Online Display Advertising 2009

8/9/2019 Online Display Advertising 2009

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ONLINE DISPLAY ADVERTISEMENT MARKET

IN INDIA

A Report by the eTechnology Group @ IMRB International for Internet and

Mobile Association of India

April 2009


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TABLE OF CONTENTS

1. EXECUTIVE SUMMARY 3

2. RESEARCH METHODOLOGY 4

3. ONLINE ADVERTISING MARKET IN INDIA 5

3.1MARKET SIZE 6

3.2QUARTERLY DISTRIBUTION OF REVENUES 8

3.3BREAK UP OF MARKET BY VERTICALS 9

3.4GROWTH IN VALUE OF VARIOUS VERTICALS 10

4. COMPARISON WITH GLOBAL SCENARIO 11

5. UNDERSTANDING AN INTERNET USER 13

5.1ONLINE ADVERTISEMENT FOR DIFFERENT PRODUCT CATEGORIES 14

5.2SEARCHED FOR INFORMATION AFTER WATCHING THE ADVERTISEMENT 15

5.3PRODUCT PURCHASED 16

5.4CONVERSION FROM VISIBILITY TO PURCHASE OF ONLINE ADVERTISEMENTS 17

5.5USERS ATTITUDE TOWARDS ONLINE ADVERTISEMENTS 18

6. ONLINE ADVERTISING IN SME 19

6.1AWARENESS AND USAGE OF ONLINE ADVERTISEMENTS 20

6.2BARRIERS FOR USING ONLINE ADVERTISEMENTS 21

7. POSSIBLE TRENDS IN ONLINE DISPLAY ADVERTISING MARKET 22


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1. Executive Summary

As media vehicles continue to fragment and mesh within each other, marketers need to

understand the implication of various parameters guiding this fragmentation basis the consumer

behavior. The challenge for a marketer is to have a deeper understanding of every media vehicle

so that they can selectively target right customers for their message delivery.

Internet has opened up a lot of opportunities for marketers for targeting customers in interactive

and measurable ways. Online advertising helps to target specific customer segments and gather

information across geographical boundaries in a cost effective manner. Online advertising helps

in not only leading visitor to a publishers site but also creating awareness which potentially

could result in gradual brand building. This report aims to map the size and charts detailed

behavior of Internet users and small-medium enterprises in the online display advertising market

in India.

Findings of the report show that size of the online display advertising market has reached INR

3400 Million for FY 2008-09 registering a significant growth rate of 45% and is expected to

surge at INR 4500 Million for FY 2009-10. The study reveals the fact that online publishers

(26%) remain major contributors of this market while there is a sharp decline in the contribution

of the finance sector (25% to 16%) this year. In addition, automobile sector and mobile handset

manufacturers have adopted this form of advertising as an effective tool to target Internet users

in the age group of 18-24 years, who are the growth drivers of the Internet in India.

Online display advertisement has consistently formed a sizeable portion of overall online

advertisement market. It has continued to be an effective long-term option for digital marketers

in targeting customers with specific characteristics. Unlike in mature markets, the spend share of

this advertising option continues to remain higher in India. Although the share of other options

such as search engine marketing may assume larger proportions over time, display advertisement

will continue to command a substantial part of this spending. Recent financial debacle in the US

and its ripple effect on the Indian economy has resulted in differences in the market dynamics

compared with previous years. However, increase in the Internet user base, extensive usage of

Internet by political parties for elections and usage of Internet for advertising by SMEs are the

factors strongly supporting for sustained growth of online display advertising market in India.


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2. Research Methodology

The research team at eTechnology Group with IMRB International adopted a mix of primary as

well as secondary research for this report. Given below is the research methodology used for the

report:

In-depth discussions with the key players in the

online display advertising industry

Detailed questionnaire was designed to get insights

on the market size of online display advertising

industry

Relevant data points were culled out from I-CUBE

2008 reports, an annual syndication of eTechnology

group, IMRB International

This is based upon primary survey covering 20,000Households, 90,000 individuals, 1000 SMEs and 500

cyber cafes

Secondary research was done using information

from various published resources and other research

bodies to triangulate with our findings


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4.9

11.9

16.4

32.2

46

50

57

5.57.5

32

36

42

3.3

8.711.2

21.1

4.3

2.2

2000 2001 2003 2004 2006 2007 Mar-2008 Sept-2008

(Est.)

