Advertising dollars are raining for online companies which saw a successful year in 2007 netting in more youngsters and winning acceptance from the marketers across the domains. Everything seems to be on an upward swing for the online media that logged in a smart 52 percent growth to touch Rs 250 crore in ad revenues, according to the Pitch-Madison Advertising Outlook 2008.
However, despite the full-spirited march, online media’s contribution to the advertising pie is still hovering at a miniscule 1.4 percent, up from 1.1 per cent in 2006. But it still means growth and wider acceptability as a viable medium to engage target groups. As MSN India digital business head R Rajnish puts it, “this signifies that although the current size of ad spends is marginal in comparison to the mass media, things are changing fast. Advertisers are beginning to understand the reach of this medium as it can offer better interactivity and the targeted or contextual connect,” he argues. NDTV cheif executive Sanjay Trehan also backs this saying marketers are adopting this medium in an effort to break away from the clutter.Â “Advertisers have also adopted online advertising as a viable option to break the clutter of print and more expensive television advertising. With more companies moving to the online media with an information and e-commerce perspective, online advertising provides the most effective vehicle where the target consumer is just a click away,” Trehan says.
Forget the present share and wait for the long leaps ahead, that is how Times Business Solutions president R Sundar and Yahoo vice-president for emerging markets Prashant Mehta look at it. “In India, 1.8 percent of ad spends are on the Internet while for Britain this is 20.1 percent. Therefore, as Net penetration goes, one can get a sense of where the market is headed to. It is projected that by 2010, as many as 3.7 percent of all advertising in the country will be online,” Sundar sounds bullish. “We are in the neighbourhood of 30-35 million people. As the behaviour of these people change, broadband penetration increases and technologies become more available to engage mobile users, we are going to see the real takeoff. At that point we will see multiple things start happening,” Mehta is optimistic.
The domestic scenario has always much to do unswervingly with the ripples outside where the Internet is posing a big challenge to conventional ad delivery platforms as a potent competitor. At least in some markets and in certain categories, the scale has started firmly tilting in favour of the online medium.
At the global level, three major deals defined the equations mid-2007. Google bought DoubleClick, an online ad serving platform, to add to its present competencies while the second biggest advertising conglomerate WPP gulped 24\7 Media to give an online platform to its existing clients. Following this, another online biggie Yahoo raised its stake in the ad serving platform Right Media, much on the lines of the two other deals.
Among these, WPP’s deal in particular is an eye opener for the advertising fraternity the world over. It has forced all and sundry to sit up and take note of the fact that advertisers are moving online, and hence ad agencies should also follow suit. And the trend was visible soon in the domestic space too, as many players devotedly set up online creative shops to cater to their client’s digital advertising needs. Earlier, only independent start-ups were offering solutions for digital media.
Another development that points to the sunnier days for the Internet is WPP’s quest to expand its digital footprints. Taking the acquisition route, WPP bought majority stakes in Quasar Media, one of many independent digital agencies in the country today. Looking inwardly, it can be found that there have been new formats and old ones have been modified to fit the bill, in tune with the times.
Among the reasons for this buoyant growth, the biggest one propelling the change is the improved broadband penetration. As per the ICube report, present active user base in the country has touched the 32-million mark. Though a tiny figure, it forms a formidable consumer chunk to which lots of products and services can be targeted. As Rediff.com marketing vice-president Manish Agarwal explains, “since the Internet reach among the metros is matching print and radio, we have seen metro-centric FMCG and non-FMCG brands experimenting with this medium in big way. Even offline brands such as telecom which are targeting youth or SEC-A, B audiences find the Internet a very interactive way of communicating and this will continue to grow in future.”
Another encouraging offshoot of this increased access is the emergence and acceptance of social as well as professional networking sites. And it comes as no surprise that leading marketers also also acknowledge this. Infoedge India vic-president for ad sales, mobility and new investments Apurva Kumar thinks that with the increase in Net penetration and better content available on online, more and more content providers and services are going online.
Analysing the grounds of growth, Nai Dunia chief executive Vijay Chhajlani notes that some of the niche areas have become successful on the Internet, thus prompting advertisers to take this medium seriously. â€œSo, a lot of larger players have reached that critical mass that any advertiser would be looking for. Several advertisers have worked out their strategy for advertising and started to committing budgets. Now, people say they want online advertising and they are serious about it,” he adds.
The adaptability of this medium in terms of newer formats without being intrusive has also won many admirers, giving a fillip to the growth graph. The rich media ads and video advertising giving way to interstitials and superstitials are among these favourite new ad formats today. On the other hand, tools allowing contextual or behavioural targeting also have got thumbs up from the RoMI-conscious marketers. What most advertisers today look for are ways to filter consumers in terms of demographics, interests, etc, and allow interaction or engagement with the most relevant consumers in a non-intrusive manner, is how Rajnish of MSN explains the reason for the emergence of newer ad formats are being introduced.
