Study of the growth of online ads and Effects on other Media in India

Submitted in partial fulfillment of the requirements for

POST GRADUATE DIPLOMA IN MANAGEMENT

PGDM

2009 - 11

SUBMITTED BY

Name : Vinit M Sanzgiri

PGDM Roll No. PG-09-87

Batch : 2009-11

IES Management College and Research Centre,

Bandra, Mumbai

MAY – JUNE 2010

IES Management College and Research Centre

Bandra, Mumbai

MAY – JUNE 2010

Student’s Declaration

I hereby declare that this report, submitted in partial fulfillment of the requirement for the award

for the Post Graduate Diploma in Management, to IES Management College and Research

Centre is my original work and not used anywhere for award of any degree or diploma or

fellowship or for similar titles or prizes.

I further certify that without any objection or condition subject to the permission of the company

where I did my summer project, I grant the rights to IES Management College and Research

Centre to publish any part of the project if they deem fit in journals/Magazines and newspapers

etc without my permission.

Place : Mumbai

Date : ---------------------------------

Signature

Name : Vinit M Sanzgiri

Class : PGDM - Trimester - III

Roll No. : PG-09-87

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Certificate

This is to certify that the dissertation submitted in partial fulfillment for the award of

PGDM of IES Management College is a result of the bonafide research work carried out by Mr.

Vinit M Sanzgiri under my supervision and guidance, no part of this report has been submitted

for award of any other degree, diploma, fellowship or other similar titles or prizes. The work has

also not been published in any journals/Magazines.

Date: Industry Guide : Mr Shantonu Aditya

Signature : _________________

Company : Manhattan Communications

Place: Mumbai Designation : CEO

Project guide : Prof. Minu Mehta

Signature : __________________

Core Faculty

IES Management College

and

Research Centre

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Acknowledgement

I am delighted to submit our Project Report on the “Studying the growth of online

advertisements and the effect on other media” in the current academic year 2010 – 11.

It is an outcome of extensive teamwork under the close guidance of Prof. Minu Mehta.

I sincerely express my thanks to the Management of M/s Manhattan Communications for

granting me permission to do the project work for Post Graduation Diploma in Management in

Marketing by IES Management College and Research Centre.

Table of Contents

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1 EXECUTIVE SUMMARY.........................................................................................................6

2 INTRODUCTION TO THE SUBJECT.........................................................................................7

2.1 INTRODUCTION TO DIGITAL MEDIA.............................................................................7

2.2 DIGITAL MEDIA MARKETING........................................................................................9

3 INTRODUCTION TO THE INDUSTRY....................................................................................11

3.1 ONLINE ADVERTISING MARKET IN INDIA...................................................................11

3.2 WHAT IS AN ADNETWORK?........................................................................................12

3.3 TYPES OF AD NETWORK.............................................................................................14

3.4 SOME BIG PLAYERS IN THE BUSINESS........................................................................15

4 INTRODUCTION TO THE COMPANY...................................................................................19

5 OBJECTIVES........................................................................................................................20

6 ANALYSIS & FINDINGS........................................................................................................21

6.1 SOCIAL MEDIA AND GROWTH OF DIGITAL MEDIA.....................................................21

6.2 GROWTH IN ONLINE ADVERTISING............................................................................28

6.3 TYPES OF ONLINE ADVERTISEMENTS.........................................................................31

6.4 TRADITIONAL ADS VS ONLINE ADS.............................................................................33

6.5 REVENUE MODELS OF ONLINE ADVERTISING............................................................35

6.6 SHIFT TO INTERNET ADVERTISING.............................................................................38

6.7 INTERNET ADVERTISING IN INDIA..............................................................................40

6.8 MARKET SIZE..............................................................................................................43

6.9 AMOUNT OF REVENUES AND AD SPENT IN INDIA.....................................................44

6.10 BREAKUP OF MARKET BY VERTICALS....................................................................45

6.11 MESUREMENT OF ONLINE ADVERTISEMENTS......................................................46

6.12 KNOWING AN INTERNET USER.............................................................................47

6.13 REACH AND FREQUENCY.......................................................................................54

6.14 SWOT OF ONLINE ADS..........................................................................................56

7 CONCLUSION.....................................................................................................................57

8 RECOMMENDATIONS........................................................................................................58

9 BIBLOGRAPHY....................................................................................................................59

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1 EXECUTIVE SUMMARY

This project explains about the growing advertisements on the internet in India and the effect of

this advertisement on other types of media. Digital media as a whole and online media in

particular is the future for India. This project also explains about the various channels and levels

involved in online advertisements.

This project also brings to light the how advertisers are shifting from traditional media to digital

and online media to attract their target customers in India. We can also see various revenue

models which are involved in online advertisements today.

The project also speaks about the behavior of the internet user and his response to the various

advertisements on the internet. The demographics of the users is also explained along with detail

explanation about the percentage of advertisements clicked in various categories in different

categories how a particular advertisement gets converted to a sale.

A part of analysis and findings also includes the reach and frequency of various media and the

comparisons of the same. We can learn about various innovations which can be done on various

websites.

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2 INTRODUCTION TO THE SUBJECT

2.1 INTRODUCTION TO DIGITAL MEDIA

Digital media (as opposed to analog media) are usually electronic media that work on

digital codes. Today, computing is primarily based on the binary numeral system. In this case

digital refers to the discrete states of "0" and "1" for representing arbitrary data. Computers are

machines that (usually) interpret binary digital data as information and thus represent the

predominating class of digital information processing machines. Digital media like digital

audio, digital video and other digital content can be created, referred to and distributed via digital

information processing machines. Digital media represents a profound change from previous

(analog) media.

Digital data is independent of its interpretation (hence representation). An arbitrary sequence of

digital code like "0100 0001" might be interpreted as the decimal number 65,

the hexadecimal number 41 or the glyph "A".

Florida's digital media industry association, Digital Media Alliance Florida, defines digital media

as "the creative convergence of digital arts, science, technology and business for human

expression, communication, social interaction and education".

There is a rich history of non-binary digital media and computers. Most of us have heard of

digital media, but we may have no idea what it is and how it can help us out when it comes to

marketing. It's definitely important that you get up to speed so you can use this to benefit your

business. Basically digital media refers to any type of electronic media out there. Today media

can be accessed in many ways, including with hand held devices like mobile phones, laptops,

desktops, mp3 players, and more.

Digital media must be stored in an electronic way, so there is a lot of digital content on the

internet today, including text content, pictures, audio content, as well as video content. Through

the history of internet, digital media has been developing in various ways. Here's we'll take a

look at how it has affected the Internet and ways that it may be integrated moving forwards.

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One type of digital media is text; this in fact represented the very first explosion of this type of

content out there on the Internet. When the Internet first got big, there was an explosion of

content on the web, especially with all the text editors and word processing options out there

today. Larger companies started to put date on computers instead of storing it in cabinets, and the

internet definitely allowed a great way to share, transfer, and store content as well.

As the Internet grew, images began to appear. Instead of just text emails, soon people could send

photos, and soon photo sites for sharing photos began to pop up. Then in the middle 1990s, audio

began to become an important part of digital media with the mp3 files that could be easily used.

Soon music and more was shared online with sites that allowed you to share audio.