Mar-2008

Rural

Claimed Internet User Active Internet User

Figure 1: Growth in the Active Internet User Base in India(All figures are in Millions. Source: I-Cube2008, Annual IMRB Syndication)

3. Online Advertising Market in India

The graph above illustrates the growth in Internet user population in India over the years. The

Internet penetration findings are based on I-Cube 20081

which is an annual research syndication

conducted by IMRB International. India has witnessed continuous growth in the Internet

adoption in certain sections of society - predominant patterns exist mostly in urban areas. Across

all urban areas, there has been an increase in the number ofClaimed2

as well asActive3

Internet

users. Further with increased penetration in less affluent classes of the society, Internet has

started to reach the bottom of the pyramid.

1Internet in India (I-Cube) reports are based on a primary survey conducted across 30 cities - among 20,000 Households, 90,000

individuals, 1000 SMEs and 500 Cyber Cafes. To extend the scope of this study, we have carried out this research across 100

rural centers to understand Internet behaviour in rural areas.

2 Claimed Internet User is an individual who has used the Internet at any point in time in past. This gives us a clear indication as

to how many Indians have experienced Internet at least once in their lifetime.

3Active Internet User is an individual who has used the Internet at least once in the last 1 month.


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With nearly 0.6% of penetration in the total population, there are 3.3 Mn Active Internet users in

rural India. Non-Government Organizations (NGOs), GOI initiatives, community service centers

and CSR activities by private companies have played a significant role in ensuring this

penetration.

Among urban users, college-going students and working individuals form a major proportion of

the Active Internet user base. Such a high proportion could be due to various information

searches required for academic, entertainment or employment purposes. This growth is attributed

not only for communication or information search but also for leisure activities like gaming,

movies, music and user-generated content.

3.1 Market SizeThe below figure illustrates the growth of online display advertising market in India. In the

financial year 2007-08, the size of this industry was at INR 235 Crores. During the year 2008-09,

the industry grew at a high rate of 45% reaching INR 340 Crores. Based on the primary research

conducted in this study, it is expected that the industry will grow at a lower rate at 32% and will

grow to INR 450 Crores.

The ad spent per user, shown in Figure 3, is a function of the total display advertising market and

the Internet user base in India. The online display advertising spent per user in India is 1.4 USD

which is very less compared to the other developed countries. Due to economic downturn which

450

340

235

45%

32%

FY 2007-08 FY 2008-09 FY 2009-10

Figure 2: Online Display Advertising Market (INR Crores)


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has led to reduction in the budget allocation for all marketing activities, Ad spends per user is

expected to marginally decline to1.4 USD for the next year.

1.51.4

2008-09 2009-2010

Figure 3: Ad Spent per User (in USD)

(Conversion : 1 USD=INR 50)


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3.2 Quarterly Distribution of Revenues

Distribution of revenues across the year in various quarters follow a particular trend with

maximum revenues recorded for first and third quarters of the financial year 2008-09. The

growth in the first quarter was largely influenced by continued growth in the past years. With the

skepticism of the economic downturn, online advertisement spends reduced in the second

quarter. In the third quarter, due to holiday season and festivals online expenditure grew to 27%.

There seems to be an overall reduction in marketing spends in the last quarter. However, some

sectors such as telecommunication and automobile seem to have regained their momentum.

27%

23%

24%

26%April to June

July to September

October to December

January To March

Fi ure 4: uarterl Distribution of Revenues


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3.3 Break up of Market by Verticals

The figure above shows the percentage distribution of different industry verticals contributing to

the online advertising market. With the recession in the US economy and its global effect, there

is a sharp decline in the contribution from the BFSI sector to the market and is expected to

decline further in the year 2009-10. This decline pertains to foreign banks that have operations in

India and extensively use online medium for targeting HNIs and businessmen.

