Brightcom Group Ltd Management Discussions

Industry overview

The digital media spend for the entire year is expected to grow by 6%, despite a decline in growth for the broader advertisement market in 2020.

Paid Search

Of the digital advertising categories with a positive outlook for 2020, paid search was projected to have recorded the fastest growth (26%) during the year.

Despite an overall increase in digital advertising spend, it was found that several digital advertising categories experienced some drops in 2020, including digital out of home, podcasts and digital audio.

Pandemics Impact

Consumers spent significantly more time with digital media in March-July 2020 Y/Y (vs March-July 2019) with video (OTT/CTV) paying specific attention to the difference in advertising spend between linear TV (-24%) and connected TV (+19%). The adoption of streaming during the pandemic has been significant. And, with many people watching their wallets, advertising-based video on demand (AVOD) platforms like Peacock and Hulu that offer free or inexpensive programming may provide more opportunities for advertisers eager to catch the digital streaming wave at this moment of inflection in 2021.

How will 2021 play out?

The prediction is that there will be a major uptick in 2021 compared to 2020. The pandemic has impacted advertising budgets, but digital advertising is still essential for most brands and retailers. Digital advertising offers opportunities for brands to become visible to the consumers during moments when they are ready to spend. Optimised digital marketing strategies that are effective across channels will dominate the advertising landscape shortly, with the impact of COVID-19 accelerating digital adoption for brands and consumers.

Build adaptable scenarios and rapid reviews

Respond to the impact COVID-19 has on marketing budgets through swift and decisive action. CMOs built adaptable budget scenarios and conducted rapid reviews of how the pandemic may impact their marketing functions in the near-term. This was done while keeping long-term marketing and enterprise goals in mind. Because there were no existing playbooks with canned strategic responses for a global event of this kind, marketers made smart near-term cost corrections. CMOs appraised cost optimisation objectives by rapidly reviewing adaptable budget scenarios that trigger decisions and action with their "tiger" teams.

Operational review Highlights

• During the year, your Company achieved a consolidated turnover of Rs. 2,706.47 Crores as against Rs. 2,577.72 crores in the previous year with a net profit of Rs. 440.10 Crores as against Rs. 443.97 crores in the last year.

• We have launched a new version of our core platform called Compass 2.0.

• Signature Optimization Algorithm to serve at the next level

• Advanced Safety tool added -Protector.

• Improved Inventory tool added- Adaptor.

• We were featured amongst eDigitals "Best 72 SSP for 2020" alongside AOL, AppNexus, Salesforce DMP and the trade desk.

• Our team attended the conference Programmatic I/O held in New York, early in the year.

• Effectively managed the transition to work-from- home (WFH) for all the employees across the globe.

• Our team worked across India, Israel, Serbia and Argentina very effectively. Employees at all locations were already mobile, to begin with, and did not need much transition planning.

• We closed out all outstanding loans from the Indian banks: Canara Bank and Axis Bank. We are now a debt-free company.

• DigiDay at Dubrovnik, Croatia and Mobile World conference in Spain were cancelled due to COVID19. Elowever, the teams were able to conduct scheduled meetings virtually.

• We were amongst the Best 72 SSP list of eDigital for 2020.

• Our B-Local exchange was launched, offering advertisers an alternative to the "faceless masses" in local communities. This has been a very effective tool to improve business. Philadelphia Magazine, Boston.com, The Seattle Times, Boston Globe, The Salt Lake Tribune are some media houses already signed on.

Risk management

The Company has a well-structured and robust risk management mechanism, including a comprehensive register that lists the identified risks, their impact, and the mitigation strategy. Broadly, some overriding risks are listed below:

Data security risk: Technical failure and breakdowns in servers could interrupt our websites and result in corruption of all data and security breaches. The Company has initiated a pilot project to establish a secondary site in India as a precautionary measure.

Obsolescence risk: A technology-driven company always faces the risk of an innovation or product development that can make one or more propositions redundant. The Company remains alert with technological developments to overcome this risk.

Financial and tax risks: The Company has had a few income tax and service tax cases against it, which, if lost, may impact future cash flows. However, none of these is material.

Competition risk: Enhanced competition in the US market may reduce price and revenue margin. The Company is expanding globally and penetrating potential markets like Brazil and China. In the future, it would focus more.

Consolidation risk: Consolidation of service providers may affect the Company. The Company has also ventured into strategic acquisitions and tie-ups to capitalize on current market opportunities.

Regulatory risk: Businesses can be affected by privacy legislation and other regulations. The Company discloses all its collection statements and dissemination practices in a published privacy statement on its website.

Human resource

The Company firmly recognizes the importance of its human resources to achieve its vision. BCG has significant policies to acquire and retain new and existing talent. It trains its people in various ways to create an extensive talent pool. Besides providing attractive remuneration to people, BCG also focuses on providing a stimulating and multicultural work environment.

Internal control systems and adequacy

BCG has an adequate internal control system to ensure authorized business transactions. The internal audit function is an independent function, which internal auditors carry out through extensive audits. Regular internal audits determine the operational and financial efficiencies of the Company. Moreover, the Audit Committee of the Board of Directors conduct periodic reviews of pan- organizational effectiveness and recommends improvements whenever required. The internal control system also formulates well-documented policies, guidelines, authorizations and approval procedures and ensures compliance with applicable policies and statutes.