Internet and Online

Effectiveness of Digital Advertising

Shabbir Chunawalla

The effectiveness of digital ads could be measured by the conversions these ads make. These conversions depend highly on the user experience.

Ad experience is a mix of a web-site’s layout, its behaviour, its content and ads it carries. Experience decides whether a user will come back to the web-site or not. A publisher has to plan the ad experience which generates ad revenue, and makes it comfortable for the user.

Decluttering provides better ad experience. There are annoying ads, e.g. ads that auto-play with sound, pop-up ads, ads that interrupt the reading etc. The NYT carries ads only in banners, and uses the power of native ads. These are more effective than display ads. They seamlessly integrate to the content.

There should be immersive user experience. The idea is to create highly viewable and performance-driven ads. These should flash across display, video and native. They should engage for more time and generate page views.

The Guardian puts several high-impact ads throughout its contents, thus leading to enhanced user engagement, and thus revenues. These ads are interactive.

Page-load time is a key factor — it is the time a web-site takes to load. A user switches to another web-site if the web-site is slow-loading. It leads to loss of ad revenue. It is observed that by improving page load time, the performance increases. The Washington Post uses native banner ads to have excellent page-load time.

A user continues to stay on the web-site. It can be assessed by a heat map. It assessed by a heat map. It shows how a user interacts with the different elements on the web-site. There should be layout optimisation depending on the time spent on a particular element.

The actual content of the ads too matters. The number of ads on a page also matters.

The relevance of the ads to matters.

Facebook’s Internal Recruitment for AR-VR Roles

Shabbir Chunawalla

Though Metaverse still remains a theoretical concept, Facebook considers it the next phase of internet, and has started doing internal recruitment of manpower for roles in augmented reality and virtual reality. At the same time, it is doing recruitment externally from rivals such as Apple and Microsoft. It has rebranded products like Oculus (virtual reality headsets) with Meta name.

Meta has 68000 plus employees. It has listed 3000 open job vacancies on its website, of which 24 per cent are for roles in AR-VR.

Hacking of Smart Phones

Shabbir Chunawalla

Smart phones use operating systems — either iOS of Apple or Android in most of other phones. In their software, the hacking firms try to spot vulnerabilities to sneak into the phone and access the data. Two Israel-based companies, NSO Group making Pegasus and QuaDream, have been using reportedly such vulnerabilities to hack the phones for their clients.

Generally, hackers introduce the malware when the user clicks a malicious link. However, the Israel-based firms use the zero-click technique. Both used similar software exploits called ForcedEntry. It is a computer code designed to leverage a set of specific software vulnerabilities. It provides a hacker unauthorized access to data.

These vulnerabilities could be hidden deep inside the instant messaging platform. Security researchers call ForcedEntry as most technically sophisticated hacking.

Apple fixed the flaws in late 2021, thus rendering both the software ineffective.

Apple has field a suit against NSO Group claiming that the company has violated user’s terms and conditions, and the suit is in its initial stages. NSO has denied any such wrongdoing.

Snooping companies sell the software to governments to protect them against national security threats. However, journalists and human right activists document the abuse of such software.

Unicorns

Shabbir Chunawalla

A unicorn is a startup (privately owned) with a valuation of $1 billion plus. Aileen Lee in 2013 introduced this term to describe tech startups which were valued at $1 billion plus.

Venture capitalists finance such startups. The valuation is not connected to their financial performance. Some of these may not generate any revenue at all (Pre-Revenue Stage). Even business models of such startups complicate the matters. Some are the pioneers, and hence there is no benchmark for valuation.

They are valued high on account of envisaged faster growth. They preempt the market rivals. There is a possibility of these being acquired by the Big Tech. In fact, they are buying technologies for market synergy. Besides, innovations boost up growth.

The Economic Survey, 2021-22 puts the number of new recognised startups to over 14000. India has now 83 unicorns, most of which are in the services sector. In 2021, 44 startups have achieved unicorn status.

India has become the third larger startup eco-system in the world after the US and China.

Delhi replaced Bangalore as the startup capital of India. Between April 2019 and December 2021, 5000 startups were added to Delhi. In this period, Bangalore had added 4514 startups.

India has more than 61,400 startups recognised by the government as an Jan 10, 2022. Over 14000 new startups have been recognised by the government in 2021. Maharashtra has the highest number of recognised startups at 11,308.

Gaming

Shabbir Chunawalla

In developing games, they use game engines. One such engine is Unity. It is preferred by coders, and small developer teams. However, the preferred choice to make AAA games marketed by big companies, the engine used is Unreal Engine. This has been developed by Epic nearly a quarter of a century ago, It has its C++ core APIs. Artists prefer Unreal. Graphic fidelity on Unreal’s most basic resources contributes to graphical wonders in video games. It is known for its sheer number of tools. A game developer chooses his own area of interest while using Unreal. There are tools for designers, animators, programmers, artists and others. It gets you going. All AAA studios use Unreal. It is a field for experts. Each module requires a drilling for several months. Right now Unreal Engine 5 is in the development. Early access is available. Its Lumen is AI-based lighting system. It makes reflections visible in mirror or pond in real time

Crypto and Budget 2022

Shabbir Chunawalla

The finance minister has imposed 30 per cent tax on capital gains made from crypto and NFT transactions. No deductions are permitted while calculating income, except the cost of acquisition. There will be a 10-37 per cent surcharge in case of short-term capital gains. There will be 15 per cent maximum surcharge on long-term gains made firm virtual assets.