Last in the digital media development was video. YouTube definitely made video sharing a

hugely popular form of modern media distribution, and this is continuing to grow as we speak

today. Now with new technology seen in things like the iPhone, this new form of virtual media is

available in handheld devices as well, and no doubt this sector is only going to continue to grow

in the future.

Digital media also help businesses. Businesses are using digital media for marketing more and

more today, realizing that there is a huge marketing field out there and that it can help to draw in

visitors and can even provide better search engine visibility with you.

Text content can be kept updated on your site and helpful content is a great part of good

marketing. Expertise in one’s field can really help one’s business and get traffic flowing into

one’s business website. Photos, charts, diagrams, and models are always popular online and will

help us to get more visibility as well. Audio allows us to use music on pages or to do podcasts

for your business. Creating videos is a popular method of digital media marketing today, and

videos do very well in search engines.

With the popularity of digital media, it is definitely important that one continues to create and

use it for good marketing and business results. Even if we have to hire someone to help out, the

benefits will make it worth the money. So knowing about and using digital media is definitely

important for one’s business success today.

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2.2 DIGITAL MEDIA MARKETING

Digital marketing overlays both traditional and digital marketing strategies for providing

customers with the latest news and developments about products and services.

The difference between digital marketing and Internet marketing is in the type of marketing

techniques used. Internet marketing, although using the digital Internet, focuses on every means

of getting information to potential customers about products and services a merchant is offering

using only the Internet. Digital marketing uses all the channels available in the digital media to

get information to customers, and it does not limit itself to the Internet.

The digital marketing sector uses many different digital marketing media channels, such as:

1) Cell phone Short Message Service (SMS) – text messages

2) Really Simple Syndication (RSS) feeds

3) Podcasts

4) Voice Broadcast

5) Video E-mails

6) Banner ads on affiliate websites

7) Outdoor digital displays

8) Websites

9) Blogs

Strategies for Digital Marketing

There are two basic digital marketing strategies used by current and potential customers. These

two types of digital marketing are called the “Push” and the “Pull.” Their methodology for

providing information to customers works as follows:

Pull digital marketing – the customer seeks information about products and/or services by

visiting the company’s sources of information searching for the specific product or service

information. They are basically requesting to view this specific content. These are typically

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located in websites, blogs, streaming audio and video sources. Customers have found related

information on other websites or been directed to the company’s sources by a referring website

to find the information.

Push digital marketing – customers are provided information by receiving or viewing

advertisements digitally, such as: SMS, RSS, cell phone calls, etc., as subscribers of the latest

product and service information provided by the company.

Both have their advantages and disadvantages. For example:

Pull advantages – no restrictions on file size, no opt-in requirements, and low technology

requirements for the company.

Pull disadvantages – marketing required, little tracking of visitors, and no personalization to keep

the visitors coming back.

Push advantages – personalization of messages, high conversation rate, and detailed tracking of

customer choices.

Push disadvantages – requires Can Spam Act 2003 compliance, most customers must opt-in, can

be blocked, simply opt-out, and requires delivery technology.

Digital Media Planning

Planning a marketing campaign to target key consumer groups increasingly means integrating

digital into the media mix at the first stages of planning. A marketing campaign that takes into

account consumers’ media consumption patterns and increased media multi-tasking, is far more

likely to engage and cut-through. The most effective digital campaigns don’t simply extend

offline executions onto the web; they respond creatively to the way that consumers use digital

media in conjunction with other channels.

Recent research from Think box and the IAB highlights the advantages of planning a marketing

campaign to make use of multiple channels from the start:

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Increased purchase intent, with conversion rates rising by more than 50 per cent when TV and

online are used together, extended reach across different audiences and channels, lengthening the

life of the campaign, with different channels helping to keep messages fresh.

3 INTRODUCTION TO THE INDUSTRY

 The U.S. accounts for half of the world’s $500 billion advertising industry, which would make

many think that America is number one in this industry. However, if one looks at a volume-to-

award ratio, one can’t help but admit the creative power of countries like Brazil, India, Thailand

and Singapore. For instance, at the last Cannes Awards, the president of the Jury was Piyush

Pandey, Group President and National Creative Director of Ogilvy and Mather, India -- a country

quickly becoming a viable online advertising center.

3.1 ONLINE ADVERTISING MARKET IN INDIA

Source: I-Cube 2008, Annual IMRB Syndication

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

Internet penetration findings are based on I-Cube 2008, 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 of Claimed2 as well as Active3 Internet

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

started to reach the bottom of the pyramid.

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.

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.

3.2 WHAT IS AN ADNETWORK?

An online advertising network or ad network is a company that connects advertisers to web sites

that want to host advertisements. Increasingly, ad networks are companies that pay software

developers as well as web sites money for allowing their ads to be shown when people use their

software or visit their sites. A network representing many Web sites in selling advertising,

allowing advertising buyers to reach broad audiences relatively easily through run-of-category

and run-of-network buys.

Advertising networks provide a way for media buyers to coordinate ad campaigns across dozens,

hundreds, or even thousands of sites in an efficient manner. The campaigns often involve

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running ads over a category (run-of-category) or an entire network (run-of-network). Site-

specific buys are not a major emphasis when dealing with advertising networks. In fact, site-

specific buys are not even available at some networks, so as not to conflict with in-house sales

reps.

Ad networks vary in size and focus. Large ad networks may require premium brands and

millions of impressions per month. Small ad networks may accept unbranded sites with

thousands of impressions per month.

One of the key issues for publishers is exclusive vs. non-exclusive representation. Exclusive

representation generally brings a higher percentage of revenue sharing, but sometimes results in

a smaller percentage of ad inventory being sold. In non-exclusive arrangements, publishers may

use secondary advertising options to fill the space left unsold by the primary ad network.

Ad networks are primarily involved in selling space for online ads to appear. This online

advertising inventory comes in many different forms, including space on websites, in RSS feeds,

on blogs, in instant messaging applications, in adware, in e-mails, and on other sources. The

dominant form of inventory remains to be third-party websites, who work with advertising

networks for either a fee or a share of the ad revenues.

An advertiser can buy a run of network package, or a run of category package within the

network. The advertising network serves advertisements from its ad server, which responds to a

site once a page is called. A snippet of code is called from the ad server, that represents the

advertising banner.

Large publishers often sell only their remnant inventory through ad networks. Typical numbers

range from 10% to 60% of total inventory being remnant and sold through advertising networks.

Smaller publishers often sell their entire inventory through ad networks. One type of ad network,

known as a blind network, is such that advertisers place ads, but do not know the exact places

where their ads are being placed.

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In most cases, ad networks deliver their content through the use of a central ad server. Large ad

networks include a mixture of search engines, media companies, and technology vendors.

3.3 TYPES OF AD NETWORK

There are three types of online advertising networks:

1. Vertical Networks: They represent the publications in their portfolio, with full

transparency for the advertiser about where their ads will run. They typically promote

high quality traffic at market prices and are heavily used by brand marketers. The

economic model is generally revenue share.

2. Blind Networks: These companies offer good pricing to direct marketers in exchange for

those marketers relinquishing control over where their ads will run. Blind networks

achieve their low pricing through large bulk buys of typically remnant inventory

combined with conversion optimization and ad targeting technology. The financial model

is arbitrage.

3. Targeted Networks: Sometimes called “next generation” or “2.0” ad networks, these

focus on specific targeting technologies such as behavioral or contextual. Targeted

networks specialize in using consumer click stream data to enhance the value of the

inventory they purchase.

