Offline is where the action is, even for online companies

Offline is where the action is, even for online companies
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First Published: Wed, May 09 2007. 11 46 PM IST
Updated: Wed, May 09 2007. 11 46 PM IST
MakeMyTrip (India) Pvt. Ltd spends around Rs10 crore a year on print and television advertising. The travel firm has to necessarily be in the public eye in a country where the travel and hospitality businesses are booming.
According to the Centre for Asia Pacific Aviation, the number of domestic air passengers in India grew from 26.5 million in 2005-06 to 33 million in 2006-07. And 4.2 million foreign tourists visited India in 2006, up from 3.5 millionin 2005.
But MakeMyTrip is an online travel company. “We have already established ourselves on the Internet; now, we need to expand our presence in the real world,” said Sachin Bhatia, co-founder and chief marketing officer, MakeMytrip.
The travel firm isn’t the only company with an online business model to discover the advantages of advertising in mainstream media such as print and television. Monster, Naukri, Cleartrip, Yatra, and Rediff, all companies with the .com suffix have. As have the online media programmes created by companies such as Hindustan Lever Ltd (SunsilkGangofGirls.com) and Cadbury India Ltd (Meethamoment.com).
Ironically, it is the Internet’s limited reach in India that is pushing these companies to advertise in mainstream media. According to the Internet and Mobile Association of India, an industry body, India has around 38.2 million Internet users, less than 4% of the country’s total population. Other estimates exist, with the most optimistic one putting the number of Internet users in the country at 55 million, or 5.5% of the population, but even that number pales in comparison to the 60% of the country’s population that television reaches.
“TV and print are almost omnipresent media and online companies cannot ignore their ability to reach out to a larger population,” said Sidharth Rao, CEO and co-founder, Webchutney Pvt. Ltd, a consulting firm that advises firms on new-media strategies.
Rao said despite the web’s cost-effectiveness, the medium does not reach out to as many consumers as television and print do.
According to TAM Media Research, a Mumbai-based television audience measurement firm, advertising spends of Internet firms on television grew 205% in 2006, to around Rs79 crore. Their advertising spend in print grew 87.5% to Rs41 crore the same year. On an average, said N. Bhaskara Rao, chairman, Centre for Media Studies, “The advertising budgets of online firms are growing 35-40% year-on-year.” The firms, he added, were feeling the need to spread their advertising across more media, and spend more on each, because “placing one’s bets on just one medium is (no longer) enough.” And so, even as traditional media firms fret about the Internet’s growing impact on their business, they are becoming the preferred advertising media for Internet companies. The Rs10 crore MakeMyTrip spends on TV and print advertising is around half its advertising budget. A large part of the remainder goes, not to the Internet, but to outdoor media and radio.
Growing competition is one reason for the rapid growth in ad spends of Internet firms. At the end of 2005, India had two online travel firms. Today, it has six. There are many new entrants in the market,” said Sanchayeeta Bhattacharya, national director, Mindshare Insights, the research division of Mindshare, a mediabuying agency.
“That is the reason why online companies are getting competitive and investing in media that will help build their brand identity among a larger audience base,” she added. Yatra and Cleartrip, both online travel firms, said more than 60% of their advertising budget is devoted to mainstream media. Yatra, which claims that it sells more than 3,500 tickets a day, said only 30% of its marketing budget is targeted at the Internet, with the rest going to print and television.
“A 360-degree approach to advertising is the only way to keep up with the competition,” said Noel Swain, vice-president, marketing, Cleartrip.
Meanwhile, television and print firms are not complaining.
“Online companies are one of the leading advertisers across our platforms. They, in fact, account for more than 1% of our total ad revenues,” said Joy Chakraborthy, executive vice-president and head, network sales, Zee Network Ltd. This set of advertisers was almost non-existent some two years ago (barring some exceptions of portals like Naukri.com), he added.
Naukri.com, a jobs portal, in fact, credits its television campaign for its growth over the past few years.
“Today, we have more than nine million registered users and that’s mainly thanks to our aggressive advertising and marketing drive,” said Sumeet Singh, national head, marketing, Infoedge India Ltd, the company that runs the portal. “Today, we advertise on about 100 radio channels and more than 200 TV channels,”he added.
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First Published: Wed, May 09 2007. 11 46 PM IST
More Topics: Marketing and Media | Advertising |