Online publishers are the major contributors to online advertising market with 26% of the

revenue from this industry vertical. This is attributed to the available platform as well as easy

accessibility to the target audience, which in turn, helps them to become key influencer. Their

share is expected to remain static or decline in smaller percentage in upcoming year. Online

spending by political parties, real estate and general merchandise companies which arecategorized as Others formed 4% of online marketing spend in the financial year 2008-09.

These expenditures are expected to fall to 1% in the next financial year.

16%

11%

9%

9%

12%

7%

5%2% 4%

26%

BFSI

Auto

FMCG

Consumer Durables

IT / Telecom

Education

Online publishers

Electronic Media

Print Media

Others

14%

10%

9%

2% 1%5%

25%

12%

10%

13%

2008-09

(Market Size INR 3400 Million)

2009-10

(Market Size INR 4500 Million)

Figure 4: Industry Breakup of Online Display Advertising


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Figure 5: Growth in Online Advertising (FY 2008-09 and FY 2009-10)

3.4 Growth in Value of Various Verticals

The graph, above, shows the value in INR Million and growth of the various verticals in the

online display advertising market. Of these industry verticals, Education is expected to grow at

the rate of 70%. There is a sharp decline witnessed in the online advertising spend from BFSI

sector because of financial debacle over the last year.

Following this, automobile sector is expected to show the second highest growth rate (56%) with

increase in the product launches and emergence of Internet as the effective medium to target

youth who constitutes the major chunk of Internet user base in India. With lot of information

available online and introductions of the websites where you can compare the features, prices of

various vehicles it offers great help to the prospects for taking purchase decision.

5

44

374

306

306

408

238

884

170

51

119

630

585

45

0

45

0

5

18

405

1125

225

68

45

56%

47% 47%

27%

70%

32% 32%

16%

27%

-62%

BFSI Auto FM CG Consumer

Durables

IT / Telecom Educat ion Online

publishers

Electronic

M edia

Prin t Media Others

FY 2008-09 FY 2009-10 % Growth


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4. Comparison with Global Scenario

Based on the reports published by Internet Advertising Board (IAB), the aggregate online

advertising revenue in the US has reached USD 23.4 billion in the year 2008. This revenue has

been growing exponentially in past years. However, due to recent downturn the growth has been

a little lower. The latest estimates for Europe market has not been made available by IAB yet.

The previous reports have indicated that the European market stands at USD 17.4 billion for the

year 2007. Of this aggregate revenue, online display advertising comprising banner ads,

sponsorship links, rich media and digital video amount to 32% (or USD 7737 billion). On the

other hand, search advertising commands 45% of this share.

Figure 7 shows illustrates the Online spends per user in developed countries like USA is 143.3

USD of which 47.3 USD is per user spent on online display advertising (i.e. 32% of the Total

Online Advertising Spend). This is far higher than the online display advertising spent in India

which stands at USD 1.5. The online display advertising spend per user in India is still lower

compared to other European countries.

23,44822,612

17,997 17,449

11,244

2006 2007 2008

USA Europe

Figure 6: Aggregate Online Ad Revenue Europe and USA(USD in Millions)

Source: IAB Internet Advertising Revenue Report March 2009& IAB Europe AdEx 2007


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125.3 118.6101.3

76.765.8 59.5 57.8 57.5

143.3170.7

188.3

207.6

Norw ay UK Denmark USA Sw eden Germany Netherlands Belgium Finalnd France Austria Italy

Figure 7: Online Ad Spends per user across various countries

Source: IAB Europe Ad Ex 2007/PWC


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Base: 1.8 Mn Active Internet users who have clicked on online Advertisements(Source: I-Cube 2008, Annual IMRB Syndication)

5. Understanding an Internet User

The effectiveness of the online advertising is based upon targeting the right customers in a cost

effective way. Today, most of the websites are loaded with different forms of advertisements to

enable advertisers for conveying their message regarding their products/services. I-Cube 2008,

annual syndicated study for tracking Internet usage characteristics in the country, examines the

orientation of users towards online advertising. Internet users in their online purchase decision

get influenced by their exposure to various kinds of online display advertisements. This section

charts out the product purchase behaviour of a user post visibility of online advertisement to the

final product purchase.