Listing some from the preferred list, Indiatimes director for ad sales Upen Roop Rai comments, “rich media ads are the flavours along with specific ads such as shoshkeles and old format ads.” Rediff’s Agarwal is also quick to point out that last year, a major chunk of advertisers sought solutions in the search and content-based advertising space and these areas are likely to growÂ in 2008 as publishers will increase inventory yield from existing content pages by deploying behavioural targeting and contextual advertising. Yahoo’s Mehta also feels that search-based advertising saw a very healthy growth last year.
Google India managing directorÂ Shailesh Rao points out that â€œadvertisers across verticals here have been using multiple formats like text, image, and video ads to meet different business goals across Google search engines.” In addition, Rao says advertisers have also shown a lot of interest in the rich media capabilities.
As the medium gets bigger, the major publishers also fared better in the year. NDTV, which came out with new initiatives last year, recorded a revenue increase of 50 percent. The Naukri group, which started ad sales just a year ago, has been witnessing significant double digit growth and as Kumar says, “even the base of revenues are becoming significantly larger now.” Times Business Solutions, which already has many properties like Timesjobs, Simplymarry, Ads2 book and Magicbricks under its wings, also had a good year in revenue terms. While Rediff recorded good growthÂ in ad revenues from its India business which comprises online advertising and fee-based services, increased by eight percent to touch $6.12 million during the quarter ended December 2007 as compared to $5.69 million during the same quarter last previous year.Â MSN grew higher than one recorded by the display ad market. The world’s biggest search company also enjoyed healthy gains in the past year as Google’s Adwords received support from marketers across categories. Times Internet also had a good year as its revenue grew by 50 percent and revenues registered a jump of 30 percent. Yahoo India, riding high on its revamped advertising interface and slew of activities, had a good period too. Not lagging behind is Nai Duniaâ€™s Webdunia whose chief executive Chhajlani says, “we have trebled the traffic during the first year and we expect our revenues to double up this year as well.”
Changing Face of Advertisers Â
One of the biggest complaints by the online media is that they always only get the left-overs. Moreover, most advertisers look for performance-based advertising on the Net. But, all this is changing as the profile of advertisers coming on the Net is changing. Sundar explains, “advertisers are slowly but surely realising the potential that Web2.0 has unleashed for them with the power of visitor interaction analysis and profiling, dynamic site searches, rich online applications and collaborative influencer platforms of social networking and blogs.” Rao too points out that Google has seen businesses by utilising the platform to support a wide variety of marketing objectives from brand development in support of new products and services to cost-effective lead generation for customer acquisition.
In one of the biggest transitions, consumer goods behemoths are also coming onboard. Though largely auto, financial services, telecom, airlines remained the growth drivers for the sector during the year.
Enthused by the success in the previous year, the online stakeholders expect a better and brighter year in 2008. And the Pitch-Madison Media Ad Outlook too projects 45 percent growth for the industry. The study also expects that the share of online advertising will also gain some notches to touch 1.7 percent at Rs 383 crore in 2008. Looking ahead, Agarwal of Rediff bets big on the video and rich media ads coupled with contextual and behavioural targeting. He also foresees better returns from both text and display ads. Google expects better growth on the continued use of search advertising and exploration of online advertising using different formats. Another major platform that has caught the attention of online industry is mobile. And both Yahoo and Google have plans to leverage this platform given the proliferation of mobile devices and the increased use of data services over mobile devices.
MSN expects to see manifold increase in the user numbers propelled by increased broadband connectivity. It also points out mobile phone as the next mile in the equation. NDTV’s Trehan feels the market will make manifold rise while Yahoo believes that it is going to be a great year for the Internet as a whole,Â thanks to more use of mobile platform and other strong user products.
Naukri’s Kumar also feels upbeat about the industry prospects when he says, “significant double digit growth will continue. And though I don’t see the big spenders changing, I do see a lot of new advertisers with the profile of advertisers changing to some extent.” He adds, “the year 2008 will see a lot of traditional brands that have not been there taking to the online media in a big way. Gaming sites will be one of them.” Indiatimesâ€™ Rai too expects the industry to continue the upward movement but sees a slower growth on account of lesser number of brand-building activity that is taking place online now. â€œGrowth will be there but not on similar lines as last year, as the overall market has moved or is moving towards performance-based advertising from brand-building and in such a scenario spend gets limited,” he sums up realistically.