Online Advertising Netting Growth

India's top-throttle advertising industry is pushing ahead online, with the

Internet starting to penetrate into homes and advertisers seeing here an

increasingly huge target audience to tap. Estimates about the size of the market

vary though. Mumbai-based Mediaturf, an online media buying agency, which has a

tie-up with larger traditional media buying houses such as the city's WPP's

Mindshare and Initiative Media, estimates online advertising will touch Rs 200

crore by 2007, while international research conducted by MSN says its will be

over $100 mn by 2010.

Leading portals in India such as Rediff, MSN, Yahoo, Indiatimes, and their

likes are expecting ever-increasing growth on the advertising front with most of

the sites projecting more than 50% growth, thereby reaching out to focused

consumers and flourishing revenue figures. According to Rediff.com head of

investor relations and public affairs Debasis Ghosh, of the $2.9 mn revenue

clocked by the company for the quarter ended Septermber 30, 2004, online revenue

from India was $1.3 mn-an increase of 73% over the same quarter last year.

"While this largely comprised advertising and fee-based services, the

Indian online advertising grew by 127% over the same quarter last year," he

said. The fee-based services on Rediff include online subscriptions, mobile

downloads and online shopping, which according to Ghosh has been going up by

18%.

With the increase in Internet usage, the advertising sector is also

witnessing new entrants by the day. Substantiating this, Ghosh disclosed that of

the 90 advertisers for Rediff in the September quarter, 26 were first time

advertisers and included names like Blaupunkt, Crocodile, British Council,

Principal Investments and Tata Indicom. According to him, everyone, from leading

multinational companies to financial services banks, to insurance companies, to

retail outlets, is making a beeline for the doorsteps of online sites to grab

the mindshare of netizens.

Notwithstanding the rush for advertising online, sites are also coming up

with interruptive yet innovative ways for hosting advertisements to hold

prominence, be it marquees, mazes of pop-up windows, scrolls, sponsored links-the

list is an ever-increasing one.

MSN claims to be the best site in terms of banner ads, and click ads. Grey

Interactive general manager Sudhir Nair corroborates the same when he says,

"While MSN scores the ground with its messenger ad spots, Yahoo is equally

ground-breaking with its monster banners. Rediff, being an early entrant, has a

loyal user-base and the variety of contents becomes relevant for

campaigns."

Not just MSN, Yahoo! and Rediff, others sites like Sify, Indiatimes,

Hindustantimes and CIOL are all joining the ad bandwagon to contribute largely

to the increasing advertising pie. Indiatimes is gaining massive ground with

campaigns and offline promotions. "The advertising on indiatimes.com is

estimated to be between Rs 15-20 crore this year," informs Times Internet

COO Rajesh Sawhney. Similarly, India's only technology site CIOL is

anticipating revenues of close to Rs 2.5 crore for FY 2004-05. Besides the

normal advertisement route, which certainly is the primary source of revenue for

any portal, CIOL is also focusing on customized programs for CIO and SMB

communities.

This growth is just the tip of the iceberg, Yahoo! India country manager

Neville Taraporewalla says: "We have seen 100% growth in online advertising

in 2004. Whilst we account for over 20% market share, a lot of growth is coming

from competitors too. In 2004, we have seen the online advertising industry grow

by over 75% to $15 mn globally compared to last year's $8.5 mn."

While the maze of pop-ups and marquees interrupting access is often

irritating, these colorful advertisements are not just adding spice to the site,

they are actually started making them financially viable. A necessary evil if

you will, till a new revenue model emerges.

Pallavi Goorha in New Delhi

CyberMedia News