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Market Research India - Online Advertising Market in India 2009
Market Research India - Online Advertising Market in India 2009
Market Research India - Online Advertising Market in India 2009
Market Research India - Online Advertising Market in India 2009
Market Research India - Online Advertising Market in India 2009
Market Research India - Online Advertising Market in India 2009
Market Research India - Online Advertising Market in India 2009
Market Research India - Online Advertising Market in India 2009
Market Research India - Online Advertising Market in India 2009
Market Research India - Online Advertising Market in India 2009
Market Research India - Online Advertising Market in India 2009
Market Research India - Online Advertising Market in India 2009
Market Research India - Online Advertising Market in India 2009
Market Research India - Online Advertising Market in India 2009
Market Research India - Online Advertising Market in India 2009
Market Research India - Online Advertising Market in India 2009
Market Research India - Online Advertising Market in India 2009
Market Research India - Online Advertising Market in India 2009
Market Research India - Online Advertising Market in India 2009
Market Research India - Online Advertising Market in India 2009
Market Research India - Online Advertising Market in India 2009
Market Research India - Online Advertising Market in India 2009
Market Research India - Online Advertising Market in India 2009
Market Research India - Online Advertising Market in India 2009
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Market Research India - Online Advertising Market in India 2009

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  • 1. Online Advertising Market ‐Online Advertising Market IndiaJuly 2009
  • 2. Executive Summary  Estimated to be worth INR 6.8 bn in 2008 and forecast to register INR 8.5 bn in 2009  Market  Online Advertising accounts for just 4% Indian advertising industry  Fastest growing segment in Indian advertising industry at 74% CAGR from 2004‐2008  Online user base of 50 mn in 2008 despite low penetration rate of just 4.3%; computer literacy &  growing penetration in urban areas alone will add significantly to the user base Factors   In addition to domestic user base, a large number of expatriate Indians, who consume Indian influencing influencing content, form a target audience content form a target audience growth  Encouraging consumption patterns including usage, frequency and response to advertising  Low Internet‐user/literacy‐rate ratio and low availability of Indian vernacular content exhibits  immense potential since majority of users prefer accessing vernacular content  BFSI, Online publishers and IT/Telecom are the major revenue contributors  Niche & emerging nature of medium coupled with low barriers to entry could lead to greater  Trends competition  Acquisitions and  investments by foreign players as well as Private Equity firms is providing a  boost to this nascent industry  Largely dominated by search engines and portals  80% of the total revenues go to the top 8‐10 portals/portal group sites Competition  Online Ad networks have started gaining acceptance in the Indian market in the past 2‐3 years g g p p y  Around 15 ad networks exist as of 2008, accounting for 15% of the total online ad spend ONLINE ADVERTISING MARKET – INDIA.PPT 2
  • 3. •Advertising Industry•Online Advertising Industry g y•Factors influencing growth•Trends•Competition ONLINE ADVERTISING MARKET – INDIA.PPT 3
  • 4. The Indian advertising industry has witnessed a shift in spending patterns over the past 3 yearsIndian Advertising Market Segment Size & Share•Market estimated to be worth INR 227 bn in INR bn 2008 and growing at 18% p a p.a. 250 +18% 8% 226.8 234.0 198.4 Others 200•Largest Segments: 165.1 Online 150 138.5  Television: 37% share 117.7 Radio 100 Outdoor  Print: 50% share TV 50•Fastest Growing Segments: Print 0  Online: 74% 2004 2005 2006 2007 2008 2009E  Radio media: 39%•Like other global markets, the Indian g , Segment Growth Rates advertising industry is also suffering due to the % Online is  Online current economic environment fastest  Radio  100 growing•The long‐term prospects for the industry 80 Outdoor continue to remain sound: Others 60 Print  Strong growth rates vis‐à‐vis other markets 40 TV   Advertising to GDP ratio for India is 0.47 compared 20 to 1.34 in the US, 0.95 in the UK and a close 0.54 in 0 China ‐20 2005 2006 2007 2008 2009E ONLINE ADVERTISING MARKET – INDIA.PPT 4