There would be 1 per cent TDS to facilitate the government in tracking quantity of crypto trading.

There is 18 per cent GST on transaction fees earned by crypto trading platforms. It remains unaffected.

Some clarity is required on how digital collectibles like NFTs will be taxed — whether 30 per cent capital gains tax is only in the hands of a trader or would be paid even by the artists who create and sell such assets.

Loss of transfer cannot be set off against any other income.

The gift of these assets is taxable in the hands of recepient.

E-Commerce of Meat

Shabbir Chunawalla

The size of the total meat market is around Rs.3 trillion, 70 per cent of which is fish, 16 per cent poultry, 11 per cent mutton, 2 per cent pork and 1 per cent beef. However, the organised sectors account for only 1 per cent of the total market, or Rs.3000 crore. However, as the total market is expanding, and is likely to reach Rs.6-9 trillion in the next five years, there is a huge potential for e-commerce of meat too.

There are virtual e-commerce companies such as Licious, FreshToHome, TenderCuts, Zappfresh, Meatigo and Fipola. These account for 80 per cent of online meat market. The rest is catered by Big Basket, Milkbasket and Swiggy.

In fish market, around 97 per cent is controlled by the wet market and only 3 per cent is run by organised players. The online players have a miniscule share of the organised market.

The online players focus on their superior quality and hygienic practices to induce consumer confidence.

Crypto Ban

Shabbir Chunawalla

On account of the decentralised nature of cryptos, bans are largely ineffective. China banned cryptos in 2017, and the transactions moved to exchanges elsewhere, especially Hong Kong and Japan. China imposed a ban on cryptos mining. Mining too moved elsewhere along with associated tax revenue.

The hashrates are measures of the computational power required per second while mining cryptos. The current hashrates are higher than those that prevailed before China ban.

There are no reasons to believe that an outright ban will be more effective in India. Participants in crypto eco-system will simply migrate elsewhere.

Implementation of CBDC

Shabbir Chunawalla

There is an array of digital payment methods available in India, e.g. IMPS, UPI, NEFT, RTGS, Wallets, Cards and NETC. Is an additional payment instrument such as CBDC necessary? Though actual users of digital payments are 200 million, there is potential user base of 700 million. Besides, digital payments are accepted at 15 million outlets, against a total potential of 50 million outlets. Thus a new medium of exchange, CBDC can be accommodated.

Paper and metal currency has the cost of making and distribution. Currency is printed at security presses, under the authority of the RBI, and is distributed through 20 currency vaults at its regional offices. These currency vaults feed 4000 currency chests managed by the commercial banks. Bank branches get their cash from these currency chests and the public is served by these branches. The soiled notes are returned to the RBI through the same channel. Thus physical currency is a costlier proposition than digital currency.

CBDC’s design could evolve over a period of time. To begin with, CBDC could ride the existing digital payments infrastructure. CBDC could use technology other than blockchain initially, and can adopt blockchain at a later stage. On the lines of UPI wallet installed on devices, CBDC can also be presented as wallet. A consortium of banks can play the role of distributors of CBDC. Each bank can acquire a million voluntary customers. Anonymity could be introduced through privacy settings gradually. According to Nandan Nilkeni, the proposed digital rupee (CBDC) should remain anonymous. There are concerns pertaining to surveillance if all transactions are recorded and visible. Banks could be encouraged to be proactive by compensating the infrastructure costs of the branches.

RBI must take steps to widen the user base of CBDC. Digital payment literacy should be encouraged by educating the small stores and individuals.

Contours of CBDC

Shabbir Chunawalla

CBDC from India could be based on blockchain or it could be more like a digital wallet. Blockchain-based currencies provide anonymity, but have high transaction costs and are slower to go through transactions. It all depends on the architecture of the blockchain.

A CBDC could run through a distributed ledger technology (DLT) which empowers the central authority to allow access to and editing the database. Blockchain is a subset of DLT systems, and is far more democratic.

CBDC use cases will decide which which factors are to be accorded primacy. RBI may adopt a phased strategy while introducing CBDC.

Government subsidies is one use-case. These can transferred through Aadhar directly to the beneficiary. It keeps the banks out of the scene. The government will have to bear the cost of fund transfer. CBDC is trustworthy as it is unlikely that the central bank will default on its liability. It is a no-risk settlement asset.

International financial transfers could occur on real-time basis, without an intermediary. The cost of cross-border transfers will fall down.

The cost of printing, storage and transport of the physical currency would be saved. China is promoting digital Yuan. Many other countries too are exploring digital currencies. CBDCs could dethrone private cryptos as they are legal tender. They are greener too, as mining is power-intensive process.