There are two types of advertising networks: first-tier and second-tier networks. First-tier

advertising networks have a large number of their own advertisers and publishers, they have high

quality traffic, and they serve ads and traffic to second-tier networks. Examples of first-tier

networks include the major search engines. Second-tier advertising networks may have some of

their own advertisers and publishers, but their main source of revenue comes from syndicating

ads from other advertising networks.

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While it is common for websites to be categorized into tiers, these can be misleading. While

Google is in the clear majority of advertisement impression served, other networks that could be

labeled as tier 2 actually dominate over these tier 1 ad networks as far as the number of

customers reached.

3.4 SOME BIG PLAYERS IN THE BUSINESS

Online advertising is steadily robbing the market share from traditional media advertising. Given

the potential of growth and increasing Internet penetration in India, online advertising is set to

explode in coming years. The 38.5 million Indian Internet users, according to an IAMAI study,

have become the prime target for numerous advertisers clouding the web.

To cash in on this growth, a number of online ad networks have come up in India in last few

years. Here is an overview of current pool of online ad networks in India.

Komli is a leading online ad network in India offering tools to Publishers to help them manage,

optimise, and make the most of their online advertising. On the other hand, advertisers have

access to millions of clients worldwide in order to increase their consumer commitment, brand

recognition, leads, and sales. They offer different options such as CPM and performance based

CPC and CPAmarketing.

Solutions to both publishers and advertisers include Komli premium network and Komli

performance network. Komli premium network offers publishers tons of advertising formats

using the newest web technologies, as well as many top brands, and provides advertisers with

rich, targeted ways to connect with consumers. Komli last year got $7 million funding from 3

VCs namely Nexus India Capital along with Draper Fisher Jurvetson and Helion Ventures.

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Although branded separately, Pubmatic is service offered Komli. Simply put, Pubmatic is a ad

network aggregator that helps publisher to maximize the revenue that you can earn from your

web site , and it reduces the complexity of managing multiple ad network relationships.

Pubmatic optimises the Ads for publishers by offering the ad real estate to the network that

maximizes your earning opportunities.

Tyroo is an India based online advertising network that uses proprietary targeting technology to

ensure advertisers reach out to the right websites from its inventory of publishers. Internet

company Yahoo picked up at least 35% stake in Tyroo for an undisclosed amount in July 2007.

Incubated by Delhi-based digital media company Smile Interactive Technologies Group, Tyroo

was voted as one of the 10 most interesting startups by Business daily Mint, a part of the HT

Media group. Recently Tyroo claimed to reach 2.5 billion Ad impressions a month. According to

Tyroo, its 2500 strong publisher network includes Perfspot, Facebook, About.com, SantaBanta,

Smashits, Yatra, and OneIndia. The company counts Microsoft, General Motors, Pepsi, ICICI

and Yahoo amongst its advertisers.

dgm India claims to be the largest performance based affiliate ad network in the country. dgm

India is a wholly owned subsidiary of Deal Group Media. dgm India offers to its advertisers

affiliate program to develop a virtual sales force using one of their turnkey affiliate marketing

products, whereby advertisers promote their products via relevant and top performing

affiliates /publishers. For publishers, DGM India will optimize their online inventory, monitor

and evaluate performance and provide with attractive deals from all the advertisers

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Ozone Media is another online Ad network in India. Even though they are one of the early

entrants in this business, I am not sure how they are positioned currently. Not much information

is available on their site other than that they use Accipiter’s AdManager with geo-targeting

features which helps to target campaigns to different countries and audiences. I am really

surprised that being into online advertising space they themselves do not have much to show on

their website.

PayPod is an online ad network specifically tailored to help advertising agencies take advantage

of the digital medium. Targeted at the advertising and publishing industry in India, PayPod’s

Digital Advertising Network solution helps deliver ads on the Internet based on geography,

context, content, gender and age group relevant to specific requirement and target audience.

Along with online Internet advertising, PayPod has also launched mobile advertising solutions

for publishers in India.

IndiAds is the leading Internet advertising network for the Indian and South Asian online

community. They claim to deliver 800 million ads per month to Indians and South-Asians living

in North America, Europe and Asia. IndiAds offers ad serving services for websites with traffic

over 20,000,000 pageviews per month. With ability to precisely target ads to any geographic

location, with greater flexibility in campaign settings, publishers are able to acquire new

advertisers and provide better results for their existing clients.

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Sulekha is another Indian ad network claiming to be India’s No.1 Ad network reaching 2 million

unique visitors a month and 10% of online global Indians. Sulekha Ad Network has a network of

600+ websites serving Indians and NRIs. Sulekha Ad Network influences consumer behaviour

and lead to brand awareness, lead generation and online sales by leveraging the LARGEST ad

network serving NRIs and Indians:

AdsforIndians also claims that it is the largest Indian Ad network and came into existence in

2004. it also claims to be the only Indian ad network, which has the advanced technology to

syndicate the text ads with pictures as well as banner ads. Ads placed on AdsforIndians are

published on all their participating partner sites worldwide. Ads can be geo-targeted to specific

countries and ad channels to reach the targeted visitors relevant to your Advertisement.

Although not Indian, it is the most popular Ad network not only in India but worldwide. More

than 5 publishers mentioned above claim to be the largest Ad network in India whereas more

than 75% market share is with Google alone !

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4 INTRODUCTION TO THE COMPANY

What is Manhattan Communications?

• Manhattan Communications is a total marketing solutions company that provides

advertising, branding, public relations, marketing (media, interactive, ATL, BTL). It is a

Times Private Treaties company.

• Event management in India and abroad, with its affiliates offices in India, the US and the

UK.

• The company has a New York-headquartered US affiliate, MediaMorphosis Inc.

• Mr. Adris Chakorborty based in New York, is the Founder and Chairman of Manhattan

Communications (I) Pvt. Ltd., also a Managing Director of Mediamorphosis Inc., Ethnic

Online Network

• Mr. Shantonu Aditya is the Director & CEO of the company

• Mr. Amit Koshal is the President of Ethnic Online Network.

What is Ethnic Online Network(EON)?

• Ethnic Online Network(EON) is acquired from Paypod Inc. in 2008.

• EON is an AD network technology provider and a Publisher aggregator which enables

advertisers to distribute their campaign across multiple publisher through one platform.

• EON allows to tap into the growing ethnic market spaces specifically the rapidly

expanding affluent South Asians around the world.

• Working with South Asia’s most exclusive publishers in every vertical , EON delivers

quality placement from highly respected advertisers.

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5 OBJECTIVES

PRIMARY OBJECTIVE

• To study the growth of online advertisements in India and effect on other media

SUPPLEMENTARY OBJECTIVE

• To study the revenues and the various revenue models

• To study the reach and frequency of various media and online ads in particular

RESEARCH METHODOLOGY

• Type of Research – Descriptive

DATA COLLECTION TECHNIQUES:

• Primary data through observation method.

• Secondary data through websites, books, magazines

Sample size – 30 customers

LIMITATIONS OF THE PROJECT

• Many advertisers & ad agencies are not keen on online advertisements because they still

prefer the traditional method of advertising which are TV, Radio, Print etc.

• Primary data not available as the publishers or website were not reachable

• The analysis on reach & frequency might be somewhat biased.

