Digital Advertising in India - Statistics & Trends 2013

DIGITAL ADVERTISING IN INDIA

March 2013 EDITION

March 2013 EDITION | 2

CONTENTS

Executive Summary---------------------------------------------------------------------------------------------------------------------3

1. Indian Online Advertising Industry------------------------------------------------------------------------------------------------4

2. Market Size & Growth---------------------------------------------------------------------------------------------------------------5

3. Digital Advertising: Ad Avenues---------------------------------------------------------------------------------------------------6

4. Types of Digital Ad Avenues & Growth-------------------------------------------------------------------------------------------7

5. Industry Wise Ad Spends------------------------------------------------------------------------------------------------------------8

6. Search Ads: SEO vs. SEM Spends------------------------------------------------------------------------------------------------10

7. Display Ads: Spends as per Tech Format----------------------------------------------------------------------------------------10

8. Mobile Ads: Spends as per Ad type ---------------------------------------------------------------------------------------------11

9. Form Factor Comparison: Mobile phones vs. Personal computers--------------------------------------------------------12

10. Social Media Advertising---------------------------------------------------------------------------------------------------------13

10.1 Social Media Ads: Spends as per Ad type---------------------------------------------------------------14

11. Video Ads: Spends as per Ad type----------------------------------------------------------------------------------------------14

12. Ad Conversion Ratio--------------------------------------------------------------------------------------------- -----------------15

13. Attitudes towards Online Advertising-----------------------------------------------------------------------------------------16

14. Glossary of Terms----------------------------------------------------------------------------------------------------------------- 17

15. Research Methodology-----------------------------------------------------------------------------------------------------------18

About IMRB International & IAMAI-------------------------------------------------------------------------------------------------19


Executive Summary

The purpose of this report is to take a deep-dive into the online advertising market in India closely tracking the way in
which the Indian online ad Industry has evolved. For more than four consecutive years now, we have continuously
expanded the coverage of the report to include the newer ways of advertising through the Internet, such as social media
and mobile Internet.

Based on our analysis, the online advertising market in India was valued at INR 1,750 Crores in FY 2011-2012 of which,
search advertising accounted for INR 718 Crores, clocking a growth of 46% y-o-y from our last year’s report. Display
advertising contributed another INR 595 Crores to the overall figure, contunuing to dominate the online advertising
market along with search with a combined share of 75%.

The online advertising market in FY 2012-2013 has grown to reach INR 2260 crores, which represents a y-o-y growth of
29%. The share of advertising on mobile and social media is expected to go up whereas spending on display and email will
decline due to this shift.

The top four big spenders on online advertising for FY 2011-2012 continue to be BFSI, Auto, Telecom and Travel athough
eCommerce players spent significant amounts of money on customer acquision in FY 2012-2013.

Even though traditional media like television and newspapers still remain the preferred media for seeking information and
entertainment and hog more than 80% of the advertising market in India, the Internet has been steadily increasing its
share of the advertising pie. Spends on digital media have steadily increased from just over 1 percent of total Indian
advertising spend in the year 2005 to nearly 7 % in 2012. (Source: This Year, Next year-Worldwide media & marketing
forecasts, Summer 2012; GroupM)

Please Note - Financial Years are as per the following:
st st
FY 2010-2011 = 1 April 2010 to 31 March 2011
st st
FY 2011-2012 = 1 April 2011 to 31 March 2012
st st
FY 2012-2013 = 1 April 2012 to 31 March 2013
st st
FY 2013-2014 = 1 April 2013 to 31 March 2014


1. Indian Online Advertising Industry
The total online advertising market in India, comprising search, display, mobile, social media, email and video advertising
was valued at INR 1,750 Crores in FY 2011-12 and has grown to INR 2,260 Crores in year FY2012-13.

It is projected that by FY2013-2014, the size of the online advertising market in India will be INR 2,938 Crores. On an
average, the online ad market have been growing at 40% year-on-year basis from FY 2010-2011 to FY 2013-2014.The
graph below showcases the growth trend in the online advertising market in India.