  • 5. •Advertising Industry•Online Advertising Industry Online Advertising Industry•Factors influencing growth•Trends•Competition ONLINE ADVERTISING MARKET – INDIA.PPT 5
  • 6. Online medium currently accounts for just 3% of the total market butis the fastest growing sub‐segmentOverview Online advertising – Share of total• Although online advertising has been in India since the dot‐com era, the market crossed the INR 1 bn , Print mark as recently as 2005 37% TV • The market was worth INR 6.8 bn in 2008 by revenue 50% Outdoor growing at 74% p.a. since 2004 Radio  1%• Online medium’s share of total advertising market 2% Online has risen from just 0.6% in 2004 to 3.0% in 2008 7% Others 3%• Market is forecasted to grow at a slower rate of 27% p.a. till 2013 primarily due to:  Current economic environment Online Advertising – Market Size M i Massive reduction i advertising b d d i in d ii budgets across major j client sectors INR bn Revenues  Pressure on prices or ad rates 10 Share of Total Advertising 3.6% 4%• However, online is growing faster than other 3.0% 8 segments due to fundamental drivers such as: g +74% 3%  Low input costs for advertisers 6 2.0% 2%  Increasing awareness of online usage in India among 4 1.2% 8.5 marketers or advertisers 0.9% 6.8 0.6% 1%  Growth in online user or audience base 2 3.9 1.2 12 2.0 0 0.8 08 0% 2004 2005 2006 2007 2008 2009F ONLINE ADVERTISING MARKET – INDIA.PPT 6
  • 7. Although advertising through search engines is dominant, other options include portals, online ad networks and websitesAdvertising Options = Ad space sold directly to advertiser Portals = Ad space sold through intermediary Ad space sold through intermediary Search Websites Engine g Advertiser Website Online Online Website Ad Ad Network Network Website Website • Sells aggregated ad space to advertisers  Website Website • Ad inventory sold in return for a fee or  d ld f f Contributes  commission  online ad  • Offers affiliated services or solution to both  space to the  parties – advertisers & publishers network Online ad networks effectively act as a one‐stop interface between multiple advertisers and publishers ONLINE ADVERTISING MARKET – INDIA.PPT 7
  • 8. The online medium promotes various metric systems, allowing the advertisers to optimize their return on investmentsNature of the medium• Cost effective: Online advertising is cost effective & lower priced as compared to TV, radio, or print• Measurability: The advantage of measuring the number of responses to advertising, lets the advertiser measure RoI and strategize better for future campaigns• Global reach: Amongst all media, online medium has the easiest global reach making it an optimal choice for targeting a global audience• Flexible medium: Flexibility of the medium in terms of inventory volume, advertisement type, and targeted advertising options are unparalleled• Consumer engagement: Online advertising is a two‐way communication platform enabling companies to directly engage with current and potential customers for feedback & lead generation. Metric Systems y CPC CPA CPM CPV Cost per Click Cost per action Cost per 1000 impressions Cost per visitor• Advertisers pay when a  •Advertiser pays for every  • Advertiser pays for every  • This payment model  user clicks on an ad to visit  action (sale/registration) user clicks on an ad to visit action (sale/registration)  1000 impressions of their  1000 impressions of their involves showing the ad to  involves showing the ad to the advertisers websites completed as a result of a  advertisement targeted visitors, as well as • Mostly used by search  visitor clicking on their  • Preferred usage by portals leading them to the  engines advertisement advertisers website •Mostly used by ad  networks t k ONLINE ADVERTISING MARKET – INDIA.PPT 8
