Global online firms are turning India-centric, hoping to capitalize on a growing mass of Internet users, online advertising and an exploding mobile user base.
India’s Internet penetration at a mere 3% is among the lowest in the world, but the fourth largest in the Asia-Pacific region with more than 30 million users, according to data from comScore Inc., a global Internet information provider, and Telecom Regulatory Authority of India (Trai). Broadband users are even fewer at 2.34 million, Trai said.
“A lot of companies like ours tend to focus not only on penetration, but also on growth rates,” said Jaspreet Bindra, country manager, MSN India. Yahoo!, Google , MSN India are aggressively going local.
AOL Global Operations Ltd recently entered the race for Indian eyeballs with an India-specific site. eBay and Monster.com are aggressively wooing Indian customers.
“The India online advertising market is still very small, but is beginning to grow rapidly. There is tremendous opportunity for a company with AOL’s expertise, network and technology,” said P.G. Ponnapa, vice-president and head of the portal business of AOL.
A recent report by SSKI Securities forecast India’s Internet advertising revenue to grow nearly 50% by 2010 to Rs750 crore against a global growth of 20% to $47.5 billion (Rs1.92 trillion) over the same period.
“The growth rates, if you look at it from the Internet advertising market point of view, are huge,” Bindra said. The drivers are classifieds in matrimonials, real estate and jobs.
“We tripled our advertising revenue last year and we will at least double it this year,” said George Zacharias, managing director of Yahoo India, which has only ad revenues.
Auction site eBay relies on user fees for revenues. The business-to-consumer e-commerce market in India is estimated at around Rs2,300 crore, and growing nearly 100% annually, according to an Internet & Mobile Association of India report. EBay India has 2.5 million visitors a month and 2 million registered users across 670 cities, Rathin Lahiri, chief marketing officer, said. “It’s just a question of getting a certain critical mass before one looks at monetizing,” he added. The low Internet penetration does not worry them.
“The way to go about it is not to think of the obstacles alone, but what is going to happen a few years later,” Zacharias added.
The telecom ministry, which declared 2007 as the Year of Broadband, expects 100 million Internet users with 20 million broadband connections by 2010. Huge investments are being made by local service providers Mahanagar Telephone Nigam Ltd and Bharat Sanchar Nigam Ltd to upgrade broadband infrastructure.
It’s not merely PC screens, but delivery over mobile phone screens that the companies find exciting. Yahoo, in a market research report, has estimated that mobile value-added services will rise to $600 million in 2010 from $210 million last year.
“Nobody has really figured out how to make a lot of money from there, but they see it growing like mad. Therefore, the market size is suddenly looking bigger than just the PC market,” Bindra said.
MSN India is increasingly focused on the mobile phone market. Of the 165 million mobile phone users in India, barely five million access the Internet on their handsets. Industry players believe that 50% of the phones will be GPRS-ready in two to three years.
“The pie is very small now, but it is going to grow large. For everybody, it is just a question of executing to get as much share of the pie as possible,” Zacharias said. Reuters