Figure 3: Indian Digital Advertising Market Growth

30% 2,938

29%
2,260
54% 1,750

1,140

FY2010-2011 FY2011-2012 FY2012-2013 FY2013-2014
(Estimated)
Industry Estimates in INR Crores

Source: IMRB International

Acknowledging the growing importance of social media and video advertising in online advertising, we have broken up the
share of each for the first time in this edition of the report. Earlier editions of this report had market size for only Display
and Text Ads. The FY 2011-2012 and the estimated numbers for 2o12-13 include spends on display, search, and mobile ads
as well as spends on the new ad avenues: social media and video.


2. Market Size & Growth
The total online advertising spend can be subdivided among the following categories –

Figure 4: Total Online Ad Spend (FY 2011-2012) INR 1,750 Crores

The Figure 4 pie chart depicts the percentage
share of online ad spends across the various ad
avenues. Following the previous year’s trend,
search and display advertising continue form a
large portion of the overall pie in FY 2011-2012.
Their percentage share has however declined
somewhat in FY 2012-2013, owing to the rise in
the mobile, social media and video advertising.


Figure 5: Total Estimated Online Ad Spend (FY 2012-2013) INR 2,260 Crores

In FY 2012-2013, search advertising constituted about 38% of the total online advertising spend, translating to about INR
850 Crores while display advertising will form a sizeable 29% (INR 662 Crores). Advertisements on mobile phones and
tablets grew from a 7% share in FY 2011-2012 to
10% of the Indian online ad market in FY 2012-
2013, totaling to spends of around INR 230
Crores. Social media, email and video
advertising constitute 13% (INR 300 Crores), 3%
(INR 68 Crores) and 7% (INR 150 Crores) of the
online advertising market, respectively.



3. Digital Advertising: Ad Avenues
SEARCH ADVERTISEMENTS: Advertisements made up of text (displayed largely as sponsored links on search engines)
come under this category. These are backed by hyperlinks that when clicked on, take the potential customer to the
advertiser's website.

DISPLAY ADVERTISEMENTS: Advertisements that are placed at various points on a web page that typically contain
logos, photographs, other images or even text. Technologically these comprise of Image, Simple flash and Rich media with
& without video ads.

MOBILE ADVERTISEMENTS: Advertisements that are viewed or consumed on mobile phones or tablets come under this
category. These comprise of Mobile Web ads, SMS, MMS, Mobile Video & TV ads and In-App ads.

SOCIAL MEDIA ADVERTISEMENTS: Advertisements of any type: text, display, stamp pads etc displayed on various social
media websites like: Facebook, Twitter, LinkedIn, Pinterest, Orkut etc fall into this category.

EMAIL ADVERTISEMENTS: Advertisements that involve sending across a commercial message to a group of people using
email comprise of this ad type. Emails are used to engage with existing customers to get repeat business as well as to
acquire new customers.

VIDEO ADVERTISEMENTS: Advertisements that fall broadly under the display type but have video within them and are
served before, during and/or after a video stream on the internet. This type comprises In-Video ads, Standard In-Stream
ads (pre rolls, mid rolls or post rolls) and TrueView ads.

Figure 6: Trends in breakup of online ad market among various ad types



4. Types of Digital Ad Avenues & Growth
Display and search ads are the dominant online ad types today in India. Display and search advertising continue to
dominate the market but other ad types are showing explosive growth albeit on a lower base. Spends on mobile
advertising have doubled from INR 115 crore in FY 2011-12 to INR 230 crore in FY 2012-13, primary reasons being the
proliferation of mobile phones in India, enhanced mobile Internet connectivity and increased need for customer
engagement.

Spends on social media and video advertising also show 71% growth y-o-y. The graph below highlights the growth in the
various online ad types over the last three financial years.

