as one of the top three channels for effectiveness by 92% of respondents, alongside content marketing and blog leads (96%) and paid search (93%). Respondents also said that one of the benefits of affiliate marketing is that it aligns with key objectives, especially in leveraging emerging technologies (22%) and improving customer retention (22%).