  • 9. Sustainable development due to continuous technological advances, makes the online medium a long‐term growth storyTechnological advancements Banner Ads 1st Advertising ad on the Internet; Appears at various locations on the page, but mostly on top. The  concept is equivalent to buying ad space in a magazine concept is equivalent to buying ad space in a magazine Pop‐up Ads On opening the web page, a new browser window opens up containing the ad. These have become  irrelevant over time as most browsers have pop‐up blockers installed Floating Ads This type of ad is hard to go unnoticed as it  "floats" over the page for 5‐30 seconds and disables the rest of  the webpage activities, till the ad is not clicked or closed  These ads appear between web pages that the user requests. They come as full page ads between two pages  Interstitial Ads which the user wants to view  which the user wants to view These ads run as a TV commercial in the browser window. When the user opens the page, the ad streams  Unicast Ads and starts on its own, directing the user’s attention through the audio‐visual effects  These ads appear in the form of a large ad initially, and are then  reiterated throughout the website in the  Takeover Ads form of small ads appearing at different locations These ads appear on websites with content similar to that of the ad. The software searches for  Contextual Ads C t t l Ad websites with relevant keywords and places the ad at strategic locations for easy noticing ONLINE ADVERTISING MARKET – INDIA.PPT 9
  • 10. •Advertising Industry•Online Advertising Industry Online Advertising Industry•Factors influencing growth•Trends•Competition ONLINE ADVERTISING MARKET – INDIA.PPT 10
  • 11. Domestic Internet User Base • Large online user base of 50 mn despite  penetration of just 4.3% • Increasing penetration to significantly  widen user baseLiteracy & Language BarrierLi &L B i Large Expatriate Population L E i P l i• Despite high literacy English usage is low • Additional target audience of large and  Factors • Minimal availability of vernacular content  typically wealthier Indian expatriates influencing  despite majority preferring to surf  • More access and consumption of online  vernacular medium growth medium, including Indian content Positive Consumption Patterns Positive Consumption Patterns • Higher speed of Internet connections • More frequency and longer duration • Increase in response to online advertising ONLINE ADVERTISING MARKET – INDIA.PPT 11
  • 12. Computer literacy & penetration in rural areas would add significantly  to the online medium’s usage Reach of the Internet – Domestic Internet user base (in mn) Claimed Internet User base mn • The user base1 has been constantly increasing and mn Internet Subscriber base 13.50 15 touched 50 mn in 2008 from 46 mn in 2007 11.10 11 10 60 • The subscribers2 have also seen continuous rise, and 9.30 10 increased to 13.5 mn in 2009 from 11.1 mn in 2008 40 • The prevalence of cyber cafes have helped internet 46 50 5 20 32 penetration in small towns and villages, skewing the N/A 0 0 users‐to‐subscribers number to more than 4 times Mar-06 Mar-07 Mar-08 Mar-09 • In a population of 1.15 bn, it accounts to just 4% of the total, which offers immense growth potential Urban‐Rural population divide • Future Scope: In mature Asian Internet markets, internet penetration has saturated with 68% Urban Rural Total • An assumption on penetration levels in India (current 28% 72% 1.15 bn Population penetration of 4.3%) yields the following: Urban Rural Total Increase in Total Penetration p penetration Penetration User Base3 30% 10% 15% 130 mn Population 40% 15% 22% 200 mn 4% 50% 20% 28% 280 mn Internet Users Internet1 User base: Total number of individuals (Urban) with Internet access  U b T t l b f i di id l (U b ) ith I t t 82% 18% 0.05 0 05 bn Users (Source: I‐Cube 2008) 2 Subscribers: Total number of broadband and dial‐up connection owners Urban Rural3 Growth in Population not accounted for ONLINE ADVERTISING MARKET – INDIA.PPT 12