Figure 7: Trends in spends on various online ad types


Since 2010, spends in Search Ads have grown from INR 493 Crores in FY 2010-2011 to INR 850 Crores in FY 2012-2013, with
an average growth of 38% year on year. After experiencing almost 7% growth in FY 2011-2012, spends on display
advertising have shown a comparatively modest growth rate of 11%, bringing it to about INR 662 Crores in Fy 2012-2013.

As shown in Figure 7, social media advertising in India will be an estimated INR 300 Crores in FY 2012-13 posing a 71%
growth from FY 2011-2012. Along the same lines, video advertising has clocked 71% growth, and is at INR 150 Crores in FY
2012-13. Email advertising continues has grown at a consistent rate and has touched about INR 68 Crores to the overall
online advertising market in India in FY 2012-2013.


5. Industry-Wise Ad Spends
Figure 8: Industry Wise Spends (FY 2010-2011 & FY 2011-2012)

Source:IMRB International

Note: Spends by E-commerce companies were not measured separately in the FY 2010-2011.

Figure 9: Industry Wise Spends (FY 2011-2012 & FY 2012-2013)



The BFSI, travel and auto sectors continue to be the top 3 spenders in online advertising. Increased spending by
ecommerce players has been one of the highlights of the online advertising industry in FY 2011-12. Their share of spends is
estimated to decline in 2012-13. .

The Telecom sector in the above two charts includes handset manufacturers who have also been huge spenders in FY
2012-13 with new models of smartphones and tablets being launched by players across the mobile phone market.


6. Search Ads: SEO vs. SEM Spends

Figure 10: Search Ad Spends (FY2012-13)
Search advertising constitutes about 40% of the online advertising market INR 850 Crores
and is an important component of marketing campaigns aimed at customer
acquisition. Companies belonging to various verticals continue to invest in
search advertising owing to its cost effectiveness. As seen in the adjacent
graph, SEM i.e. buying or bidding for Adwords forms the majority of Search 15%
ad budget. About 85% of search spend is in terms of SEM which is about SEO
INR 723 Crores, as compared to INR 128 Crores for SEO.
SEM
85%


7. Display Ads: Spends as per Tech Format
Online Display advertising has matured considerably with the creatives
increasingly becoming more sophisticated and engaging. Long a staple of Figure 11: Display Ad Spends (FY2012-13)
brand advertising campaigns, various technologies are used to develop INR 662 Crores
display ads in the form of web banners containing images, flash objects or
interactive media using audio or video. The images can be static or
dynamic. In terms of Technology Formats, Display Ads are categorized as
follows - 20% 20%

 Image (GIF/JPEG)

 Simple Flash 30% 30%

 Rich media without video
Image (GIF/JPEG)
 Rich media with video
Simple Flash
As seen in Figure 11, display ads using Simple Flash and Rich Media without Rich media without video
video form a major chunk online display advertisements, each of them Rich media with video
contributing 30% to the total online display advertising spend. Standard
Images (JPEG & GIF) and Rich Media with video contribute to another 40% Source: IMRB International
of the pie. Usage of rich media with video is expected to grow as we
progress through 2013.


8. Mobile Ads: Spends as per Ad type

Fun, exciting and a newest interactive advertising medium, mobile advertising is a form of advertising on mobile (wireless)
phones or other mobile devices. The Internet has been reinvented on mobile devices becoming smaller, more personal,
customizable, and accessible anywhere on the go. Traditional forms of interactive advertising are therefore now in the
process of evolving as they migrate from computers to mobile devices.

Mobile advertising includes a broad range of opportunities such as search, banner displays, messaging, multimedia
messaging, video and advertising within apps. Mobile web advertising through banners and in-app advertising constitute
about 80% of the mobile advertising market. Currently, the most trending form of mobile advertising is display, with
standard JPEG & GIF images, Simple Flash and Rich media without video. Rich media with video is gradually ramping up in
the mobile advertising industry, allowing advertisers to run videos on a mobile web page or within a mobile application –
referred to as in-app. Other forms of advertising include MMS (multimedia messaging) i.e. mobile advertising that involves
audio visuals, advertising within mobile gaming apps, videos and mobile TV. MMS mobile advertising is commonly used
when consumers use tele-booking facilities.