Of the different types on online display advertising, online banners record the highest recall of

50%. 29% of the 1.8 Mn Active Internet users were able to recall streaming videos which theyhad seen in past. With improvement in the infrastructure and reduction in the hardware prices

there is higher possibility of using streaming videos as an effective method for online

advertisement. The lowest recall percentages (23%) are for pop-ups, flash videos and sponsored

23%

23%

23%

29%

50%

Pop-ups

Flash

videos

Sponsored

links

Streaming

videos

Banners

Figure 8: Recall of Different Types of Online


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links. While sponsored links are not apparent on a website, pop-ups and flash videos are often

blocked by browsers.

5.1 Online Advertisement for Different Product Categories

(Source: I-Cube2008, Annual IMRB Syndication)

The above table shows the list of categories for which display ads were clicked by the Internet

users. Category of ads related to mobile phones and devices are most frequently clicked by active

Internet users. As youth in the age group of 18-35 years form a substantial proportion of Internet

users, advertising such devices over the Internet is a viable option. This is followed by

advertisements for financial products, travel and automobile. Further, with the increase in the

popularity of online portals for travel, entertainment and jobs there is significant proportion of

visibility seen for advertisements from this area of operations.

Base: 1.8 Mn Active Internet users who have clicked on online advertisements

Online advertisement for different product categories Percentages

Mobile Phone/Instruments 58%

Ads for Loans by Banks/Financial 50%

Entertainment Sites 42%

Ads for Job Sites 40%

Investment options like Mutual Funds 39%

Education/Training related 37%

Computer/Laptop/Printer/Scanner 38%

Air Tickets Ads 35%

Personal Products 28%

Insurance Ads 28%

Hotels & Holiday Tours/Packages 25%

Automobile Ads 23%

Matrimonial Advertisements 20%


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5.2 Searched for Information after Watching the Advertisement

(Source: I-Cube2008, Annual IMRB Syndication)Online advertisements play an important role in generating awareness as well as building

branding among users regarding different product categories. Maximum number of users

searched for information for the product like mutual funds after witnessing online

advertisements. Online advertisements related to the job sites as well as mobile phone/instrument

have high rate of persuasiveness. In contrast, online advertisements for products like matrimonial

and tour packages seem to have the least influencing power leading to the lowest information

search.


Information Searched Percentages






Air Tickets Ads 3%


Personal Products 3%Ads for Loans by Banks/Financial 1%

Automobile Ads 1%

Insurance Ads 1%




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5.3 Product Purchased


The table above shows the number ofActive Internet users who have purchased product after

clicking on the Online Display Advertising. Across all product categories, investment options

like Mutual Funds have recorded the highest online purchase after clicking on the online

advertisement. This could be due to the online banking facilities like online trading, online

banking facilities offered by financial institutions. Convenience and higher discounts act as

major drivers for higher purchase of air tickets using online travel sites. Online display

advertisements related to matrimonial seems to generate almost none or minimal impact in

enticing Internet users to look for information or buy products.


Products Purchased Percentages


Air Tickets Ads 18%




Personal Products 5%

Ads for Loans by Banks/Financial 3%

Automobile Ads 2%Insurance Ads 2%






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5.4 Conversion from Visibility to Purchase of Online Advertisements


The above table shows the number of users who have clicked on an online display advertisement

which has led to the product purchase across product categories. The maximum conversion from

visibility to the purchase is observed for investment options like Mutual Funds followed by Air

Ticket advertisements and advertisements regarding Education/Training. In addition to this, these

product categories draw higher customer involvement leading to higher number of users

searching online information after witnessing an advertisement. Although, irrespective of higher

visibility online purchases for Insurance products are lower. This shows that function of online

advertisements is to create awareness while traditional method of selling these products throughfinancial advertisers is more preferable for Insurance products.