• Some of the data in the analysis is two years old i.e of the year 2008, so the figures as on

date might be different.

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6 ANALYSIS & FINDINGS

6.1 SOCIAL MEDIA AND GROWTH OF DIGITAL MEDIA

Gilbane Group Inc. an analyst and consulting firm that has been writing and consulting about the

strategic use of information technologies since 1987 has announced the general release of Digital

Magazine and Newspaper Editions: Growth, Trends, and Best Practices, a comprehensive study

of the growing market for digital editions of periodical publications.

There are many questions which remain to be answered, about newspapers and their online

counterparts. Is it that more people than not are reading the news online? Or perhaps that more

technology publishers are going online and abandoning print? What about advertising revenue?

– could it be that it's more lucrative online? But again, these are just predictions made from

reading humble blogs and online magazines.

According to 'Lo and behold: The study features statistics that, in an industry first, unify audited

data from two sources (BPA and ABC) with data from unaudited publications. Highlights from

the statistics include:

The number of business-to-business (B-to-B) publications offering digital editions has increased

over 300% from 2005 to 2007, with total subscriptions also increasing over 300%.

The number of consumer publications offering digital editions has increased over 200% from

2005 to 2007, with total subscriptions also increasing over 200%.

Digital vs. print penetration of B-to-B subscribers is up from 13.3 to 15.0%, while digital

penetration of consumer publication subscribers is down from 2.2 to 1.4%.

Visionaries like Gloria Adams of PennWell, Brent Lewis of Harlequin Enterprises, Mike

Edelhart of Infovell, Peter Meirs of Time Inc. and Marta Wohrle, formerly of Hachette Filipacchi

wax poetically about best practices and offer insights on the state of digital editions and ideas for

how to make them work for publishers.

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Contributors to the report included:

1) Nstein

2) Nxtbook Media

3) Olive Software

4) Texterity (Platinum Sponsors)

5) Advanced Publishing

6) YUDU Media

7) Zinio (Gold Sponsors);

8) Audit Bureau of Circulations

9) BPA Worldwide (Data Sponsors)

The internet is the way to go forward and it does not require any report to prove this fact. And if

you don't move with it, you'll be left behind.

Thanks to the new digital platforms like social media where technology is empowering people to

create, participate, and share content on the Web, while having meaningful conversations around

events, places, people, news, brands, and products through blogs, micro-blogging sites like

Twitter, Social bookmarking, and sharing sites like Digg, social networking sites, social forums

and review sites. Virtual worlds like YouTube, Second Life, and podcasts are a few new age

tools to name.

Technology Aids Change People’s Behavior

What is really interesting to observe is that the growth of social Web is changing people behavior

and induce them to become digital activists, as many consumers move from being passive

consumers of products and services to the active participation age to voice their feedback, be part

of product related discussions, and look for a dialogue about brands or products they currently

use or need in future. While technology is evolving with new tools to simplify our online social

interactions, at the same pace social media benefits are also increasing for individuals,

businesses, and collectively for our society.

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The Power of Social Media and its Impacts on Individuals, Businesses, and Society

Digital media doesn’t have an entry barrier; so any individual can become a news creator, subject

expert, journalist, initiator, and digital activist using blogs, micro-blogs, social sharing, and

networking sites. It provides an equal opportunity for anybody to voice their thoughts, opinions,

and share information at their disposal. The popularity of social networks will also create a new

trend of social shopping where individual can recommend to his group of friends products and

services that he or she brought or used. So, what really drives people to engage online is the

peer-influence factor and an instant re-colonization for their individual digital activities in the

form of comments, video clips, retweets, sharing, and online polls. These visible feedback

channels encourage people to be more participative in the social Web. Let’s take the example of

Susan Boyle, the famous voice discovered in Britain talent hunt show; her video got more than

100 million hits on YouTube from people across the world, brought instant success for her hard

work, and most importantly a recognition for her undiscovered talent by the world. This is a new

trend of social media creating celebrities out of common people and if you have talent then the

social Web channels like video sharing, blogging sites, and micro-blogging sites provide a

platform to showcase it - the Web world will applaud your creativity, knowledge, and expertise.

It’s no surprise that micro-blogging sites like Twitter share the breaking news faster than the

traditional media channels, as more and more people are using it not only for live streaming of

their personal events but most importantly as an information sharing medium and a collective

knowledge sharing channel with other people across the world.

Social Media as an Engagement Channel between Businesses and Customers

For brands and marketers, the social media opens up new opportunities and challenges, because

using it means getting out of your brand comfort zone, listening to people who talk good or bad

about your products, showing real commitment to your users unlike running a marketing ad for a

couple of weeks or months, and importantly adding a human face to your brand. So having a

humanized brand is very important in this new age. Consumers are increasingly using the Web to

research before making buying decisions, so the online reputation of your brand or product has a

key role in influencing people’s purchase decisions. It is no surprise that even in India, eight out

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of 10 people from the metros who buy cars use the Web to search for information on brands and

products before making a purchase call.

The major adoption driver for businesses to use the social media marketing will be its low-cost

model compared to traditional marketing channels. Unlike the traditional marketing monologue

approaches, the social media marketing facilitates dialogues and conversations with target users

or current consumers to have close proximity, better understand the brand’s online position,

product or service feedbacks, and create a good online brand reputation - the art of success in the

social media for brands is ‘listening’ and ‘engaging’ with consumers.

In the near future we will see most of the marketers adopting and building expertise in the social

media platforms, digital media tools, and most importantly understanding the new medium as an

engagement channel to interact with their consumers and deliver their product message. These

marketers will in turn educate their clients on the power shift in the target user engagement and

marketing models through digital media. In India, the lack of social media adoption among

brands was largely due to the naivety of our marketers in using the social media platforms; but

having seen the global adoption in recent times, many Indian marketers are very curious on

learning about new media platforms.

Further, professional networking sites like LinkedIn have a great pool of experts across different

domains, technologies, and businesses. What it means especially for small and medium

businesses is that using LinkedIn Questions and Answers, your business can get expert advice

and quick market research for free. This is one of the good social channels for the Indian SME’s

to understand global perspective and get expert advice.

Social Media-Benefits for Businesses and Brands

Organizations can get quick feedback on their products compared to traditional channels (Social

media monitoring tools like socialmention.com and additc-o-matic.com will help you track the

current online reputation of your brand or product across social Web, while techrigy and radian6

provide much advanced tools).

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Low cost customer service and support: Look at how Zappos, Comcast, and the like are using

Twitter to service their customers.

Deliver your brand, product, or industry event news for interested people and manage good PR.

No more email blasts or spamming to people; instead engaging with interested people, YouTube

can get you more viewers than having billboards or even TV ads at almost no cost.

Engage with the consumers as a community to provide more value. Look at the social media

strategies of Ford, JetBlue, Dell, and Zappos.

Build loyal brand advocates and promote your brand and products. Conversations with your

customers will create brand loyalists.

Market research and product or service features ideation. Tools like UserVoice.com and

SurveyMoney.com along with LinkedIn and Twitter will simplify your market survey and

product feature ideation initiatives.

For businesses, the most important thing to learn before using the social media is not in knowing

tools like blogs, twitter, and YouTube but understanding the people engagement, social

interaction behaviors, current online brand or product reputation, and managing the consumers’

and prospects’ expectations to build long-term relationships, create loyal community of brand

advocates, and engage in conversations with people who are interested in your product, brand, or

service.