A trending form of mobile display is to include the use of rich media within the banner ads. This includes banners that have
the capabilities to expand, offering advertisers a larger space to communicate their message. Games can also be placed
within a banner to make the user’s experience more interactive and engaging.

According to this edition of IMRB International’s primary survey findings, the mobile advertising market is distributed
among the following types of mobile advertisements

 Mobile Web Advertising

 SMS Advertising
Figure 12: Mobile Ad Spends (FY2012-13) INR 230 Crores
 MMS Advertising

 Mobile Video & TV Advertising

 In-App Advertising

Mobile Web Adv
40% 40%
As seen in Figure 12, the advertising viewed on Mobile Video & TV,
mobile browsers or WAP forms 40% of the total SMS, MMS Adv
mobile ad spends and mobile video & TV together In-App Adv
with SMS and MMS advertising form another 20%. 20%
The remaining 40%, which is INR 92 Crores, is
estimated to be spent on In-App Advertising, which is
a premium form of mobile advertising especially on
high-end devices like Apple’s iPad.
All mobile advertising spends add up to of INR 230
Crores in FY 2012-2013.


9. Form Factor Comparison: Mobile phones vs. Personal computers

Figure 13: Internet Traffic from Devices (FY 2012-13)

Interestingly, mobile traffic is growing so fast globally
that it is expected to surpass the desktop traffic in just a
couple of years. From our outlook the primary drivers for
16% Mobile Phones
such a ramped up growth are: continued surge in mobile
Internet-ready devices such as smart phones, feature
Personal Computers rich phones, and tablets; mobile devices with smarter
(Laptops, Netbooks technology, high mobile network speed, increased
& Desktops) video-content consumption and last but not least, the
84%
high availability of rich media and more engaging apps in
the marketplace.


Figure 13 above shows the proportion of the Internet Traffic coming from the two different form factors in FY 2012-13.

A majority of the stakeholders of the Digital Advertising Industry are now closely tracking their online traffic for the device
it’s originating from. Although a major chunk i.e. 84% of the internet traffic still comes from the personal computers -
laptops, net books & desktops, the percentage of traffic coming from mobile phones and tablets is increasing steadily.
Traffic from mobile devices grew from being 10% of the total Internet traffic in FY 2011-12 to 16 % in FY 2012-2013.

Mobile phones have provided advertisers a novel way to target affluent consumers, mainly through in-app advertising on
expensive brands of smart phones. Since it’s possible to capture data points such as device type, brand and model as well
as location of the user combined with the time of day, mobile advertising is emerging as the preferred performance
marketing channel.


10. Social Media Advertising

Judging by the spike in spends on social media advertising from FY 2011-12 to FY 2012-13, it can be safely concluded that
2012 will be remembered as the year companies in India officially took the social media plunge, embracing Twitter,
Facebook and advertising on social networking sites as an integral and crucial part of their marketing plans.

In 2013, these companies are expected to look forward and expand their investment in social media as understanding of
the medium deepens and functionality extends beyond just marketing and community building. One of the major benefits
of advertising on a social networking site (e.g. Facebook, Myspace, Friendster, Bebo, Orkut, etc.) is that advertisers can
take advantage of the users demographic information and target their ads appropriately.

Social media has been the topic of many marketing conversations of late, and there’s no doubt that its popularity will
continue to soar in 2013 and in subsequent years. Social networking has changed the balance of power between customers
and businesses and forces more accountability and transparency into the relationship. Just a few negative comments
posted on a social media website about a particualr brand influences consumers negatively about the brand and makes
them uncertain about buying that brand.

Businesses today are increasingly aware of the fact that just monitoring their social media profiles and communities is no
longer enough; instead they need to embrace it and make it an integral part of their strategy. Only then they would be able
to truly establish a connect with the customer. Social media provides brands the unique opportunity to embed
themseleves into the lives of the consumers, deeply understanding their buying behaviour and preferences and thereby,
influencing their buying decisions.

