Market Research Report : Online advertising in India 2012


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From being a small scale industry, advertising is India has evolved into a significant domain both in terns of revenue generated as well as number of people employed. Today, marketing has graduated into a quintessential aspect in a product’s success, be it a good or a service. Starting from brand image to that of brand identity, everything gets fostered through one’s advertising efforts for any particular product. Keeping this aspect in mind, one needs to keep in mind that over the period of years, online medium has developed as a prospective means of communication. Advertising industry has caught on the proposition well and diverted some of their scheme of activities towards online medium. Online advertising in India is riding on the back of enhanced Internet penetration and with active users heading northward, the sector is only poised to grow even further.

The report begins with an introduction section which throws some light on the concept of advertising, types of advertising as well as a brief differentiation of online and offline advertising. It is followed by an overview which speaks of both the Indian advertising industry and the online advertising industry. The Indian advertising industry is described with its market size and growth as well as a snapshot detailing the trend of advertising revenues and segment-wise growth rates. The online advertising industry is detailed with its market size and growth along with a break-up of the advertising industry and a segment-wise growth rates. This leads to a mentioning of the key segments of display advertisements and text advertisements. In case of online advertising sector, BFSI and travel constitute the primary verticals that source for the revenues garnered, inclusive of both display and text advertisements. The report then goes into listing the technological advancements in the sector. This section gets concluded with a Porter’s Five Forces analysis for the sector.

The report then narrows down to illustrate the business model prevalent in the sector which is followed by majority of the players. It gives a brief take on the nature of the medium aided with the metric systems available in the sector.

A brief description of the drivers that help the sector to prosper include large domestic base, positive consumer behaviour and patterns towards online media, growing proliferation of internet on mobile and large expatriate population. Online advertising derives its sustenance from internet base and with domestic internet consumer base increasing; the sector is slated for growth. Domestic consumer base is accounted as it forms the chief customer segment vis-à-vis online shopping or even online ticket booking. In the lines of growth of internet base, frequency of net usage is another aspect that gets factored. Recent data state that internet usage in India has registered a sha

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Market Research Report : Online advertising in India 2012

