Internet Special 2007: Introduction: Internet comes of AGE

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The global online industry is witnessing an unprecedented a boom, and the domestic scene is no different. So, what is the big news? The news is that the domestic Internet industry, or what is increasingly being referred to as the new or rich media, is becoming an area of interest for all and sundry. Be it traditional media owners or venture capitalists or conventional advertising agencies chasing online design firms, everybody making a beeline to snap up the bounty from the worldwide web. From starters to veterans, everybody is rushing out to get a toehold in the online bandwagon that looks promising with every passing day and thereby give the whole world a new dimension. Literally!

Before looking at what’s going on at present, let’s just revisit the past to see the factors that have helped create the whirlpool that has captured the fancy of everybody and anybody the world over. It has been long since we’ve established ourselves as the IT powerhouse of the world. We’ve also seen a lot of Internet penetration by our own standards, in terms of increase in the number of people regularly going online and using the services offered therein. According to the latest numbers from the sectoral regulator Trai, the Internet is being accessed by around 50 million people in the country, and these figures make it among the largest in the world. The reason for this can be attributed to the fact that the prices of computers and computer hardware, be it the personal computers or the laptops or the software and other add-ons, have gone down drastically over the past few years; and they are heading further south by the day.

The domestic advertising industry has also seen the trends and is increasingly getting upbeat about the activities in the online space. This can be seen from the very fact that today a number of major advertisers have started allocating a part of their ad budgets for the online platform. That the marketer is getting more educated about the benefits of the online media and recognises that this is an effective tool to enter into a dialogue with his target group without risking to be intrusive, as the traditional media is often accused to be, is the biggest change and the windfall too. Today it’s difficult to imagine a media plan without a space for the online media though it is yet to claim a considerable share of the overall ad pie. And this is confirmed by the latest Icube 2007 report too, according to which, the number of Internet users in the country has reached 42 million as on March 2007, up from 32 million in March 2006. With these kinds of numbers which media planner or brand manager can afford to look away from this medium?

Adding to the advantage is the mass proliferation of another communication device that has brought about a dramatic communication revolution-the tiny cellphone. Now, increasingly the cellphone is being looked as another powerful ad serving platform. And thanks to the move towards convergence, advertising via the Internet is fast gaining currency both among advertisers and among consumers.

As the familiarity with the online medium is touching new heights by the day, the currents can be felt. A number of offline brands are queuing up to be present on the online media. The Net has also gone a long way to change the way people communicate, gather information, share data and other similar activities. It has also transformed the way things are bought and sold. According to the Internet and Mobile Association of India, the B2C e-Commerce market will be worth Rs 2300 crore by the end of 2007.

Industry Outlook
All the players are upbeat about the viability of online advertising, being driven by a shift in the mindset. As industry veteran and Rediff.com chief executive Ajit Balakrishnan explains, “today we no longer need to explain agency people that the Internet is a useful advertising medium. The scenario has changed so much that today the young people in agencies are acting as our agents.” This shift is evident by the way traditional agencies are queuing up on the digital street with their respective specialised arms.

Be it the start-ups, classic media agencies or online veterans, all seem to be bullish about the industry. However, veterans like Mahendra Swaroop don’t believe that the current gold rush as the second coming of the Internet. He also doesn’t buy the argument that there’s a dotcom burst in 2000 when he says, “there’s no burst in the online scene in 2000 in the sense that the hardcore Internet believers continued to believe and invest in this domain. If not, Google would not have happened at all.” But Times Business Solution president R Sundar opines that “the Internet with Web2.0 is on the verge of the same kind of boom that was witnessed with when mobile telephony was launched in the country in the late 90s.”

Significantly, this gold rush is not being driven by media houses or ad agencies alone but big-pocket corporate houses like Reliance ADA group too. Group company Reliance Entert- ainment has three Internet properties already doing good business. Reliance Entertainment president Rajesh Sawhney affirms his confidence in the market when he says, “we are a very young, nascent market hence it all depends on what kind of consumer traction we can build on attract 100-million online consumers in three to five years.” Times Internet chief executive Dinesh Wadhawan echoes this saying, “the most important aspect of this medium is that this is the only interactive medium: whatever you do it responds back, it tells you your campaign is good or rubbish,” thereby also makes a point to advertisers that this medium presents a compelling RoI opportunity for them.

Even independent start-ups are making a mark in their respective domains. Among these travel portal which are pushing up e-commerce figures. The largest travel portal MakeMyTrip co-founder and its chief marketing officer Sachin Bhatia believes that small innovations are the way forward. He also thinks that social networking is going to help people interact in a much more efficient manner in the future.