  • 13. Apart from the domestic market, a good number of expatriate Indians  surf Indian content regularly Indian Expatriates – Online characteristics Expatriate population – by geography • The Indian expatriate population is more than 30 mn Country Indian Expatriate  West including US, UK etc. is over 6 mn g , Nepal p 4,000,000  Gulf‐based countries is ~4 mn Malaysia 2,400,000 • The typical profile is a relatively wealthier individual Burma 2,000,000 with higher purchasing power United Kingdom 1,600,000 • High availability of telecom infrastructure in these regions increases the probability of Internet access The Netherlands Th N th l d 217,000 217 000 • Moreover, a major share of this community maintains France 75,000 strong links with the homeland and accesses content USA 2,765,815 of Indian interest Canada 960,000  49% of NRI use the online medium f this purpose, f NRIs h li di for hi compared to 35% for electronic media and 16% for print Australia 235,000  Figure in western countries is higher at 64% Saudi Arabia 1,500,000  52% surf Indian websites at least once a day and 26% surf UAE 1,300,000 at least once a week Trinidad & Tobago 525,000 525 000 • Inclination to maintain strong linkages arises from:  Assets: 67% have bank accounts and houses in India South Africa 1,300,000  Personal: Indian matrimonial and entertainment websites Mauritius 855,000 Online advertising is an effective medium to target a significant Indian expatriate population. O li d ti i i ff ti di t t t i ifi t I di ti t l tiNote: All numbers stated are approximate in nature ONLINE ADVERTISING MARKET – INDIA.PPT 13
  • 14. A sizeable online population, low penetration rate and increasing usage offers a long‐term value propositionConsumption of online media Broadband Penetration • Speed: The ratio of Broadband to Dial‐up has grown 1.0 Broadband to Dial‐up Penetration 0.85 significantly over the years, ensuring rise of efficient g y y , g 0.8 08 internet connections in the country 0.54 0.6 • Frequency: 67% of the active Internet users log on more than 2‐3 times a week 0.34 0.4 0.24 • Duration: Average hours spent per week has 0 0.2 drastically increased from 6.9 hrs in 2007 to 9.3 hrs in 0.00 0.00 0.03 2008 0.0  Dial‐up connection usage has also increased over the past 2003 2004 2005 2006 2007 2008 2009 2 years by a substantial 13% Duration of Usage ‐ Average Hours/Week • Key Demographic: Age group of 18‐35 years accounts for 79% of the total user base Source: I-Cube 2008 Dial-up Usage Source: TRAI 13‐17 18‐25 25‐35 35 above Av. Hrs/Week +14% Hrs/Month/Subs % of Total 7% 45% 34% 14% 10 9.3 4.0Internet UsersInternet Users 82 8.2 8 6.9 3.8 3.7 6 4.8 • Response to online advertising: More than 50% of 4 3.0 3.0 Internet subscribers respond to online marketing, an 2 increase compared to 2006‐07 2006 07 N/A 0 2003 2006 2007 2008 2009 ONLINE ADVERTISING MARKET – INDIA.PPT 14
  • 15. The low Internet‐user to literacy‐rate ratio & under utilization of Indian Vernacular languages, suggest immense growth potentialLiteracy & language as a barrier Language profile – Internet User Base• Online medium’s prerequisite of literacy poses a growth barrier in comparison to Television or Radio, Total Population of India  as the target group is restricted to the literate 1.15 bn 1 15 b population only 65%• Currently, for every 15 literates in the country, just 1 Literate population in India  has used the internet 747.5 mn• 21% of th t t l I di f the total Indian population are E li h l ti English literates, while 44% can read & write in Vernacular 21% 44% languages 33%• However, the Indian Vernacular languages account English Literate   Non‐English Literate  for just 1300 websites (including Hindi) on the world 67% 247 mn 500.5 mn wide web, which is 0.02% of the total• In Print media, Hindi newspapers comprise 40%, English only 15% and Vernacular Languages fill up 35% of the Indian market English g• This strengthens the fact that there exists a 500 mn Preference  probable user base for Indian Vernacular content on Internet Users in India of language 28% the Internet 50 mn• In addition, from the total number of Internet users 72% in India, i I di 72% users would prefer t b ld f to browse I tInternett Vernaculars content in Indian Vernacular languages ONLINE ADVERTISING MARKET – INDIA.PPT 15
  • 16. •Advertising Industry•Online Advertising Industry g y•Factors influencing growth•Trends•Competition ONLINE ADVERTISING MARKET – INDIA.PPT 16