Social Media-Driving Social Changes for a Better Society

The heart of social media is people; it empowers us to spread social causes and change

perspectives, participate in digital activisms (The recent PinkChaddi campaign and PubBharo

aandolan were quite successful in India), and show support to crowd sourcing activities like

ushadidi.com to share information in crisis situations with better reach, relevancy, and

engagement. Recently votereport.in helped share irregularities in Indian elections in an

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unprecedented way with massive participation of members. But, success of community

initiatives depends on multiple factors like cultural adoption and availability of technology apart

from the reach and usage of technology by people.

The growth of social sites’ usage among people will open new doors of opportunities for

researchers to understand people behaviors, consumers’ behavioral change patterns, market

trends, content consumption patterns, and social changes through technology, and the same will

add to the growth of behavioral economics. Social Web allows people to form communities and

voice their opinions for social causes and changes. In a similar vain it helps policy makers to

deliberate on things like administrative irregularities. This can either be driven by common

people or social activists or the government. One good example of using social media in

administration is the initiatives of Obama administration in the U.S. to engage with people on

various administration related issues.

The New Media and its Next Growth Story

The new media is growing at a rapid pace, there are already hundreds of millions of users; and

with millions of new users joining social sites every month, penetration of the Internet and

mobile phone in developing world provides a better reach for technology and creates adoption of

technology usage by proving visible benefits. Standards like OpenId and OpenWeb encourage

people to try new online services using existing credentials instead of getting overloaded by

managing authorization information for each online service. These changes will drive more

adoption of social Web by individuals, businesses, brands, marketers, researchers, and physical

social communities around the world. Along with new technology innovations for mining online

content across social Web to create structured information for particular search terms, online

engagement and reputation measurement tools, real-time information retrieval and search, and

social advertising and marketing measurement tools, with brands heavily using sociable ads to

market research and engage with consumers in advertisements (In social ads people can

customize advertisements with their profile data like picture, name, location, and why they like

it, and share it among their network of friends to drive a ripple effect for brand ads).

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We will also see software as a service (SaaS) providers integrating social engagement tools into

their product offerings and growth of community based customer support sites for many products

and services.

The growth of social media also needs standards and adoption of OpenWeb (having one

authorization and access control on the use of complete social Web services) by online service

providers, social user data usage, security and privacy policies, and social media measurement

metrics and engagement (ads, campaigns, or community) guidelines for better utilization of new

media potential and leveraging it’s benefits.

According to a recent article in TechCrunch, every minute more than 20 hours of video is being

uploaded to YouTube, and Nielsen-Online reports that people spend a lot of time on video

sharing and social sites on the Internet than anywhere else. What it means is that very soon

production houses will use video sharing sites as a channel for their content sales like the early

experiments of ESPN with YouTube. Also, there are tens of millions of bloggers around the

world producing online content almost regularly, if not everyday, while their content may be not

so good as that of a professional journalist they are good enough to draw the attention of online

users to encourage people journalism trends.

All I want to say in conclusion here is that business conditions and people behavior are changing

as technology evolves with new age digital platforms and tools; so it’s time for new media

adoption, rather than resisting it to become extinct from business.

The New Digital Media vs Traditional Media

Does the rise of new digital media means the death of the traditional news and print media?

Nobody knows precisely what will happen. However, radio didn’t die after TV came and it only

went through significant change cycles. If you look at the blogs or micro-blogging sites most of

the conversations are still powered by the content from traditional news or media channels, with

the difference that people don’t want to pay for usual content delivered by traditional media as

now they can get it for free on the Web. This is a significant shift in terms of how the changing

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digital technology can influence the way people consume content from traditional news and

media channels. According to Indian Readership Survey-2009, there is a decline in news and

magazine readers across the country, while Bangalore itself has noticed a decline of 7 percent in

the readership of English newspapers.

The traditional media players have to leverage the power of new digital media to cut their

distribution and printing costs (PCWorld became an online magazine from print media). Quality

online content still can command users to pay, new services like Amazon Kindle where content

feed is available on subscription are a good channel for news media sites to reach the target users

and still get paid, using people-powered journalism and have a reach for news from across the

world at minimal cost and focus on niche areas to beat the ‘hub of great content’ game on the

Web.

6.2 GROWTH IN ONLINE ADVERTISING

The digital advertising industry is experiencing remarkable growth as technological innovations

fuel demand. Digital marketing allows marketers for two-way and even one-on-one

communication with consumers, potentially providing them with a very personal experience.

Furthermore, the cost associated with digital advertising is considered to be much lower than the

costs associated with traditional type of advertising. Both effects - enhanced effectiveness and

less cost - translate into a higher return on investment for digital marketing in comparison with

advertising through traditional media.

With increasing entertainment, communication, and media options and a proliferation of devices

that allow consumers to tune out advertising, marketers are expected to more and more rely on

creative messaging that consumers will not want to skip, as well as advice on the best way to

reach an increasingly more fragmented target audience.

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Globally, 91 percent of marketers are using online advertising, according to a McKinsey & Co

survey of 340 senior marketing executives. Over half (55%) said they plan on cutting spending

on traditional media in order to focus on Internet advertising.

A Forrester Research survey found that 25 percent of marketers would increase spending on

online advertising due to an economic recession. In addition an Epsilon CMO survey from

September revealed that 63 percent of marketers planned to increase their Internet advertising

spending in 2008.

Source: eMarketer, August 2008

Some of the reasons online advertising is attractive to marketers is the ability to measure their

campaigns and target their message more than other forms of media.

Online advertising also is more engaging to consumers and more young people are spending

more time online per week they are watching television.

The Internet is the only channel that allows marketers to connect with consumers during the

entire shopping process, from the research phase to the point of sale and post feedback.

Advertising was first established and developed in print format in the form of banners, cut-outs,

brochures, newspapers etc. Radio followed the trend along with Television. Internet gained its

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impetus in India in the mid 90’s and since then, efforts were made to propagate and establish the

advertising root in the World Wide Web. The beginning of online advertising dates back to 1994,

when Netscape Navigator 1.0 was released and the first ever banner advertisements were sold.

However, India took time to accept the medium of online advertising.

As days went by, India, specifically the urban market, gained momentum to be at par with its

technologically advanced counterparts. Slowly, the internet started penetrating to the bottom of

the pyramid as well. Since then, a range of online advertising methods emerged- banner ads,

content based ads on search engines like Yahoo, Google, MSN etc., social networking ads,

classified ads, email ads and more. 

This was the time Google came up with its free search engine which was widely accepted and

acknowledged. People began to ‘search’ more and ‘click’ more. Advertisers started creating

websites and promoted their products and services online. Thus, when you search on ‘new

mobile models in India’ on Google, you get to see millions of website. For example, if you check

out the ‘Mobile Phones’ section of www.infolona.com you’ll find the latest mobile phones

available in the market. Choices are many and they are free. You can also go back to the website

later when you make up your mind to buy a mobile. Online advertising started clicking!

Google’s paid advertising formula in the name of AdWords and AdSense also worked well.

Competitors like Microsoft and Yahoo tried (and still trying) their hands in the same field, but

not yet successful to come up with a strategy that surpasses Google’s. Overall, Internet

advertising market in India is worth Rs 215 crores as per Lintas media report issued recently.

