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In-depth: Non-metros lead recovery for edtech sector, companies plan to spend more on digital marketing

The sector is allocating a substantial amount towards digital marketing with more focus on non-metro cities as these markets are pushing demand faster for both online and offline players

The Covid-19 pandemic has significantly disrupted the country’s education sector—causing a paradigm shift in the field and making online learning a vital part of mainstream education. As a result, the edtech sector is seeing a solid growth, especially from non-metros.

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Seeing the growth and the spike in demand, edtech companies are also planning to keep on increasing their social media spends.

Byju’s, one of the leading names in the field, has doubled its revenue to what it was before the lockdown.

Mrinal Mohit

“We have seen an increase in demand for all our learning programs across classes from students in both metros and non-metros. We have received an overwhelming response with almost 3X increase in the number of students accessing our app and, overall, we have now touched the lives of over 57 million students on our platform,” said Mrinal Mohit, Chief Operating Officer, Byju’s.

Arjun Mohan

Arjun Mohan, CEO, India, upGrad, said, “The pandemic proved to be counter-cyclical for edtech as the online education industry was on the rise even before Covid-19 had hit us.”

And given the current scenario, the brand is now looking to double its quarterly revenue numbers.

“We plan to grow our revenue to ₹100 crore/month and look to cross the ₹1,200 crore annual run rate by end of this fiscal. We had to move from quarterly cohort launches to monthly cohort launches, in order to cope with the increased demand,” Mohan said.

The traditional players are, however, biting their nails, worried about whether there will be a recovery of admissions into their campuses, as not everything can be taught online. Around 250 million children in 1.3 million schools were the first to get affected by the pandemic.

The sector has seen smaller towns pushing the demand now.

Nitin Putcha

“Starting from a dead stop in March, there has been approximately 40-50% recovery in new admissions. Assuming campuses can open in September, there should be up to 90% recovery in admissions,” said Nitin Putcha, CEO, ITM Group of Institutions.

Yatharth Gautam

Yatharth Gautam, Director and CMO, Birla Open Minds, a part of Birla Edutech said, “Considering the present situation of Covid-19 and indecisiveness on opening up of educational institutes, the recovery rate looks gloomy in the coming days, which may indirectly impact the investment prospects in the sector in the coming days. We are hopeful that the last quarter of the calendar year 2020 will bring recovery prospects for the education sector as the shadow of uncertainty starts to fade away.”

While the initial months can be categorised as “zero” for the offline sector, the demand picked up once the lockdown was lifted, as this gave a sense of hope to investors.

“But with various cities opting for relocking, the sentiments are shifting rapidly towards uncertainty,” he said.

However, the pandemic has surely helped in accelerating the Indian online education market.

ITM’s online venture, LetsUpgrade.in, was launched just before the pandemic hit and is now seeing an exponential growth in admissions.

Mohan said the brand has seen a big behavioural shift in the mindset of parents too towards learning online as they have seen their kids benefiting from it in real time. He strongly believes this will benefit the brand and the whole industry in the long run.

“We have seen an increase in demand for all our learning programs across classes from students in both metros and non-metros,” he said.

Gautam said the online sector was estimated to be approx. $3 billion till 2022 but now stands revised at around $15 billion.

But despite all positive sentiments, the demand spread will be in pockets and not in bulk, Guatam cautioned.

“The smaller towns will be pushing more demand because of the fact that the teaching methodology in rural schools is still far behind as those in tier 1 and 2 cities. Also, quality education is yet to reach various locations of the country with the right approach and price equation,” he explained.

Mohan said we cannot deny the digital gap in India as we move to rural India and, therefore, a targeted reach through digital becomes a challenge in these markets.

More focus on non-metros + digital

Brands in the category are keeping advertising budgets to directly complement the strategy to reach out to new markets with smaller towns in focus.

Being a national advertiser, as well as a focused digital advertiser, ITM’s biggest growth has come from digital advertising in non-urban markets.

Since ITM gets 50-70% of its customers from non-metro markets, it is learning the media habits of these customers by surveying its own students, and increasingly, these habits are all based on digital and mobile consumption.

“Our budgets are increasingly focused on the language internet, social media and search. The digital platforms of mainstream media are quite appealing, but their old-fashioned pricing and practices need a re-look to attract the focused spenders,” said Putcha.

He advised media buyers to innovate and stop looking at non-metros and rural markets as extensions of a national plan, but as a separate strategy that meets customers on their choice of media. This is Advertising 101, he said.

As Mohan believes digital is not apt for rural, upGrad looks at more mass media such as TV or print to reach these markets. But as the pandemic hit the distribution of print across markets, it is shifting its spends towards TV and supplementing it with digital.

He said, “While we will continue to advertise targeting the metros due to new launches, consumers and prospective learners will now see upGrad more active in the smaller towns. This isn't a short-term change, but a conscious shift in our marketing strategy to align with our business objectives. Based on the traction we get from the markets, we will scale up the budgets.”

With budgets slashed by considerable amount in the pandemic, even Birla Open Minds is now focusing on the catchment area and the targeted population as opposed to a larger section of the map while hoping to get higher demand from smaller towns.

“In the long run, we expect digital to maintain its higher percentage over traditional as there are bound to be liquidity issues for all concerned and the cost-benefit analysis points towards a digital media preference,” he added.

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