ONLINE ADS: Revenues Ahead?

Chances are that many still aren’t fully aware about what comprises online

advertising. Most of us tend to associate online advertising with the banner ads

we see flashing at strategic locations on Web pages. But those constitute a very

small fraction of the whole. Ever noticed the interstitials (small windows that

pop up while a Web page is downloading and disappear after a while), Web site

sponsorships, the classifieds, advertisement mail, and link ads in chat boxes?

These are among a host of advertisements that can be found on the Net.

Industry

pundits believe that online advertising is "waiting to happen". Most

of them however admit that the story so far has been shaky. As Binod Chaudhry,

VP and regional director, Rediff.com puts it, "Yes there is a problem with

online advertising today. But though the present doesn’t look so bright, the

future is absolutely mind-boggling." With the exponential growth in PC

sales–according to DQ estimates, India will have 10 million PC’s by 2003 at

a growth rate of 42%–and the expanding Internet penetration, the power of the

Net as a medium is huge. "With the boom in the IT industry and its

penetration in every part of life, with dot-coms consolidating their position

and offering various value additions, Web advertising will grow." adds

Sreenivasan K R, head, sales and marketing, Ciol.com.

The interactive edge

Perhaps the biggest advantage that online advertising has over offline

advertising is that it facilitates the advertiser to reach an absolutely

pinpointed and targeted audience. On the Net, the audience can be qualified like

no other medium, knowing their age, gender, income category, interests and

hobbies, and most important of all, browsing habits. All this can help an

advertiser decide the sites and the slots where he wants to promote his brand.

As Stu Ginsburg, spokesperson for the Internet Advertising Bureau (IAB) points

out, "The Internet is a terrific medium in that it permits all consumer

activities to happen at one place and one time–one can advertise, brand,

market, and sell all in one place using the right targeting capabilities."

Chaudhry further qualifies this, "There are users that sign up asking for

specific information, maybe regarding books, computers or music. These databases

are undoubtedly the most potent means for mail advertising."

Apart

from being economical and dynamic, what stands out is that the Internet is the

only medium where mass advertising is interactive too. "Traditional

advertising is usually a one-way mechanism, there is no way for customers to act

on the information in the ad. On the Internet, however, interested customers can

click on a banner, learn more, and actually make purchases on the spot,"

states Arti Dwarkadas, business director, Ogilvy Interactive. The interactive

power of the Internet allows the consumer to determine the extent of the

advertising message, ranging from a quick brand impression to a full-fledged

session with a brand, product or service.

The Internet as a medium knows no demographic boundaries and this gives the

advertisers a huge audience to tap and build brand image if not sell products.

Experts agree that the general trend in advertising on the Net is driven by a

brand building and brand promotion exercise and not so much by sales. As N

Muralidharan, MD and VP, JobStreet India states, "Some companies have

started using the Net for launching brand campaigns that tap the tech-smart

folks." Companies can also benefit from Internet advertising by educating

their customers about their products and technologies–the Net is immensely

capable of doing that. According to Pankaj Sethi CEO Media2India, "A recent

study conducted by Jupiter Media Metrix, suggests that advertisers are

increasingly using the online advertising medium for brand building."

What holds the growth?

In spite of all these benefits, why is it that online advertising is yet to

take off? Chaudhry believes that too much has been expected from a medium, which

has been around for only four years. "Give it some time," he says,

"Online advertising is still in its infancy. Ten years down the line you

and I will be proud that we were around when it got started." Perhaps one

problem that needs to be overcome is the mindset. Most of the corporates, who

constitute the largest chunk of advertisers on the Net, are not very sure about

what the Net can deliver. According to Charudhry, this is because they still

prefer to do things the traditional way.

One reason why Web advertising did not take off could conceivably be the

dot-com shakeout. With so many online companies closing shop, advertisers turned

apprehensive about investing in online ads. But optimists believe that this

so-called shakeout has, in fact, been a good thing to happen. As Sreenivasan

points out, "Like any other industry the dot-com industry is going through

a consolidation phase. Only those with a solid business model will

succeed." Chaudhry agrees, "The failure of dot-coms is somehow

creating the impression that it is the failure of the Internet, which is a very

narrow understanding of the difference between a medium and a business

idea."

Another genuine problem that Web advertising faces today is the

infrastructural inadequacy. According to Nasscom, the number of Internet

connections in 2000 was about 1.6 million and the Internet users were pegged at

4.8 million–a minuscule portion of the country’s one-billion-strong

population. Then there are the bandwidth issues, especially the last-mile

connectivity. Also, not being a very evolved medium like traditional

advertising, Web advertising does not have a matured pricing model. Moreover,

the returns are also highly unpredictable. Chaudhry agrees, "There are

times when you invest Rs 5 lakh in online advertising and you get returns worth

50 lakhs and there are times when huge investments go bust."

Gradually, however, Internet advertising is becoming more organized.

Advertisers are increasingly looking at ways to move beyond the much-used banner

ad, either by sponsoring a portion of a site or getting their content integrated

into it. "The future of online advertising continues to look bright.

Broadband access technologies, coupled with lower PC prices, will ensure greater

numbers of users, which in turn, will support advertising revenue models for the

medium," says Sethi.

The opportunities for interactive advertising on the Web are endless; they

just need to be tapped right. DQ