Product Categories ClickedOnline Ads

Searched forInformation

ProductBought

Mobile Phone/Instruments 58% 6% 7%

Ads for Loans by Banks/Financial 50% 1% 3%

Entertainment Sites 41% 4% 1%

Ads for Job Sites 40% 8% 12%

Investment options like Mutual Funds 39% 13% 38%

Computer/Laptop/Printer/Scanner 37% 3% 2%

Education/Training related 37% 6% 15%

Air Tickets Ads 35% 3% 18%

Personal Products 28% 3% 5%

Insurance Ads 28% 1% 2%


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5.5 Users Attitude towards Online Advertisements

Active Internet users feel that online advertisements are misleading and distracting. This could

be attributed to reaching not to the exact page where product is advertised but to the home page

of the advertiser after clicking an online display Advertisement. This is not in accordance with

the requirement of the users who are in a search of a good deal but ultimately leading to the

advertisers home page and not to the product advertised. However, approximately one third of

the Active Internet users (66%) feel that online display advertisements serve wide variety of

products and these advertisements (37%) are generally not ignored by them.

62%

54% 52%

37%

70%

34%

47%

Theypresent

misleading

information

Theydonot

offer

comprehensive

information

Adsare

distracting

Theyareless

likelytomake

mepurchase

Theyare

irrelevant

Iignorethem

Theydonot

offerawide

varietyof

products

Figure 9: Attitude towards Online Display Advertisement

Base: 1.8 Mn Active Internet users who have clicked on onlineAdvertisements

(Source: I-Cube 2008, Annual IMRB Syndication)


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6. Online Advertising in SME

Small-Medium Enterprises4

(SMEs) are keen on advertising in specific geographies considering

constraints regarding the scope of operations and limited advertising budgets. This might have

resulted in the higher popularity for Newspapers, Yellow Pages and even online classifieds.

Interestingly, SMEs are embracing Internet as an advertising medium including Internet

advertising as well as online classifieds with considerable percentage of awareness and likeliness

of usage in future. It has been witnessed that online advertising has gained acceptance among

SMEs in India and Internet medium is capable of having an impact on the audiences with

considerable percentage of SMES showing likeliness of using online advertisement in future.

4For the purpose of the study we defined SME as an enterprise with employee strength of 11-250. Only those SMEs

which had either a Head office or a single office in the Top 8 Metros (Mumbai, Delhi, Kolkata, Chennai,

Hyderabad, Bangalore, Pune and Ahmedabad) were considered.

44%

23% 23% 22%

6%

2%

8%8%

3%6%

34%

23%

45%

31%

15%

21%

Newspaper Yellow Pages Magazine/

Journals

Internet Out of Home

(Billboards,Hoardings

etc.)

Online

Classifieds

Radio Others

Advertisement Methods Currently Used Likely to advertise in future

Figure 10: Advertising Methods Utilised by SME

Source: I-Cube 2008, Annual IMRB Syndication


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6.1 Awareness and Usage of Online Advertisements

Overall, display advertisements are more popular among SMEs compared to the search engine

marketing in India. The highest conversion from awareness into actual usage exists for Online

Banner advertisements followed by email marketing. Few SMEs use Pop-ups as preferred type

of online advertising. Compared to the online display advertisements there is lower awareness

and usage of SEM (Search engine Marketing) among SMEs. It has been observed that SMEs

prefer local search engines for advertisements and some of these even opt for sponsored search

links on these search engines.

74%69%

44%

35% 33% 31%

20%

14%10%

3%7%

10%

22%27%

Banner Ads on

Portals and other

w ebsites

email Marketing Advertisements in

Blogs

Pop-ups Content Based ads Results on search

engine

Sponsored search

item on a search

engine

Awareness of Online Advertisement Methods Present Usage of Online Advertising Methods

Figure 11: Awareness/Usage of Online Advertising Options (SME)



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6.2 Barriers for Using Online Advertisements

Inadequate reach and perception of Internet as a Less effective media are the main barriers

preventing SMEs from using online advertising. Lack of awareness among people and lack of

expertise are other important barriers for not using online advertising.

