Digital advertising has been one of the fastest growing areas in India. According to industry estimates, Internet advertising is valued at Rs 650 crore in 2008-09 and is poised to touch the Rs 1,000-crore mark in 2010.
The year 2009 has seen advertisers from diverse fields such as consumer goods, healthcare, retail advertisers, and even auto makers, making inroads in the digital medium. Earlier, Maruti Udyog Ltd was the only car manufacturer to advertise in the Internet medium, however, today it has become imperative for every car manufacturer to have an online presence.
Accordingly, the auto sector has increased their digital spends from a mere 1-2 per cent to over 8-10 per cent. Advertising on Google India alone for the auto sector has reportedly gone up by 50 per cent in the last one year. General Motors, which recently launched its sedan, Chevrolet Cruze, in India is one of the auto advertisers on Google. The auto major is said to have allocated a budget of Rs 1 crore for the digital campaign for Cruze.
Given the tremendous growth scope of the medium, exchange4media takes an in-depth look at the growth spurt and the emerging trends in digital advertising, as well as the challenges ahead.
From the client’s perspective
Speaking to exchange4media, Sriram Krishnamurthy, VP - Sales, Marketing and Service, Onida, noted, “Digital advertising is a sunrise area. However, as the penetration of the digital media – be it broadband or mobile – grows, it will have a bigger role to play. It’s a huge area, but at the same time, the measurability of impact and the cost is not as rigorous as in some of the traditional media, thus, the measurability and the accountability of this medium to justify the cost would determine how it goes.”
“Till a couple of years back, we never used to do much of digital advertising, nevertheless we have increased our digital spends. However, it is still at a slow pace, but definitely growing,” Krishnamurthy added.
Speaking on the growth scope, Narasimha Jayakumar, Business Head, Google India, explained, “We are beginning to see a lot of interest from diverse range of companies in digital advertising. The auto sector has certainly grown quite significantly this year. We are seeing over 50 per cent increase in the number of advertisers who are advertising on Google alone. This apart, a lot of consumer goods, retail as well as healthcare companies are also showing a lot of interest in digital advertising.”
“Auto sector is definitely one of our engines of growth and will continue to be one of the vehicles for growth in 2010-12 and I believe that a lot of auto companies are spending significant proportion of their total media budget on digital. As opposed to digital advertising being 1-2 per cent of their overall media spends, now spends have increased to 8-10 per cent,” he added.
Rammohan Sundaram, Founder, CEO & Managing Director, Networkplay.in, noted, “Digital advertising on the Internet is going the brand way, something we are clearly seeing through our quarter on quarter growth at NetworkPlay. We add on at least five new clients every quarter who have not tasted the Internet before, so it clearly shows that the adoption of this medium is happening at a rapid pace from the traditional offline brands.”
Sundaram further explained, “There is a lot of noise on the mobile side of the spectrum, though we haven’t seen any breakthrough in terms of innovations outside of Bluetooth as a technology, where brands are using the services of the companies that can offer relevant captive solutions, case in point being IPL and CL matches, where brands are connecting with the 40K audience on the ground by way of this technology. Finally, it is clear that the industry is headed towards audience engagements than just pure play real estate occupancy in the digital space.”
The trends to watch out for
Jayakumar noted, “The year 2009 has begun to see the concept of an ‘Always on’ campaign. Traditionally, advertisers in the past were used to advertising in print or television, in particular. Increasingly, the Internet is being used as a high engagement medium. For instance, over the last few years, the number of hours spent on the Internet outside of work has significantly increased. The IRS data shows that on an average people spend 9.3 hours per week online outside of work.”
He added, “The Internet by definition is by far an intimate form of advertising, because it pretty much tracks what consumers do online, how many times they view an ad or click on them. Video advertising is emerging as a big trend and is becoming important. Most of the advertisers believe that the slowdown has taught them a lot of lessons and actually they have become a lot more careful about ROI. Measurability is becoming a very key trend, which will continue.”
Sundaram is quite gung-ho about the mobile side of the canvas and like many others, believes that it is just a matter of a few more days when high-end bigger screen phones are made available through 3G, which automatically sets up the stage to do innovative branding solutions on the mobile. According to him, “There are just 40-50 advertisers currently, who are largely mobile VAS service providers who use the medium. However, the day isn’t far off when we will see a lot of traction from the traditional brand advertisers spending significant amount of their advertising spends on mobile.”
He further pointed out, “Don’t forget a lot of first time Internet users in India will actually be using their mobile phone to hook up on the Internet, and for all you know, it is a volcano that’s waiting to explode. We are already seeing a lot of social media applications on the mobile phone, and with Twitter, etc., penetrating our lives in a big way, 2010-11 will be the year of mobile maturing in India.”
Among other interesting trends, a lot of car and bike companies are using their websites as virtual showrooms and are viewing their websites as a critical part of their digital strategy.
Sundaram of NetworkPlay said, “We are involved in a lot of those, whether it is evangelising the space in the market place or building requisite products that will cater to the brand managers to make the right decisions. Basically, the problem has been perpetual, however, as an industry, we have recognised that the growth in the space has to be paved by traditional brands coming online, which only has instigated a stream of efforts from companies to build ad products that will determine what brands actually are getting in terms of reach, frequency, time spent, engagement, TOM Scores, Impact studies, etc. This is the language brand managers understand and they automatically will be empowered to make decisions when it comes to using the digital medium.”
Meanwhile, though the Internet is one of the fastest growing mediums in the country, it is still far from being the primary medium. However, the growth of broadband and mobile penetration will definitely contribute towards this medium growing in leaps and bounds.