IAMAI (Internet and Mobile Association of India) reported that size of the online display

advertising market reached Rs.3250 Million for the financial year 2008-09 registering a

significant growth rate of 38% and is expected to surge at Rs. 4300 Million for the financial year

2010. The Indian Government also made some significant efforts to accentuate and support the

growth of online advertising. The improvisation done in the Government websites, different

departments like banking, transportation, tourism etc. clearly shows this positive trend.

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The declining interest in other forms of advertising and the new found interest in online

advertising are showing positive trends. The online supremacy is bound to grow in the days to

come and India may witness a gradual decline of print and audio advertising.

6.3 TYPES OF ONLINE ADVERTISEMENTS

Text ads

Advertisements displayed as simple, text-based hyperlinks are known as Text Ads. As their

name suggests, text ads they do not include graphic images. Text ads are sold on non-search

websites and can be served either by individual websites, or a publisher’s own ad servers.

Display Ads

Graphical advertisements featured on websites are known as Display Ads. Display ads are often

available in many standard shapes and sizes, including: banners, leader boards, skyscrapers, large

boxes, and other sized graphical ads. Display ads use eye-catching visuals to quickly grab catch

the attention of website visitors browsing the pages on which they are featured. Display ads are

sold on non-search websites and can be served either by individual websites, or a publisher’s

own ad servers. 

Pop-Up Ads

Advertisements that appear to “pop up” in a new window as users browse a website are known

as Pop-Up Ads. Hover ads, floating ads and slide-in ads ads are all considered pop-up ads.

(Sometimes these ads are also known as Pop-Under Ads, depending on whether they are

displayed over or underneath the current web content being browsed.) The use of Flash and

DHTML ads has risen in recent years in an effort to counter the increased usage of pop-up

blockers.

Flash / DHTML Ads

These kinds of ads incorporate Flash animation or other motion graphics. Ads may be animated

display ads in more traditional shapes and sizes, or, as of late, they can be sophisticated ads that

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function similarly to pop-up ads but with much deeper integration into the overall design of the

site.

Interstitial Ads

Interstitial ads appear between web pages that the user requests. For example, an interstitial ad

may appear after you click on a link in an excerpt to view the full content of news story. Because

interstitial ads load in the background and do not interrupt the users immediate browsing

experience, they are a preferred method of delivering ads with rich media, streaming video,

and/or large graphics.

Video Ads

With the popularity of online video watching, video ads have become a viable means of

distributing rich advertising content. Currently video ads can either be content created entirely by

the advertiser, or “in video” ads that will show your ad within a video. Major search properties

like Google (through YouTube), MSN, Yahoo, and AOL all offer advertising on their video

websites.

Email Ads (Classified Ads & Newsletter Advertising)

Ads that are distributed by a publisher through email blasts to opt-in audiences are known as

email ads. Advertisers can individually sponsor a publisher’s email newsletter or they can

purchase classified ad space.

On-Site Sponsorships

On-Site sponsorships are ads (typically just a company’s logo) that can be bought on individual

websites. Sponsorship ads typically appear in an area on the website reserved for sponsors and

often noted as such. 

Advertorials

Advertisements in editorial form that appear to contain objectively-written opinions are known

as paid editorial ads, or “Advertorials”. Online advertorials are typically featured on publisher’s

websites and promote products and services related to the website’s content. Some ad networks

will develop, optimize, and write your advertorial and place it on their ad network. 

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6.4 TRADITIONAL ADS VS ONLINE ADS

Modern age belongs to internet; the power of internet is so immense that ever since the internet

comes in use of a common man it took no time to emerge as the mass medium of

communication. The growth of internet is so quick that all other medium of communications

have faded away and today everything is available on web even the traditional competitors of

net, the newspapers and TV channels are now compel to use world wide web to publish and

transmit their programs. In this article we will try to analyze how internet has affected traditional

advertising and marketing strategies. 

Conventional TV and print advertising media can in fact only hope to create understanding and

push consumers to recognize new needs. From then on other elements of the promotional mix

take over such as straight marketing and point of promotions. The quantity of each element of

the campaign can be focused on the part of the procedure that is being addressed. For example

consumer research into brand awareness and attitudes is extremely developed within the TV

arena.

Unlike conventional media, the online marketing encompasses the entire 'sales' process. For this

reason I have used the term 'marketing' rather than 'advertising' because the internet is so much

more than an advertising medium. Marketing campaigns can create awareness then drive

consumers all the way through the process to actually making a purchase online. The vital

difference is that the internet is a distribution channel for products and services, not just a

communication channel.

It is vital that online marketers (just as with any other medium) develop campaigns that have

clear objectives and the metrics chosen must reflect these objectives. For example, if the

campaign is trying to sell mobile phones online, then the basic measure must be an analysis of

the number of mobiles sold against the marketing spend, i.e. return on investment.

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While leading Web marketing firms have realized that the Web can work both for direct

marketing and brand enhancement, others are struggling to form a coherent strategy. The direct

marketing model is legitimate and effective, but we believe that those who are using the Web

only for direct marketing may be significantly under-utilizing the medium and leaving

themselves vulnerable to competitors.

The proven ability to enhance brands through online ads creates new possibilities, but is fraught

with opportunities and threats: opportunities to use online messages to make consumers aware of

your product, to change perceptions and to gain market share; and threats that competitors will

figure it out first - or be more effective in their execution. It is constructive for marketers to think

of the Internet as a technology that enables information transfer. 

Because of its unique characteristics, communication can be fashioned along two key

dimensions: the first ranges from proactive to reactive communication, the second from

broadcast communication to personal dialogue. You can reach your target in many ways - from a

broadcast that proactively reaches them on a mass-reach Web site to a personalized e-mail

delivered in reaction to a customer's query. Online is multi-faceted and requires a communication

mix appropriate to your marketing strategy. Effectiveness depends on the right mix.

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6.5 REVENUE MODELS OF ONLINE ADVERTISING

Pay Per Click (PPC) is an Internet advertising model used on websites, in which advertisers pay

their host only when their ad is clicked. With search engines, advertisers typically bid

on keyword phrases relevant to their target market. Content sites commonly charge a fixed price

per click rather than use a bidding system.

Cost per click (CPC) is the amount of money an advertiser pays search engines and

other Internet publishers for a single click on its advertisement that brings one visitor to its

website.

In contrast to the generalized portal, which seeks to drive a high volume of traffic to one site,

PPC implements the so-called affiliate model, that provides purchase opportunities wherever

people may be surfing. It does this by offering financial incentives (in the form of a percentage

of revenue) to affiliated partner sites. The affiliates provide purchase-point click-through to the

merchant. It is a pay-for-performance model: If an affiliate does not generate sales, it represents

no cost to the merchant. Variations include banner exchange, pay-per-click, and revenue sharing

programs.

Websites that utilize PPC ads will display an advertisement when a keyword query matches an

advertiser's keyword list, or when a content site displays relevant content. Such advertisements

are called sponsored links or sponsored ads, and appear adjacent to or above organic results on

search engine results pages, or anywhere a web developer chooses on a content site.

Although many PPC providers exist, Google AdWords, Yahoo! Search Marketing,

and Microsoft adCenter are the three largest network operators, and all three operate under a bid-

based model. Cost per click (CPC) varies depending on the search engine and the level of

competition for a particular keyword.