Media Biggies Coming Onboard
It is not that only independent players or corporates that are getting onto the web bandwagon. The belief of media companies in the new media can be gauged from the investments they’ve made into this domain in the recent past. The Times group, which has always been regarded as a serious player in the domain, has surprised the industry by fragmenting its online identity into two entities – Indiatimes, under the Times Internet, and Times Business Solution. Falling in line with the ongoing trend, NDTV has also tried to get its acts together by setting up a separate entity, NDTV Conver-gence. Its chief executive Sanjay Trehan says, “the web is now gaining critical mass and is witnessing a lot of traction.” And he attributes factors like increasing broadband penetration coupled with cheaper PCs for this. “The PC accessibility has gone up and the resultant cross- media pollination across the platforms taking place,” Trehan adds.

Another prominent traditional media player that has taken to the Internet in a big way is Network18 which is present in almost all the categories across the board. Web18, which Network18’s dedicated online business venture, already has nearly a dozen portals in different genres and is increasing its presence by the day. Explaining the reason for his group’s interest in the domain, Web18 chief executive Surya Mantha says, “as a media company that’s into the business of gathering audiences and informing and entertaining them and building loyalty with them is a part of the deal, we’ve a fairly thought out and reasoned strategy for this media. We know these audiences will consume content and services across various platforms and Internet is one of them.”

But industry veteran Mahendra Swaroop wonders why the media conglomerates aren’t yet feeling the transition that is taking place. “They are flirting with the medium without really understanding it completely,” he avers and points out that majority of big media owners are letting go off an opportunity and is thus betting on a business of generations.

Large Portals vs Niche Sites
The ongoing gold rush also presents a different picture. Last time we saw a number of horizontal portals mushrooming, but this time the focus is more on focused sites. Portals seem to be a business proposition that new entrepreneurs seem to be wary of. Reliance’s Sawhney is a staunch advocate of niche sites, and he claims that portals as a concept is dead. “Portal was a concept of 2000, but the concept of 2007 is vertically integrated sites. Portal is a dying breed,” he is vocal. But Rediff’s Balakrishnan aggress to differ on this. Defending his turf-Rediff is the largest Indian portal in terms of traffic-he says, “the claim of niche sites getting traction can’t be understood as there are no metrics to prove that such micro-focus sites are able to build customer loyalty overtime.” While Web18’s Mantha says his team is trying to figure out what a new portal in a market like ours can offer, Swaroop opines that these are early days and it remains to be seen which business model does better business. “As of now both the models look equally compelling,” says Swaroop.

Agencies Not Behind
A slew of factors can be seen propelling the online medium as a preferred ad serving platform. One of the major factors is the sea change in terms of the way the Net is now perceived by leading marketers, agencies and users. And a testimony to this is the evolution of specialised digital advertising agency or interactive agency arms. Recent months have seen a flurry of activities in the ad world in this regard. And the move towards digital agencies isn’t just limited to traditional agencies as many independent start-ups have also entered this sphere. The online tracking firm eStats India figures show how online advertising has come of age and is showing signs of growth. In 2006, the online ad market touched the Rs 220 crore and is projected to grow by 24.2 percent this year.

Because increasingly leading advertisers, be in the consumer goods sector, automobiles, financial services or mobiles, are all taking the online route to create curiosity and buzz. As Hari Shankar of Starcom IP quips, “the Internet is often referred to as the ‘lean-forward’ medium while traditional media is ‘lean-backward’ because of the depth of interaction it offers. The Net is a futuristic medium that ultimately will become a convergence platform for all other media.”
Digital Initiative’s Varsha Brajesh feels the Net is becoming a sure way for marketers to indulge in a dialogue with urban market. She says, “for brands which are talking to the young urban market, the Net is becoming an intrinsic part of their media plans. With the web now pioneering the social media space, it’ll wield more power as an influencer media.”

Explaining the strategic reason for marketers to go online, GroupM Interaction business head Sanchit Sanga says, “the web is a far more measurable advertising medium than any other medium and tracking RoI becomes much easier in this space. This helps them set more measurable marketing tasks even before they spend the money. Another important aspect is that it offers very high level of demographic, contextual and location-targeting that help advertisers avoid message spillage.” Independent agency Webchutney’s Siddharth Rao seconds this saying, “with its high cost-effectiveness, and the targeted reach coupled with the rising consumer connect, the web is the ideal way forward for marketers.”

But all the players in the ad world don’t buy this. Madison Media chairman Sam Balsara feels that it is the promoters of digital media who are responsible for the present situation that digital media is in today. “While traditional media has always worked on the concept of brand building, digital has always prided itself on its interactivity, engagement, lead-generation and sales,” says Balsara.

