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Online advertising grows, but fails to generate enough revenue

Online advertising grows, but fails to generate enough revenue
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First Published: Mon, Feb 19 2007. 12 04 AM IST
Updated: Mon, Feb 19 2007. 12 04 AM IST
The numerical comparison is designed to impress: according to the Internet And Mobile Association of India, an industry body, around 40,000 brands targeted at Indians went online with their advertising last year; the number of brands currently being advertised on television channels in India is much lower at 9,000. Mahesh Murthy, CEO, Pinstorm, an online marketing and advertising firm, claims that the number is actually much higher and that “over 55,000 brands targeting Indian consumers advertised on the Internet (in 2006).”
“We had only 80 brands advertising on our platform in 2005 but the number grew to 260 in 2006,” adds Rajnish, the head of digital marketing revenue and strategic business at MSN India. “We saw a significant jump in our advertising revenue,” he says.
The volume of Internet advertising has grown, and advertisers have realised that the medium has a place in their media plans. However, in value terms, in 2006, Internet advertising accounted for just around Rs350 crore of the Rs16,300 crore spent on advertising. Television advertising accounted for Rs6,600 crore.
The reason for this disparity is reach: even the most optimistic estimates of India’s Internet population put the number at around 50 million. In contrast, there are around 500 million people who have a television set at home. “Advertising rates on Internet hover around Rs1 to Rs440 for display ads on websites and Rs1 to Rs4,400 for search-engine-based advertising,” says an executive from an online marketing company. Of the two, search-engine based advertising is the more popular: it refers to the advertisements that appear in one corner of a screen when users search for a particular subject. Advertising rates on television could vary from Rs500 to Rs200,000, even more for a 10-second spot, depending on the channel, the programme, and the time-slot.
Online advertising is growing also because some advertisers have realized that their target audience spends a lot of time online. It isn’t about banner ads anymore, says Samir Suneja, the head of marketing at Perfetti Van Melle. “It is about clutter-breaking initiatives like contests and innovative advertisement layouts to grab the attention of our target audience who are in the 15-34 age group,” he adds.
He says the company is working on a new online campaign for Mentos, and that this will be something that has never been seen in India. A spokesperson for Samsung India says the company uses online advertising for categories such as “MP3 players and IT products” because these are targeted at “youth” and that experience had shown that the Internet was “a strong medium to reach this audience.”
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First Published: Mon, Feb 19 2007. 12 04 AM IST
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