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Not all was gloom or bloom for digital advertising in 2009

Anurag Gupta

Robin Thomas

In times of crisis and recession, it is only obvious that advertisers will want to make every penny spent on advertisement count. Internet lends itself very well here. It is the only medium that on the one hand can deliver against ROI objectives of the advertisers, since the medium is truly capable of specific measurement in terms of 'cost of acquiring a customer' or 'cost of generating a transaction'. Advertisers can use the Internet as a direct response medium, a medium where they can actually specify their objectives in terms of cost per acquired customer. On the other hand, being an interactive medium, the Internet can provide a really immersive brand engagement with the user.

However, it is a pity that advertisers in India have still not exploited the true potential of the Internet. Digital media in India has not got its due despite being present for over a decade in India. There has been no growth in terms of advertising spends per user during the decade. The following table and chart highlight this fact:

Source: Zenith Optimedia & Internet World Stats

The above charts clearly show that in 2009 the ad spend per user in India have remained almost the same at an abysmal $ 1.3 up from $ 1.2 in 2000, though during this period the number of Internet users have gone up 14 times. There is a lot of catching up that Indian digital media has to do with other parts of the world.

Not everything in 2009 was doom and gloom as far as Digital advertising is concerned. Categories that continued using the Internet were travel, finance and online classified businesses. Categories that significantly increased the share of digital in their overall mix were automobiles and consumer electronics. Emerging categories include education and real estate. We would like to see FMCG and retail advertise more on the Internet.

A significant trend that really scaled up in India was social media. Following interesting facts emerge as per Alexa and Vizisense:

Orkut & Facebook: 4th & 5th most visited sites. Facebook claims to have 5.7 million users in India.

Twitter: 12th most visited site

Linkedin: 14th rank

In addition to the above, take a look at the ranking in terms of users of User Generated Content sites: 6th visited site

YouTube: 7th

Wordpress: 15th

What the above simply means is that seven out of top 20 sites Indian Internet users are visiting are in the arena of social media. Four out of top 20 most visited sites in India are social networking sites. I would estimate that more than 70 per cent people who are online are engaging with social media on some or the other platform (site).

One can argue that these are quantitative numbers, what about quality? Advertisers look for certain demographics whilst targeting their communication messages. Hence, it is important to also see what kinds of people are part of this social media fraternity. Let us look at the demographics of users of Facebook (source: Vizisense). Almost 50 per cent of Facebook users have income over Rs 2 lakh / annum and more than half of the users are above 24 years of age. 63 per cent users are graduates and above.

Audience demographics of, a business networking website, is even better. Close to 60 per cent users have an annual income of more than Rs 2 lakh and close to 80 per cent users are graduates and above.

This reinforces the point that not only is there a substantial number of users visiting various social media sites, they are also relatively well educated and well to do - exactly the kind of audience that most of the brands and marketers will want to address. I would go a step ahead and say that after Bollywood and cricket, the only other thing than has the potential of truly binding Indians is social networking.

Advertisers need to understand that it is also only a matter of time that the younger generation, which is growing with the Internet, will be difficult to find anywhere but on the web, as these people are shunning consumption of the traditional/ offline media and are spending disproportionate time on the Internet. This phenomenon can already be witnessed across the world.

I believe that at 50 million users, the Internet is no longer a niche medium and advertisers need to start allocating proportionate monies to the Internet in their overall marketing plans, rather than allocating some small percentages.

(Anurag Gupta is Managing Director, DGM India.)