  • 17. BFSI, Online publishers and IT/Telecom are the major revenue contributors for  the online advertising industry in India ` Niche & emerging nature coupled with low barriers to entry in this industry Trends could lead to rise in competition Acquisitions and  investments by foreign players as well as Private equity firms  is providing a boost to this nascent industry is providing a boost to this nascent industry ONLINE ADVERTISING MARKET – INDIA.PPT 17
  • 18. BFSI, Online publishers and IT/Telecom are the major revenue contributors for the online advertising industry in IndiaBreak up of the market by verticals Online Ad spends ‐ by vertical 25%• Ad revenues in the online medium come from two BFSI 26% sources ‐ the customary offline advertiser and other y 17% online companies like job, matrimonial, travel sites Online 25% 23%• These online companies have their own advertising Publishers 21% space, but they themselves advertise on targeted 13% IT/Telecom 13% portals to increase traffic on their websites 23%• Other than these online companies, the major 10% Auto 9% contributors to ad revenues are Banking, Financial 10% Services and Insurance (BFSI), IT/Telecom and 8% Consumer Durables FMCG 8% 6%• Analysts predict sustainable growth in online Consumer 8% 8% advertising as many Indian businesses ranging from Durables 10% small exporters and SMEs to large enterprises have 4% started allocating budgets to online ads on account of Education 7% 7% 2007‐08 cost effective & global advertising 2008 09F 2008‐09F 7%  35% rise in online ad budget of Auto companies in 2009 Others 6% 6% 2008‐09A  30% rise in the number of education sector companies advertising on the Internet in 2009 The market share of BFSI and Online Publishers has   A typical SME engaged in e‐commerce derives 4% of its revenues from online sales, expected to grow by an decreased drastically in 2008‐09 due to the economic  additional 600 basis points over the coming months meltdown ONLINE ADVERTISING MARKET – INDIA.PPT 18
  • 19. Niche & emerging nature coupled with low barriers to entry in this industry could lead to rise in competition Successful Entrepreneurial ventures• Low barriers to entry in the online medium as compared to other advertising medias could Naukri.com Komli encourage entrepreneurial growth in this industry• The current upsurge of Ad networks and search • Indian digital advertising &  •Leading provider of online  technology company engines in India would promote high competition recruitment in India •Founded by Amar Goel in  •Founded by Sanjeev  2006 Bikhchandani in 1997 Surge in the number of  •Recognised among the  •Listed company under the  •Listed company under the online ad networks can  world’s “Fifty Best  name of Info edge on BSE  be attributed to growth  Technology Start‐ups” by  5 and NSE of online advertising in  BusinessWeek & YouNoodle the past 3 years Website Entrepreneurial  Entrepreneurial    websites Search Engine Ad networks 3 3 •An Indian online ad network •India’s first crawler based  •Founded by Harish Bhal in  search engine developed  2006 completely in India •Listed as “10 Most  1 1 1 1 •Founded by Anurag Dod in  Interesting Start‐Ups” in  2006 January 2008 by business  daily, HT Mint 1998 1999 2000 2005 2006 2007 2008 Founding year of online ad networks in India Guruji.com Tyroo ONLINE ADVERTISING MARKET – INDIA.PPT 19
  • 20. Acquisitions and  investments by foreign players as well as Private  equity firms is providing a boost to this nascent industry Foreign Ad Networks in Indian Market • Fox Interactive, the digital arm of  • Microsoft Advertising soft‐launched  • AOL is in the process of launching its News Corp, rolled out its digital  N C ll d i di i l its international online ad  l l d ad‐network Advertising.com in India d k d d advertising services in India with the  network DrivePM (Performance  • The network will essentially launch of its online ad network,  Media) in India aggregate India‐specific inventory called .FoxNetworks • It carries out online campaigns  from a large number of international based on pay‐for‐performance basis sites PE/VC Firm Investments/Transactions Date Helion Venture Partners, Opus Capital Invested INR 400 mn in a self‐servicing online video advertising platform, Jivox June, 2008 Capital 18, Goosefish Media Ventures p , Invested an undisclosed amount in NetworkPlay.in y October, 2008 , Nexus India Capital, Draper Fisher  Invested INR 280 mn in Komli January, 2008 Jurvetson, Helion Ventures Sequioa Capital Invested INR 200 mn in Ideacts July, 2008 IDG Ventures Invested INR 160 mn in Ozone Media July, 2008 Yahoo! India Bought between 35% to 50% stake in Tyroo Media July, 2007 Around INR 4 bn was invested by private equity/venture capital firms in online advertising sector recently A d INR 4 b i t db i t it / t it l fi i li d ti i t tlNote: Above list may not be exhaustive ONLINE ADVERTISING MARKET – INDIA.PPT 20