The PPC advertising model is open to abuse through click fraud, although Google and others

have implemented automated systems to guard against abusive clicks by competitors or corrupt

web developers.

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Cost per impression, often abbreviated to CPI or CPM for Cost per thousand impressions, is a

phrase often used in online advertising and marketing related to web traffic. It is used for

measuring the worth and cost of a specific e-marketing campaign. This technique is applied

with web banners, text links, e-mail spam, and opt-in e-mail advertising, although opt-in e-mail

advertising is more commonly charged on a cost per action (CPA) basis although sometimes

CPM is used.

An online advertisement impression is a single appearance of an advertisement on a web page.

Each time an advertisement loads onto a user's screen, the ad server may count that loading as

one impression. However, the ad server may be programmed to exclude from the count certain

nonqualifying activity such as a reload, internal user actions, and other events that the advertiser

and ad serving company agreed to not count. For online advertising, the numbers of views can be

a lot more precise. When a user requests a web page, the originating server creates a log entry.

Also, a third party tracker can be placed in the web page to verify how many accesses that page

had. There are other advertising pricing structures, which are generally referred to as Cost Per

Action (CPA) :

• CPC - Cost per click Through

• CPL - Cost per lead (lead usually meaning a free registration)

• CPS - Cost per sale

• dCPM - Dynamic CPM

CPI and/or Flat rate advertising deals are sometimes preferred by the publisher/webmaster

because they will receive a more consistent fee proportional to the amount of traffic.

Today, it is very common for large publishers to charge for most of their advertising inventory

on a CPM or CPT basis. A related term, effective cost per mille (eCPM), is used to measure the

effectiveness of advertising inventory sold (by the publisher) via a CPC, CPA, or CPT basis.

This type of advertising arrangement closely resembles television and print advertising methods

for speculating the cost of an advertisement. Often, industry agreed approximates are used. With

television, the Nielsen ratings are used; print is based on the circulation a publication has.

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Cost Per Lead or CPL is an online advertising pricing model, where the advertiser pays for an

explicit sign-up from an interested consumer interested in the advertiser offer.

In a CPM (Cost-per-Thousand) pricing model, advertisers are forced to pay for wasted

impressions. CPC (Cost-per-Click) pricing models, commonly found on search engines, compel

advertisers to pay for clicks from people that might never sign up on the advertiser landing page.

In complete contrast, advertisers can pay only for qualified sign-ups using CPL pricing models.

CPL pricing models are at the pinnacle of the online advertising ROI hierarchy.

CPL advertising enables advertisers to generate guaranteed returns on their online advertising

dollars, which is especially useful in a tough economy. It's no surprise that CPL advertising has

shown explosive growth in recent times - in fact, IDC projects CPL advertising to be the fastest

growing segment of online advertising.

CPL advertising is also commonly called online lead generation.

Cost Per Action or CPA (sometimes known as Pay Per Action or PPA) is an online

advertising pricing model, where the advertiser pays for each specified action (a purchase, a form

submission, and so on) linked to the advertisement.

Direct response advertisers consider CPA the optimal way to buy online advertising, as an

advertiser only pays for the ad when the desired action has occurred. An actioncan be a product

being purchased, a form being filled, etc. The desired action to be performed is determined by

the advertiser.

The CPA can be determined by different factors, depending where the online advertising

inventory is being purchased.

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6.6 SHIFT TO INTERNET ADVERTISING

Internet Advertising and New Media

For the most part, the reason why the effectiveness of mass media advertising is declining is

emergence of the internet and what online users have made of it. Internet usage is said to be at

considerably large annual growth anywhere in the world. This makes it an extremely appealing

channel for advertisers. Of course, shifting to this new media is not as easy as placing traditional

advertisements online. Successful web advertising requires much more than that. It entails a deep

understanding of who the internet user is today.

Truly, internet users are now different consumers from the ones advertisers used to talk to via

TV, radio, and print. What internet advertising firms are faced with are more empowered

consumers who have wide varieties of interests and have greater capabilities to be fully

informed. Today’s consumers are also multi-taskers who have become more impatient and

therefore harder to reach, attract, and engage.

Learning the Value of Internet Advertising

Because of the change in consumer mindset, advertisers are still trying to catch up with the

relatively new media that is the internet. Although those engaged in web advertising have

become bolder and more daring in their approach, it seems this is not enough to regain the

response advertisers used to have when traditional media began.

However, in an attempt to make full use of the vast potential of the internet, firms have learned

the value of web advertising as a platform for directly communicating with their customers and

improving on their social networks. This has led to a whole new means to advertise in a more

subtle and more personal way. Through this, e-CRM (Electronic Customer Relationship

Marketing) also developed.

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The Role of e-CRM in Internet Advertising

e-CRM is a means by which firms use the internet to build stronger brand relationships with their

customers by directly communicating with them and delivering delightful brand experiences at

every interaction. Through this, firms are better able to win their customers’ loyalty which would

result in the business’ long term profitability.

Today, more and more companies are developing online communities around their brands rather

than making do with simple web advertising. Through social media platforms and other online

tools, such brands can easily track what their most loyal customers are saying about them and

they can easily communicate with each other for improvements in products or services and

enhancements to their brand personality.

How Companies are Approaching Internet Advertising

In the end, those looking into web advertising are still faced with barriers to effectively

communicating through this new media. For one, apart from the fact that advertisers recognize

that online consumers dislike interruption (therefore the obsolescence of pop-up ads), the new

consumer is not as well-known as advertisers would like. Advertisers also have not mastered the

new technology and have not developed a means to measure the effectiveness of the new media.

Needless to say, firms seem to be on the right track as they constantly communicate with their

customers. This not only leads to better delivery of goods and services and development of new

products but also the generation of new insights that would lead to fresh ideas for web

advertising.

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6.7 INTERNET ADVERTISING IN INDIA

The online segment in India is likely to cross the 100 million dollar mark by 2010, according to a

study by MSN. The Indian Internet industry, like in the early years of this decade, is convulsed

by less-than-spectacular consumer growth and depressed advertising revenues. But character and

good businesses are built through times of tumult and tribulation, not ease and quiet.

The Internet space in India can be categorized into four categories:

Content and Basic Service Providers: This include horizontal and vertical portals that focus on

providing manufactured content across multiple interest areas such as news, movies, finance and

travel and basic services such as email, stock quotes. (e.g., Yahoo, Rediff, Sify, Indiatimes) This

also includes social sites such as Facebook, Orkut and others. The revenue model for these sites

is almost entirely through display advertising by large brands.

Search Providers: This include general purpose and niche service providers (e.g., Google,

Yahoo, Live and Ask.) These sites earn revenues mostly through cost-per-click adwords.

Local Commerce Providers: These are sites that focus on enabling chiefly two functions:

enabling users to transact amongst themselves, and enabling users to find local businesses (e.g.,

Sulekha, Naukri, Shaadi) These sites earn their revenues through user fees and response

advertising of small to medium businesses (SMBs). 

Ecommerce Providers: These are the sites that sell specific goods, hard and soft, in different

domains such as general purpose ecommerce, airline travel, bus travel and more. (e.g.,

Indiaplaza, Yatra, eBay) These sites earn revenues through transaction commission.

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The problems with large corporate display advertising are as follows:

Marketing heads of big brands do not believe brands can be built online and therefore do not

allocate large spends for online advertising.