  1. 1. Online Advertising Market – India May 2012
  2. 2. Executive Summary  Indian advertising industry is expected to witness a growth CAGR of a1% over the period 2011‐ 2015e  Online advertising industry in India is the fastest growing segment in the advertising industry Market  It is divided into two types of advertisements namely a2 and a3  BFSI, Travel Telecom, Online Publishers are some of the highest spenders on the online medium  for advertisements Drivers LE  Challenges Factors  influencing   Large Domestic Internet base MP  Positive consumer behavior & patterns   Lack of trust in internet advertising  Literacy and language barriers A towards online media Growth S  Growing proliferation of internet on mobile   Large Expatriate Population  Emergence of Social Media networking  Increase in private equity investments Trends   Internet turning into an effective Sales medium  Indian players expanding globally  Growing online marketing activities from corporates  The industry in India is dominated by search engines and portals  Although India has a large network of players operating strongly in the domestic market, foreign Competition ad networks are also making their way into the Indian market to utilize the large consumer base   Competition in the market is likely to increase with entry of more and more multinationals  ONLINE ADVERTISING MARKET IN INDIA 2012.PPT 2
  3. 3. •Market Introduction•Market Overview Indian Advertising Industry Online Advertising Industry•Business Model•Drivers & Challenges•Trends•Competition Traffic Statistics•Strategic Recommendations•Appendix ONLINE ADVERTISING MARKET IN INDIA 2012.PPT 3
  4. 4. Display advertisements dominate the online advertisement market in India  SAMPLE Online Advertising Industry – Overview   • Online advertising is a form of marketing  Online Advertising Industry – Growth  communication on the Internet which intends to:  Influence a consumer towards purchasing or taking up an  action on the content displayed on the website with  INR bn respect to products, ideals, or services c2 c3 • The market is currently dominated by Display ads  and comprises rich media, video and classifieds  • Factors such as growing internet base (computers  c1 and mobiles), growing popularity of social media  0 networking sites are also fueling growth in the online  2011 2015e advertising market in India Advertising Break Up   Segment Growth Rates c10 S1 S3 c9 S2 S4 c8 Others c5 c4 c7 ONLINE ADVERTISING MARKET IN INDIA 2012.PPT 4
  5. 5. BFSI and Travel industry remain the dominant advertisers on the online media in India Display Advertisements ‐ Overview SAMPLE Text Advertisements ‐ Overview • Text advertising market in India is estimated  • Display advertising market in India is  at INR a8 in FY 20‐‐ and is expected to reach  estimated at INR a4 in FY20‐‐ and is expected  INR a9 in FY 20‐‐ to grow to INR a5 in FY 20‐‐ • BFSI leads this form of advertising by holding  • Travel, BFSI and Telecom are the largest  the maximum share followed by the Travel  advertisers in this medium sector • Some new advertisers that are fast evolving in  • However, industry sectors such as Telecom,  the display ad space include FMCG, Education Auto are fast catching up  FMCG is expected to account for a6% and   Telecom  accounted for a10% and Auto to  Education for a7% in the display  account for a11% of text advertising  advertising spends in FY20‐‐ spends in FY20‐‐ Spend Spend High 14% 14% High 12% 12% Medium Medium 8% Low  8% Low  High: more than 10%; Medium: 5‐10%; Low: less than 5% High: more than 10%; Medium: 5‐10%; Low: less than 5% Display Advertisements Spends (FY 20‐‐) Text Advertisements Spends (FY 20‐‐) ONLINE ADVERTISING MARKET IN INDIA 2012.PPT 5
  6. 6. Advertising through search engines is dominant with other options including portals, online ad networks and websites ADVERTISING OPTIONS  SAMPLE  In this case, ad space is sold  Herein ad space is sold through  directly to the advertiser  the intermediary wherein  X1 wherein the advertiser directly  there is an ad network who  contacts the media connects the 2 parties Description ONLINE WEB SITE AD NETWORK A D • Sells aggregated x4  X2 V to advertisers  E • X5 sold in return  WEB SITE R for a fee or  Description commission  T • Offers affiliated  I services or  S solution to both  E parties – R advertisers &  WEB SITE X3 publishers Description Online ad networks effectively act as a one‐stop interface between multiple advertisers and publishers Online ad networks effectively act as a one‐stop interface between multiple advertisers and publishers ONLINE ADVERTISING MARKET IN INDIA 2012.PPT 6
  7. 7. Drivers & Challenges – Summary  Drivers   Challenges  Large domestic internet base Lack of trust in internet advertising Positive consumer behavior &  patterns towards online media Literacy and language barriers  Growing proliferation of internet on  mobile  Large Expatriate Population ONLINE ADVERTISING MARKET IN INDIA 2012.PPT 7
  8. 8. Growing internet base coupled with options including  mobile internet is providing fillip to the market Large Domestic Internet base Impact •The user base of internet in India is constantly increasing and as such it offers a lot  of opportunities for online players P L E  •The prevalence of cyber cafes have helped internet penetration in small towns and  M villages, skewing the users‐to‐subscribers number to more than 4 times SA  Moreover, reducing cost of PCs and internet tariffs has helped in popularizing it in India •Therefore, increasing internet penetration in India has motivated consumers to use  it as a medium for various activities such as online shopping, online ticket booking  etc Total Internet Subscribers – India Number of Broadband Subscribers – IndiaSubscriber Base mn Rural Subscribers Subscriber Base mn Urban Subscribers d1 0 0 2008 2009 2010 2011 2012e 2013e 2014e 2015e 2007 2008 2009 2010 2011 2012e 2013e 2014e 2015e ONLINE ADVERTISING MARKET IN INDIA 2012.PPT 8