The four main categories of social media advertising tracked in our report are:

 Text Links
 Display (includes Stamp Ads)
 Video
 Sponsered/Promoted Tweets & posts


10.1 Social Media Ads: Spends as per Ad type
Figure 14: Social Media Ad spends (FY2012-13) INR 300 Crores

We estimate the total social media spend in India to be an
estimated INR 300 Crores in FY 2012-13. Display
advertising captures a huge 75% of the pie, followed by
text links, sponsored/promoted tweets & posts and video
constituting 5%, 12% and 8%, respectively.

Social media spend has nearly doubled in last 2 years.
Youtube/video sharing sites are growth areas where
advertisers would further increase their spends in FY 2013-
2014. They would do this by developing video content for
various social media websites.


11. Video Ads: Spends as per Ad type
One of the main reasons of online advertising revenues soaring high is because more and more people are watching videos
online and the people who provide this video content are increasingly bundling it with ‘forced view’ (pre-rolls, mid-rolls and
post-rolls) advertisements. Interestingly, this forced viewing has worked and it has also made viewers accustomed to the
fact that if they want to view content for free, viewing ads is the price they have to pay for it, much like television.

Figure 15: Video Ad spends (FY2012-13) INR 150 Crores

The video advertising market is currently divided into
three main types of video ads:

 In-Video Ads (expandables and overlays)
 Standard In-Stream Ads (pre, mid & post rolls)
 True View Ads by Google*

As shown Figure 15, the overall video ad spends in India
in FY 2012-2013 was about INR 150 Crores, of which 64%
went to in-stream ads while 24% went into in-video
overlays. The share of True View ads by Google is
expected to increase largely owing to dominant position
of You Tube in the video space.


*TrueView video ads give viewers choice and control over which ad they watch so advertisers are charged only when a
viewer has chosen to watch their ad. (http://www.google.co.in/ads/innovations/trueview.html)


12. Ad Conversion Ratio

With greater bandwidth availability, advertisers today are trying to make advertisements that are interactive and engaging
in an effort to drive clicks and conversions.

Since the entire industry is becoming more performance and ROI driven, it becomes mandatory for businesses to measure
the conversion rates and analyze the consumer behavior better. Below shown are the conversion ratios of various ad types
according to the findings of IMRB International’s syndicated study: I-Cube 2012. Figure 16 below shows the post ad
viewing behavior. Emails, mobile and social media ads show very high view to click ratio (more than 60%).

Figure 16: Ad Conversion Ratio (FY2012)


As per the findings, 67% of individuals that saw an email ad, clicked on it and 66% of those who saw an ad on a social
media website clicked on it. The Click to Seen ratio for In-Streaming Video ads have increased from 38% in last year to
43% in FY 2012.

Post click behavior also tells an interesting story, with emails and social media advertising showing the highest conversion
from click to look for information online (81% in both cases). Mobile ads have the highest Search to Bought ratio (75%),
although it is difficult to say so conclusively owing to small base. This is followed by the social media ads where 64% of
people who looked for specific information on a product have in the end bought that product.


13. Attitudes towards Online Advertising

In terms of the attitudes of Internet users to online advertisements, there emerge some interesting points. 50% of
respondents felt that online ads were informative., while 46% said that they clicked on ads that were relevant to them, and
46% felt that online ads helped them find the right product that they were searching for.

Figure 17: Attitude of Internet Users towards Online Advertising


Quite interestingly, 41% of respondents agreed that online ads had an impact on their buying decisions, while nearly 50%
found online ads interesting. This goes to show that if advertisers are present compelling ad content that the online
audience finds relevant to them, there is a sizeable chance of positively influencing buying behaviour and even driving a
sales conversion.


14. Glossary of Terms

ACTIVE USER: An individual who has used the Internet at least once in the last 1 month.

CLAIMED INTERNET USER: An individual who has used the Internet at any point in time in the past. This gives us a
clear indication as to how many Indians have experienced Internet at least once in their
lifetime.