Issues & Challenges
But this sunshine sector has its own set of difficulties as well. One of the biggest on the list is the issue of poor infrastructure that encompasses the lingering spectrum issue as well as that the pricing of the access points for the Internet. As Web18’s Mantha says if the price of a PC can become under-Rs 10,000 there’s a probability of the PC penetration going up further. That apart a further decline in broadband access cost will help improve the matter a lot. He also says nothing can help if power  isn’t available. eBay India’s Deepa Thomas also lists low penetration to be the primary hurdle that the industry is facing. “India is one of the fastest growing Internet markets in the world but penetration is very low at barely three percent,” she says, adding accessibility also has a huge role to play in helping the industry to grow further.

Industry tracker Estats India chief executive Vikram Bharadwaj also sees the infrastructural issues as a major bottleneck that is holding this medium from going the whole hog. Bharadwaj explains, “the problems of low PC penetration in semi-urban areas and lack of quality content is further complicated by the lack of high speed connectivity. Unless these areas are addressed properly, applications like e-governance and other B2C kind of applications and services cannot take of big way. Even in the metros the broadband target set by the government for 2007 has not been achieved and future target will be very difficult to achieve the way things are moving now.” Bhardwaj also believes that other than infrastructure improvement, the industry also needs to address the issue of content that is relevant to the audiences. Arguing that that there is an urgent need to customise the content, Bharadwaj says, “the biggest bottleneck facing the Internet vendors today is lack of relevant and reliable content availability. Content aggregators and syndicators are facing a challenge as to how to cater to the diversified content usage habits of today’s users.” Agrees Reliance’s Sawhney, saying lack of localised and contextually relevant content is responsible in a big way for keeping the numbers low on the net. Sawhney explains, “we need language content when we talk about rural market or SEC-B or C market. It isn’t about just infrastructure. Probably they don’t connect with the online language. We must dish out content in the language they need. The content also needs to become broad based to appeal to large mount of people for which we need the broadband content as well as the infrastructure.” Indiatimes Wadhawan too thinks the same and says that there’s a need to provide quality content to the user in the way that he wants. However, Juxtconsult’s Tiwari feels the main issue for the low ad spend on the Net is the lack of belief in the medium which is why this medium gets very low advertising revenue.

However, investments or the commitment shown by advertisers for the medium in terms of the kind of money being allocated for the medium still remains a major grey area. Industry analyst JuxtConsult chief executive Sanjay Tiwari feels, “it’s the marketers’ lack of belief on the Net that’s keeping ad revenues so low on this media. But he also feels that the industry has also to be blamed for this mess as it isn’t doing enough to market itself well. It needs to do its bit to make this tool more accessible and affordable. In short, the players aren’t marketing themselves well.”

GroupM Interaction’s Sanga also believes so: “lack of knowledge at the client’s end is the first barrier. Marketing teams are taught and oriented to follow a stereotypical approach on television, print and outdoor and they want to replicate the same on this medium as well.” Tribal DDB’s Leroy Alvares also blames the lack of research and planning as factors preventing the takeoff of this medium. “Lack of research and planning tools for the medium tends to become a barrier. Several clients begin with coordinated marketing that’s an extension of the offline campaign and after which they see no additional benefits and write off the medium,” argues Alvares.

According  to DGM India’s Anurag Gupta, low awareness of the Internet, limited understanding of use of it to acquire customers and widen business and limited understanding of the use of appropriate technologies for getting the best returns are the reasons for poor ad support for this medium. “Convincing clients to look at Internet as a serious medium for branding is the challenge we face today,” avers Interactive Avenue VP for business development Amardeep Singh.

The big question that still lingers on is that what does the future hold for the Internet or rather what does the Internet hold for the future. And the opinions are highly varied even on this. Majority of the leasing players vouch for convergence taking place between the mobile and the PC screens. As Swaroop says, “once the network becomes broader and the bandwidth increases, or we get the 3G spectrum then accessibility will be easier on the mobile. Positively, things are already getting there. Already iPhones are becoming larger, so it is just a question of time when 3G happens here and more sites become WAP- enabled, which majority players claim that they are already.” Yahoo India’s Pearl Uppal expresses her belief in the mobile platform when she says, “today digital is actually the next online wave, and this is expected to come through mobiles in emerging markets like India.”

Static content will no longer be the king of the Internet as it’ll be replaced by collaborative communication and user-generated content, says Times Business Solution’s Sundar.  He also sounds bullish about the mobile platform when he says “with the convergence of technologies, within the next couple of years we will all be connected 24×7 to the net, at home, at work, and while mobile.”

With so much happening and all stakeholders seemingly bullish the Internet seems to be coming out of age and ready to go the whole hog and become a favoured advertising destination.

About the author / 

Neeta Nair

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