  • 21. •Advertising Industry•Online Advertising Industry g y•Factors influencing growth•Trends•Competition ONLINE ADVERTISING MARKET – INDIA.PPT 21
  • 22. The developing online advertising market in India is already witnessing stiff competition among domestic as well as international playersCompetition Most used search engine Yahoo• Online advertising industry in India is largely 20% Rediff dominated by search engines and portals y g p 7% Indiatimes• In spite of the online industry’s long tail, 80% of the total revenues go to the top 8‐10 portals/portal group 3% Sify 3% MSN sites 2% 1% Others• Search accounts for almost 25% of the total online ad market by revenues• Google dominates the search advertising market while Yahoo India has a hold on display and banner 64% advertising Google• Rediff.com, an Indian b d search engine and d ff d based h d services portal, managed 13% of the total online ad Online ad networks in India revenues in fiscal year ended March 31st, 2008 Komli/PubMatic NetworkPlay• From the past 2‐3 years, ad networks have started Tyroo IDG Technetwork gaining acceptance in the Indian market• Currently, India has close to 15 online ad networks DGM India Google Adsense• In 2008, 15% of total online ad spends were on ad Ozone Media Adwinks networks which is expected to increase by 3700 basis p points over the next year y PayPod Sulekha ONLINE ADVERTISING MARKET – INDIA.PPT 22
  • 23. The upcoming ad networks offer numerous types of services to cater  to their advertisers and publishers across the globe Komli Tyroo DGM India Ozone Media PayPod NetworkPlayPublisher’s BaseP bli h ’ B Indian       International    Services for Advertisers Lead Generation      Target Advertising       Rich Media Text      Click Fraud Management      Ad Campaign Optimization      E‐mail marketing      Search Engine Optimization      Payment Metric System CPM CPM CPA CPM, CPA CPM,CPC,CPA N/A  Offered           Not offered         Data not availableNote: Above list may not be exhaustive; profiles of all market participants is not included ONLINE ADVERTISING MARKET – INDIA.PPT 23
  • 24. Thank you for your timeFor an updated report or any customized research requirements, please contact:Gaurav KumarE‐Mail: gaurav.kumar@netscribes.com; sales@netscribes.comPhone: +91 33 4064 6214; +91 983 030 9715Netscribes’ Services:RESEARCH & ANALYTICSRESEARCH & ANALYTICS MARKET INTELLIGENCE MARKET INTELLIGENCE CONTENT SOLUTIONS CONTENT SOLUTIONSInvestment Research Market Monitoring & Competitive  Social Media MarketingEnterprise Market Research Intelligence Marcom Support ServicesPatent Research Sales & Prospect Intelligence Content Management ServicesSyndicated Market ResearchS di t d M k t R h Listening & Media Monitoring Li t i & M di M it i Book Packaging Services B kP k i S i Brand SurveillanceFor further details, visit us at: www.netscribes.comAbout NetscribesNetscribes supports the organic and inorganic growth objectives of global corporations through a combination of Enterprise Market, Investment & Patent Research, Market & Sales Intelligence, Social Media Monitoring & Management and Custom Publishing solution.Disclaimer: This report is published for general information only. High standards have been used for preparing this market research report; Disclaimer: This report is published for general information only High standards have been used for preparing this market research report;however, Netscribes, Inc. or “Netscribes” is not responsible for any loss or damage arising from use of this document. This document is the sole property of Netscribes and prior permission is required for guidelines on reproduction. ONLINE ADVERTISING MARKET – INDIA.PPT 24

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