ONLINE ADVERTISING: Online advertising is a form of promotion that uses the Internet and World Wide Web to
deliver marketing messages.

DIGITAL ADVERTISING: Digital advertising is marketing that makes use of electronic devices such as computers,
tablets, smartphones, and mobile phones to engage with consumers and other
business partners.


15. Research Methodology

The findings presented in the current edition of the report have been derived by conducting both primary as well as
secondary research. This report tracks data for the Indian Financial Year, showcasing the information captured from
various data sources for FY 2010-11 (April 2010-March 2011) and FY 2011-12 (April 2011-March 2012). Estimations for FY
2012-13 (April 2012-March 2013) have also been provided.

PRIMARY RESEARCH : Interviews were conducted with Internet users and online ad industry players and information
collected on Internet usage in case of the former and volume of online advertising business managed by the latter.

Figure 18 : List of Cities by Population Strata

CITIES BY STRATA
Internet Users: Structured Face
Top 4 Metros Delhi, Mumbai, Chennai and Kolkata to Face (F2F) interviews were
conducted with 81,000 individuals
Other 4 Metros Bangalore, Hyderabad, Ahmedabad and Pune among 21,000 households spread
across 35 Cities during ICUBE-
Coimbatore, Jaipur, Lucknow, Ludhiana, 2012, a syndicated product of E-
Small Metros
Visakhapatnam, Patna, Guwahati, Kochi, Tech, IMRB International.
(More than 1 Mn population) Vadodara, Indore, Surat, Nagpur
Industry Experts: In-depth
interviews were conducted with
Non Metros Aurangabad, Belgaum, Aligarh, Bhubaneswar, stakeholders of the online
(Between 0.5 to 1 Mn population) Raipur advertising industry in India,
including ad agencies, media
Small towns Alappuzha (Alleppey), Ujjain, Sambalpur, agencies, online publishers, ad
Faizabad, Panipat, Kolaghat, Baleshwar, Philbit, networks, mobile ad networks as
(Less than 0.5 Mn population) Amreli, Chickmagalur well as advertisers.

SECONDARY RESEARCH : Secondary research was done to understand the structure and dynamics of the digital
advertising market in India. Information from various published sources was used to perform data validation check.
Information collected from both secondary and primary research was thoroughly analyzed to prepare this report.


About IMRB International and IAMAI

eTech Group | IMRB International (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
Research Team for this Report
eTech Group | IMRB Tarun Abhichandani, Group Business Director
BIRD - IMRB International (Tarun.Abhichandani@imrbint.com)
‘A’ Wing, Mhatre Pen Building Durga Ray, Insights Director
Senapati Bapat Marg, Mumbai (Durga.Ray@imrbint.com)
www.imrbint.com Priyam Joshi, Research Manager
(Priyam.Joshi@imrbint.com)

About Internet and Mobile Association of India (IAMAI)

The Internet and Mobile Association of India [IAMAI] is a young and vibrant association with ambitions of
representing the entire gamut of digital businesses in India. It was established in 2004 by the leading online
publishers, but in the last eight years has come to effectively address the challenges facing the digital and
online industry including mobile content and services, online publishing, mobile advertising, online
advertising, ecommerce and mobile & digital payments among others.

Eight years after its establishment, the association is still the only professional industry body representing
the online and mobile VAS industry in India. The association is registered under the Societies Act and is a
recognized charity in Maharashtra. With a membership of 125 Indian and MNC companies, and offices in
Delhi and Mumbai, are well placed to work towards charting a growth path for the digital industry in India.

Contact Details

Nilotpal Chakravarti
406, Ready Money Terrace, 167, Dr Annie Besant Road, Mumbai - 400 018
Tel: +91-22-24954574 | Fax: +91-22-24935945 | http://www.iamai.in

Published By – Dr. Subho Ray, President, on behalf of Internet and Mobile Association of India

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Digital Advertising in India - Statistics & Trends 2013

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