Tech News
Internet advertising in India boots for boom time
By Sunrita Sen
Jul 6, 2005, 7:28 GMT

New Delhi - The Internet helped Mohua Lahiri decide what brands to go for when she bought a camcorder and a laptop.

Sunil Mehta and Meenakshi Gupta surf the net to firm up their travel plans and and often buy air tickets online.

Vivek Sharma, Susheela T. and Ravi Agarwal do their banking online. Agarwal, a young corporate executive, says the net has been a big help in homing in on the optimum house loan.

They are all among the 26 million Internet users in India, largely in the age group of 20 to 40 - a target-base for India's rapid growth advertising industry is increasingly looking at.

It's reboot time for Indian advertising with predictions that the online segment is likely to cross the 100 million dollar mark by 2010, according to a study by MSN.

India's advertising industry generates about 2.2 billion dollars annually, according to industry sources. Currently, online advertising comprises less than one per cent of the pie.

The total spending for 2004-2005 was about 18 million dollars, but the Indian Online Association (IOA), predicts this will touch 34 million dollars in the next financial year and will cross 57 million in 2006-2007.

Industry watchers feel it is going to be boom time soon.

"Internet is increasingly a part of the media mix for advertisers as they realise its high potential in reach and penetration," said C.V.S. Sharma, chief of Tribal DDB India, which is linked with Tribal DDB Worldwide, a global digital marketing agency.

The growth over the past three to four years has been good. Tushar Vyas of Group M, one of India's top media investment enterprises attached to global advertising agency Walter Thomson Associates (WTA), pegs it at 50 per cent a year for at least three years in a row. Vyas heads Group M's digital media unit M1.

Print and television still hog a major share of Indian advertising at 700 to 920 million dollars annually.

But digital advertising industry players point out that television too saw a sluggish beginning and then exploded as cable TV entered the arena.

So what's holding back the online advertising boom? Tribal DDB's Sharma, more commonly known as Venke in advertising circles in India, says, to begin with, it's the mindset.

"The unfamiliarity with the new medium, a lack of understanding of its reach and potential, a fear of venturing into a new area," he elaborates.

The limited reach of Internet - it has only 26 million users in a country of one billion - is another reason. The mobile industry has far overtaken Internet with a user base of 50 million in India and is growing by the day.

"Till the Internet reaches a bulk of consumers, it won't have critical mass and will remain a niche media," says Sharma.

Advertisers are, however, honing on to the targeting capabilities of the net. The many advantages of the medium include the fact that it is a two-way communication.

Unlike print and TV, the consumer can decide when and how he wants to be exposed to a campaign, and the advertiser too can filter targets in terms of groups and locales.

The Internet has great cost advantage as well. "The cost per 1,000 reach is very effective when compared to other media," says Vyas.

Finance is the main sector going for Internet advertising in India. While Tribal DDB has among its clients Citibank and India's largest state-run bank State Bank of India. Group M does campaigns for ICICI, one of India's leading private banks.

"Internet goes beyond where say television can reach," says Sharma. Most online ads provide addresses of company websites where netizens can get more information about products. In many cases, transactions can be completed online.

However, the lack of a large enough base of credit card users and a wariness about using the card online acts as a drawback.

Both Sharma and Vyas insist that the Internet should not be seen in isolation. "Mass media will always remain. The challenge is how to use the combination most effectively," says Sharma.

Most in the advertising industry agree that today even a brilliant campaign has a vital element missing if there is no Internet presence.

The new entrants to the field are travel companies, the hospitality sector and branded goods, especially electronic goods, aimed at the youth and young professionals.

In a recent campaign Samsung used banners on mass portals like Yahoo, Rediff and MSN, asking users to answer a set of simple questions to win a computer notebook. The month-long campaign attracted 50,000 participants and created the buzz that every advertiser dreams of.

Leading portals in India like Rediff, Yahoo and MSN are also seeing a revival. Rediff saw an increase of over 70 per cent in online revenue on its India operations in 2004. It largely comprised advertising and fee-based services like online subscriptions, mobile downloads and online shopping. And there were more than two dozen first time advertisers the same year.

Yahoo! India saw a 100 per cent growth in advertising in 2004. Indiatimes.com, the online operations of one of India's leading media groups estimated total advertising on its site to be around 3.5-4.6 million U.S. dollars in 2004.

There are several other players in the field like Sify, Hindustantimes and CIOL. All top advertising agencies in India from JWT, Lowe Lintas, O&M and Mudra have interactive arms or links with the same.

As connectivity improves with wider use of broadband, the Internet advertising boom is just waiting to happen.