  9. 9. Trends – Summary Emergence of Social Media  networking Indian players expanding  Internet turning into an  globally Key  effective Sales medium Trends  Increase in private equity  Growing online marketing  investments activities from corporates ONLINE ADVERTISING MARKET IN INDIA 2012.PPT 9
  10. 10. Online marketing activities help companies to provide real time insights to their consumers on their products SAMPLE Growing online marketing activities from corporates• Corporate concerns in the current market scenario have realized the importance of correct and  Online  efficient marketing activities in order to promote their products and services marketing   Since more number of consumers are now preferring the online medium to make their purchases as well as  activities on the  for searching information, companies are looking to create appropriate visibility for their products   rise• Companies are finding the online medium more efficient in comparison to television and print  ads as it can engage the consumers actively thereby promoting real time engagement and  awareness about the products  Moreover, Internet is a cost effective advertising medium for the companies and helps in immediate  interaction with end users Some of the activities observed in the online advertising domain are as follows  • p1 Advertisers promoting social  • p2 messages • p3 • p4 Aim to increase brand  • p5 exposure Auto, banking, insurance,  • p6 education and travel  ONLINE ADVERTISING MARKET IN INDIA 2012.PPT 10
  11. 11. Private: Domestic Company – Player 1 (1/3)Company Information SAMPLE  Offices and Centres – India Registered Address New Delhi Tel No.Fax No.WebsiteYear of Incorporation Registered  AddressProducts and Services Category Products/ServicesAdvertising Online Advertising Key People Name Designation ONLINE ADVERTISING MARKET IN INDIA 2012.PPT 11
  12. 12. Private: Domestic Company – Player 1 (2/3) Financial Snapshot Key Ratios Profit y‐o‐y change  Particulars  2011 2010 2009 2008Total Income Total Income (2011‐10) INR mn  INR mn E  Profitability Ratios Profit / Loss 6 Operating Margin ‐3.76 2.54% 6.30% 6.46% N.A. L 5 Net Margin ‐3.61 1.42% 5.03% 5.35% N.A. P Profit Before Tax Margin ‐3.76 2.54% 6.30% 6.46% N.A. 4 Return on Equity ‐88.66 49.71% 138.38% 146.62% N.A. M 3 Return on Capital Employed 19.22 ‐13.20% ‐32.42% ‐119.06% N.A. Return on Working Capital ‐19.24 9.82% 29.06% 44.13% N.A. SA 2 Return on Assets ‐15.70 8.82% 24.52% 25.94% N.A. 1 Return on Fixed Assets ‐365.25 328.56% 693.80% 555.88% N.A. 0 0 Cost Ratios 2009 2010 2011 Operating costs (% of Sales) 3.76 97.46% 93.70% 93.54% N.A. Administration costs (% of  N.A. N.A. N.A. N.A. N.A. Financial Summary  Sales) Interest costs (% of Sales) N.A. N.A. N.A. N.A. N.A. • Company incurred a net profit of INR f1 in FY 2011, as  Liquidity Ratios compared to net profit of INR f2 in FY 2010 Current Ratio ‐1.69% 1.41 1.43 1.47 1.54 Cash Ratio 137.90% 0.15 0.06 0.21 0.15 • It reported total Income of  INR f3 in FY 2011, registering  Leverage Ratios an increase of f4% over FY 2010 Debt to Equity Ratio N.A. N.A. N.A. N.A. N.A. Debt to Capital Ratio N.A. N.A. N.A. N.A. N.A. • Earned an operating margin of f5% in FY 2011,  a  Interest Coverage Ratio N.A. N.A. N.A. N.A. N.A. decrease of f6 percentage points over FY 2010 Efficiency Ratios • The company did not report any debt to equity ratio both  Fixed Asset Turnover 67.67% 231.31 137.95 103.87 0.00 in FY 2011 and FY 2010 Asset Turnover 27.41% 6.21 4.87 4.85 0.00 Current Asset Turnover 14.95% 2.01 1.75 2.62 0.00 Working Capital Turnover 19.69% 6.92 5.78 8.25 0.00 Capital Employed Turnover 27.20% 35.00 27.51 27.40 0.00 Improved Decline ONLINE ADVERTISING MARKET IN INDIA 2012.PPT 12
  13. 13. Private: Domestic Company – Player 1 (3/3)Key Recent Developments SAMPLE  Description  News • Operates as a wholly owned subsidiary of b1 plc whose primary activity includes b2, b3,  b4 and b5Overview • It provides services to more than b6 blue‐chip clients and  agencies with over b7 staff  across the world • ‐‐ uses b8 core online advertising channels namely search, affiliate and email  • B9 and b10 have jointly acquired performance marketing firm b11 • The Board of b12 has entered into a sale of and purchase agreement for the disposal of Buy Out  one of its trading agencies b13 to that of b14 and to b15  However, both the concerns will continue to run separately wherein b16 will be the MD of b17 and  b18 will be headed by b19 ONLINE ADVERTISING MARKET IN INDIA 2012.PPT 13
  14. 14. Traffic Statistics – Player 1 Ranks SAMPLE  Most Viewed Sub‐Domains Z1 Z2 Global Rank Global Rank Y1 India Rank India Rank Y2 Reach Reach Y3 Audience Snapshot Technical Details Age (Years) Y4 Unique Page Views/Day Age (Years) Unique Page Views/Day Y7 (%) (%) Gender Y5 Search Engine  Search Engine  Gender Redirection (%) Y8 Redirection (%) Average Load Time  Time (mm:ss) Y6 Average Load Time  Y9 Time (mm:ss) (Secs) (Secs) ONLINE ADVERTISING MARKET IN INDIA 2012.PPT 14
  15. 15. Thank you for the attentionThe Online Advertising Market – India 2012 report is a part of Netscribes Business Services Industry Series.For more detailed information or customized research requirements please contact:Phone: +91 33 4064 6214E‐Mail: sales@netscribes.comFollow us on:About NetscribesNetscribes is a knowledge‐consulting and solutions firm with clientele across the globe. The company’s expertise spans areas of investment & business research, business & corporate intelligence, content‐management services, and knowledge‐software services. At its core lies a true value proposition that draws upon a vast knowledge base. Netscribes is a one‐stop shop designed to fulfil clients’ profitability and growth objectives.Disclaimer: This report is published for general information only. Although high standards have been used in the preparation of this report,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 IN INDIA 2012.PPT 15