In a slowing economy where marketeers are cutting back on ad spending and revenues of traditional media platforms such as television and print are suffering, emerging media such as the Internet and mobile phones, which are comparatively more economical, are gaining momentum, benefiting from residual marketing budgets.

According to the just-released Digital Media Outlook 2009, a report on the digital media industry that surveyed the top 445 advertisers in India, 2009-10 will see a 10% drop in spending on traditional media, while online spending will increase by 44%. The advertisers surveyed account for nearly two-thirds of the country’s at least Rs19,000 crore advertising industry as of 2008.

“Many consider 2009 to be the year when digital (media) finally gets the spotlight in the $4 billion (around Rs19,400 crore) Indian advertising and marketing space,” says Sidharth Rao, chief executive officer, Webchutney Studio Pvt. Ltd, the digital marketing agency that collated the report along with JuxtConsult, an online research consultancy. JuxtConsult was Webchutney’s knowledge partner for the report.

The study was conducted between December and March and detailed interviews were carried out with marketeers, typically middle-level executives, 13% of them being brand heads, 15%, marketing and communication heads, and 72%, marketing heads.

The report says that the Internet, with its estimated 47 million user base in India, is gradually being recognized as an efficient medium for advertising because of its ability to “engage” with audiences directly. Given its measurability, it is increasingly being recognized as a more accountable medium.

Still, there are big advertisers, such as consumer goods companies, that have so far remained sceptical about its usefulness, largely because of its limited reach. Internet’s low penetration level at 4.2% (compared with television and print media’s penetration levels at around 50% and 20%, respectively) has limited its scope as a primary medium of choice for many advertisers.

The Digital Media Outlook 2009 report says that even though the number of advertisers using the medium has increased in the past few years, the allocation of online expenditure was no more than 5.4% of overall budgets in 2008-09.

The report notes that the purpose and role of the Internet as a medium of marketing and communication can become more relevant and potent if one also realizes that the ultimate aim of any communication is not just to “reach the consumer”, but to stay on “top of mind”. The report says any medium which offers selective targeting of consumers, talks to them at the right time and in context, and also engages and interacts with them, must play a primary role, rather than a peripheral one, in any modern-day, integrated marketing and communication plan.

It notes that advertisers have begun to appreciate these factors and many advertising segments are likely to see a spike in online spending this year. Online spending by consumer goods companies, for instance, is expected to increase by at least 300% in 2009-10 from Rs16 crore in 2008-09, it says.

For edited excerpts from the report and advertisers’ views, click below:

Keeping the Digital Promise (PDF)

Also Read Digital Media Outlook 2009 (Full Report)

Graphics by Ahmed Raza Khan / Mint

priyanka.m@livemint.com