32%

22%

18%

9%

36%

10%

16%

Inadequate

reach

Less effective Lack of

awareness

Lack of

expertise for

implementation

Online

advertising is

not relevant to

the brand

image/

objectives

Considered

more intrusive

than others

Others

Figure 12: List of Barriers for Using Online Advertisement



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7. Possible Trends in Online Display Advertising Market

Online advertising avenues include various web-based options using which brand and marketing

messages get delivered. These options include search engine marketing, banner ads, rich media,

digital video, email marketing, lead generation, classifieds and sponsored links. Search engine

advertising comprises a high proportion of the overall options due to efficient search engine

avenues. Online display advertisement comprising banner ads, rich media, digital video and

sponsored links has relatively large number of participants but enjoys a limited share in the total

spends. There are, however, inherent differences in these options. Online display advertisement

provides a marketer an option to generate awareness which in turn will result in brand-building

in long run. While through search advertisement, a marketer can generate effective leads in ashort span of time. Search engine marketing provides a distinct advantage of enabling a marketer

by providing complete control over a campaign with selection of keywords and the ability to

place the advertisements on the selected websites while the same does not hold true for online

display advertisements

The yardstick to measure the effectiveness of online advertisement has evolved from mere

number of impressions to the customer acquisitions leading to performance based

advertisements. This trend is very much apparent in India where in pricing for online advertising

campaigns are frequently measured against the performance. Matured markets like the US and

some of the European countries have adopted Hybrid Model in measurement. In this model, the

marketers are using this model to ensure creating awareness and the generating leads through an

online campaign. While the existence of this model is not visible in the Indian market, there is

high possibility of such emergence in the next couple of years.

Recognizing the possibility of using Internet as an effective tool for targeting niche audiences,

innovative perspectives are being practiced by established and traditional institutions. During the

recent US Presidential elections, Barak Obama's team ensured that the campaign had a strong

presence on social networking sites such as Facebook, MySpace and LinkedIn. Through such

presence, Barak Obama ensured he maintains a two-way interaction with his electoral. Of late,

many Indian politicians have started considering Internet as a viable medium and useful platform


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for interactive political communication especially with youth. Similar approaches are being

practiced in India with Indian National Congress party using sites like YouTube and Facebook to

execute web-based social marketing campaigns. The party had entered the digital space by

launching its first Internet campaign for the Rajasthan state Assembly elections. With 50 millions

Internet users in Urban India and majority of them in the age group of 18-24 years, Internet is

emerging as an effective tool to engage with them. Bhartiya Janata Party (BJP) has launched a

website LKAdvani.in for its prime ministerial candidate Lal Krishna Advani and another for its

chief ministerial candidate for Delhi, Vijay Kumar Malhotra at VKMalhotra.in. Further, this

party has teamed up with top Internet companies for spreading their campaign messages over the

Internet.

Over time, the online advertisement space is expected to change its composition. Presently,

certain web-based avenues such as search engine marketing command a high share of this space

which is glaring in matured markets. Display advertisement, however, will continue to hold its

share due to its distinct advantages such as ensuring long-term impression of a brand, possibility

of interactivity and delivering rich media.


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About IMRB | eTech Group

eTechnology Group (a specialist unit of IMRB International) is a research based consultancy

offering insights into IT, Internet, Telecom & emerging technology space.

Our continuous link with industry and a constant eye on the pulse of the consumer ensures that

we can decode the movements of technology markets & consumers. To our clients we offer an

understanding of the present market environment and a roadmap for the future.

Contact Details:

IMRB | eTech

A Wing, Mhatre Pen Building

Senapati Bapat MargMumbai

Tel: (91) 22 24323675

Fax: (91) 22 - 24323900

Research Team

Research Director: Balendu Shrivastava

Principal Analyst: Tarun Abhichandani

Analyst: Rohit Gangwal

Contact at:

[email protected]

About Internet and Mobile Association of India (IAMAI)

The Internet & Mobile Association of India (IAMAI) is a not-for-profit industry body registered

under the Societies Act, 1896. Its mandate is to expand and enhance the online and mobile value

added services sectors. It is dedicated to presenting a unified voice of the businesses it represents

to the government, investors, consumers and other stakeholders. The association addresses the

issues, concerns and challenges of the Internet and Mobile economy and takes a leading role in

its development. The associations activities include promoting the inherent strengths of the

digital economy, evaluating and recommending standards and practices to the industry,

conducting research, creating platforms for its members, communicating on behalf of the

industry and creating a favorable business environment for the industry. Founded in January

2004 by leading portals in India, IAMAI in the only specialized industry body in India

representing the interests of online and mobile value added services industry.

Subho RayPresident, IAMAIhttp://www.iamai.in

Online Display Advertising 2009

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