In India, Internet advertising (or online advertising,
as it is commonly known) first came to the domain in
late 1999. The market exploded in mid-2000 and
consequently, along with the dotcom crash, it crashed
in early 2001. Since then it has been quite a struggle
to survive, forget expand, in the ambiguous market.
per the projections made during mid-2000, the industry
today should have been over Rs 100 crore (even Rs 500-600
crore, according to some leading analysts of that ''golden
era''). But today, the market stands anywhere between
Rs 25 crore and Rs 80 crore, depending on the person
you talk to. Certainly, well short of the 800lb gorilla
it was made out to be by many.
reasons for this anomaly are several, and they can be
traced over a ''five-stage Internet advertising growth
It all started with huge promises in terms of deliveries
at a very high cost. The sales and marketing people
from websites and portals promised advertisers that
anything was possible right from micro-level
targeting of individual users to offering overall marketing
solutions for brands. Which was in reality not possible
given the penetration levels of the PC and the Internet
at that point of time.
certainly had not accumulated the requisite critical
mass needed to justify even the micro-level targeting
and hence the cost per contact was simply not viable
or was not practical to offer a complete holistic marketing
solution. The problem was that there was a complete
lack of understanding at both ends the clients
(advertisers and particularly the new-age ad agencies)
as well as the media (websites and portals).
of the representatives from the websites and ad agencies
were professionals from the traditional media who had
moved into the new media for more lucrative remuneration
or to kick-start their otherwise moribund careers without
a keen desire or understanding in the medium itself.
They failed to realise that this was quite a different
ballgame all together.
the other hand a whole host of clients and advertisers
jumped on to the bandwagon just to see their ''brand
on the net'', rather than understanding the media, though
the idea was to fine-tune the brand communication to
optimise its effect. To make matters worse all these
came at a very high cost if evaluated in terms of cost
per reach. Leading portals had been known to charge
Rs 800-1,200 CPM (cost per thousand impressions) for
basic banner advertising, which is probably 10-12 times
that of today''s industry average. All in all, lots of
grist for the Page 3 mill.
The market did a complete U-turn with the dotcom crash
in early 2001. The clients who had had a bad experience
with the Net immediately pulled out and joined the then
bandwagon of ''dotcom bashing''. They completely closed
themselves to anything to do with the Internet and even
today, major advertisers cite these experiences as the
reason for them not considering the Net as a medium
the websites'' perspective, suddenly from asking for
a premium, it became a question of survival. The problem
was further compounded by the fact that lots of online
advertisers themselves were Internet companies and they
slowly began disbanding one site after the other. Like
all other markets in a similar situation of oversupply
the websites reacted by slashing prices.
then on it became a complete price war and the prices
touched the rock bottom, even as low as Rs 30 CPM on
many a leading portal. Little did the sellers realise
that they were not only undercutting their own value,
but the value of the entire industry as a whole.
their desperation to get business two new concepts started
gaining popularity cost per lead (CPL) and cost
per acquisition (CPA). The media started making deals
with clients based on the fact that only if the users
signed up for a particular thing or if the sale got
closed at the clients end, only then does the media
the role of the medium changed completely, unlike the
traditional media, for Internet the media vehicles (websites)
had to not only reach out to their users and ensure
that the user had seen it (measured through clicks on
ads) but also ensure that a part of the sale process
(CPL) or the entire sale process (CPA) had closed.
of clients, who were into branding exercise, were offered
such deals and they grabbed it with both their hands.
From their perspective they had nothing to lose; they
got the branding through the ad tools used to promote
CPL/CPA but when it came down to payments it was based
only on whether the lead had been generated or the acquisition
had been made.
leading portals that had excess inventory with them
particularly offered this and hence they saw this as
a way to not only utilise that but also to acquire clients.
Most financial clients advertising on the Net today
are operating only through this kind of CPL/CPA mode.
Today the market has moved towards another interesting
concept: bundling. Leading portals offer a bundled value
to the clients. One portal effectively uses its well-known
parent publication. Most of their deals consist of a
substantial part of the promotion being carried out
in the parent print-based product and hence the clients
get an assured visibility in print as a part of the
well-known standalone portal uses its ''dialler impressions''
(where the users are connected to the Internet using
their Internet start-up packs, where they are shown
a 30-second commercial ''ad'' clip), and added visibility
at their branded cyber café chain.
other high-growth area for the industry has been an
advertiser trying to reach out to the savvy non-resident
Indians. But the problem in this case is that either
the type of communication is still very rudimentary
(just basic fixed panels for a particular period of
time) or its is sale-based (CPL/CPA). So, probably the
full potential of the market is still not getting exploited.
leading ''verticals'' have repositioned themselves from
being just a dotcom to more holistic companies. CricInfo,
for one, is not only the largest cricket website in
the world but also offers advertisers a ''holistic marketing
solution'', revolving around cricket through their initiatives
in mobile content, print publications, merchandise,
cricket club, cricketing events, you name it.
such ''holistic'' companies have repositioned themselves
as events, entertainment, mobile, integrated marketing
solutions and virtual marketing companies. One even
created a successful print ad campaign for a large retail
A major problem faced by the Internet industry is the
lack of a consistent third-party data. The advertisers
are completely used to justification of any campaign
on the traditional media through the support from the
third-party data. All the leading research agencies
in India at one point or the other have come up with
research on the Internet, but none of them have been
consistent and did not offer regular data like print
readership or TV viewing research results published
by the same people.
like AC Nielson, which publishes the worldwide Nielson
Net Report and PC Meter as a continuous third-party
data source, unfortunately are yet to come up with something
of that format and quality in India. Till then all the
figures in the market are the claimed figures by the
websites and hence the clients look at it with a certain
amount of apprehension and confusion. Therefore, there
is a dire need for a consortium or a monitoring body
to keep track of the industry and probably even set
basic pricing guidelines to ensure that the value of
the industry doesn''t get further eroded.
key issue currently dogging the industry is the decreasing
or stagnated spends by major advertisers as they slash
and burn their advertising and promotions (A&P)
budgets to maintain their margins. Some advertisers
have cut down spends drastically up to 50 per cent.
Others have not quite taken to the Net as their next
''800lb gorilla marketing medium''.
reason for the above may be because of the fact that
most advertisers today look at the spends on the Internet
as ''leftover spends''. Post the mass media and below-the-line
(BTL) budgets, they put the remaining money (if left
over) on the Internet. Up until they look at the Internet
as one of the priority media and start viewing it as
a standalone media capable of delivering value on its
own, it''s unlikely that the absolute value of the market
will become substantial in the near future.
Given the fast increase in the supply of bandwidth (both
wireless and fixed line), along with the decreasing
accessibility costs all around, it is expected that
in the next couple of years there will be a spurt in
the number of Internet-cum-mobile users. Hence it becomes
imperative that the industry approaches it in a much
more planned and careful manner of proper value enhancement
for existing as well as new clients. The industry needs
not only vertical expansion of same clients spending
more money but also horizontal expansion by getting
newer categories and clients on board for newer mediums
has been a distinct lack of individual leadership qualities
displayed by the major players to be able to grow
their market proactively in the last five years. The
only way the market will expand is for visionary
leadership at an individual level credibility
to evangelise the potential, opportunities, caveats
and the way forward. It is clear that it is important
to communicate that this ''industry'' is legitimate
and is here to stay and grow, rather than a being a
fly-be-night inward-focused ''industry'' looking out for
its own short-term survival.
who has the intellectual and leadership capability within
this fragmented and nano-industry to play this role?
You tell me.