Supply of inventory outstrips demand for online advertising, keeping the CPMs depressed; in

fact, the CPMs in India for online advertising have barely budged over the last 10 years.

Since online advertising can precisely be tracked, marketers hold online advertising to a more

rigorous, and less profitable, metrics of cost per click, cost per lead/action.

This is a mindset that will not change quickly. It will change when marketers become sufficiently

analytical – which requires a mindset different from popping champagne at creative award

functions mesmerized by TV – to measure how brand equity is enhanced by different media and

figure that brand equity, especially among the consumers segments of influence and affluence, is

enhanced through online advertising. This will also change when the numbers of online users is

respectable when compared to that of TV and is too big to ignore. Until then, only the biggest

players, such as Rediff, Yahoo and Indiatimes, can make sizable revenues off display advertising

and for them also growth will be extremely difficult to come by as recent earnings reports have

demonstrated.

Especially handicapped are smaller general purpose content and social networking sites that have

neither the huge inventory as the majors (like Yahoo) or highly targeted demographic (like

LinkedIn). The general disinclination of marketers to advertise on general social

networking/media sites is understandable given the unpredictable, personal, untargeted nature of

the content that is typically of lower quality than professionaly produced sites with manufactured

content. Of course, such professional sites are extremely expensive to maintain (see Salon, Slate

and others in US) and are unable to be turn a profit. The problem is that most blogs or other user-

generated content posted by users is of poor quality and is of interest only to a small set of close

friends and the family dog. However, user feedback and comments create a highly viral loop and

make for extremely user experience. The key, as we have found at Sulekha after significant

experimentation, is to integrate good quality member generated content (through system- and

user-driven filters) with syndicated and mashable content into highly targeted verticals. For

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example, Sulekha integrates a sub-section of high quality travelogues, pictures, videos and

advice from members with syndicated travel content from online travel sites, mashed content and

highly pertinent travel offers from ecommerce providers. This created a highly compelling travel

destination that a site with purely user-generated content cannot produce. We have done the

same for Movies, News, Food, Mobiles and Cars…creating high quality, targeted verticals with

user participation that brands in those respective domains are readily advertising in with high

CPMs. 

While SMB advertising in India has enormous potential given there are roughly 70 lakh SMBs of

which only about 2 lakh advertise in some fashion, this customer base needs sustained education

of the benefits of advertising online and reaching to a vast, local and affluent audience. This

translates into the need for a large, very expensive sales force and highly sophisticated backend

systems to manage tens of thousands of customers. In response to this, at Sulekha we introduced

an innovation that allows SMBs to pay only when they get a call/SMS/email from a ready

customer. This assured response advertising model has removed the risk of advertising for most

SMBs and made it easier for them to experiment. Cultivating a large SMB customer base also

reduces the risk many Internet companies have of being dependent on a few major clients and

agencies which whose spends are extremely sensitive to economic downturns.

The problem that plagues all of us in the new media space is that Internet usage is not growing at

a searing pace and Internet usage through mobile phones is non-existent. There are two trends,

however, that offer high promise: large screen mobile phones and small screen light-weight

laptops. What will spur widespread, intense use of the Net in India is portability coupled with

ubiquitous net connectivity at a reasonable cost. My view is that this will happen in the next 18

months. Within the next six months, we will see the sales of sub-Rs. 10,000, 2-pound feather-

weight netbooks with sufficient primary and secondary storage and constant connectivity. And

the sale of sub-Rs. 10,000 large display phones. These two devices will usher in astonishing

explosion of Internet use and the companies that will benefit are those that toiled to build their

brands over the last 10 years. 

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6.8 MARKET SIZE

The 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 2350 Million. During the year 2008-09, the

industry grew at a high rate of 38% reaching INR 3250 Million. 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 4300 Million.

SOURCE: I-Cube 2008

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 INR.65 which is

very less compared to the other developed countries. Understanding the impact of economic

downturn and it effect on budget allocation for marketing activities, online Ad spends per user is

expected to increase marginally to INR.68 for the next year.

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6.9 AMOUNT OF REVENUES AND AD SPENT IN INDIA

SOURCE: I-Cube 2008

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.

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SOURCE: I-Cube 2008

6.10 BREAKUP OF MARKET BY VERTICALS

SOURCE: I-Cube 2008

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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, general merchandise companies and real estate players which are

categorized as “Others” formed 4% of online marketing spend in the financial year 2008-09.

These expenditures are expected to fall to 2% in the next financial year.

6.11 MESUREMENT OF ONLINE ADVERTISEMENTS

Interactive Advertising Bureau(IAB) has issued guidelines for the measurement of online

advertisements that is for counting online ad impressions. The difference between the

measurement technique of online advertisements and that of other media is that the standard

measured the ad itself whereas the measurement of other media meant measuring the

programming or content. With a series of ad format-specific guidelines, advertisers, agencies and

publishers are better able to gauge the performance of their campaigns by standardizing when

and how an ad impression is counted. These guidelines satisfy the needs of the global media-

buying community by offering consistent and accurate data, which in turn, will hasten the growth

of Internet advertising spending by simplifying the buying and selling process for advertisers,

marketers and publishers. The guidelines also offer a detailed definition for counting an ad

impression, which is a critical component in establishing consistent and accurate online

advertising measurements across publishers and ad serving technologies.

The bureau is focused on including participants from the US and Europe. It is expected that the

guidelines charted out by the bureau can be utilized in Indian markets to gather an in-depth

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understanding of online display advertisements. Based on the evolution of online advertisements,

IAB has charted out guidelines for different types of impressions displayed to an Internet user.

These guidelines are exhaustive and include search, display as well as interactive rich

advertisement displays.

The standards included guidelines for:

• Digital Video Ad

• Rich Internet Application Ad

• Rich Media Ad

6.12 KNOWING 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.

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SOURCE: I-Cube 2008

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 they

had 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

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

blocked by browsers.

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DEMOGRAPHIC DISTRIBUTION OF USERS

Growth of Internet in India is predominantly driven by youth i.e. users in the age group of 18-35

years. With higher adaptability to the technological changes, users in this age group are using

different applications available on the Internet. As witnessed in the following graph, College

Going Kids and Young Men form 60% of users who have clicked on online advertisements

followed by older men and school going kids.

SOURCE: I-Cube 2008

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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%

Base: 1.8 Mn Active Users who have clicked on online advertisements

SOURCE: I-Cube 2008

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.

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SEARCHED FOR INFORMATION AFTER WATCHING THE ADVERTISEMENT

Information Searched PercentagesInvestment options like Mutual Funds 13%

Ads for Job Sites 8%Mobile Phone/Instruments 6%Education/Training related 6%

Entertainment Sites 4%Air Tickets Ads 3%

Computer/Laptop/Printer/Scanner 3%Personal Products 3%

Ads for Loans by Banks/Financial 1%Automobile Ads 1%Insurance Ads 1%

Base: 1.8 Mn Active Users who have clicked on online advertisements

SOURCE: I-Cube 2008

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.

PRODUCT PURCHASED

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Products Purchased PercentagesInvestment options like Mutual Funds 38%

Air Tickets Ads 18%Education/Training related 15%

Ads for Job Sites 12%Mobile Phone/Instruments 7%

Personal Products 5%Ads for Loans by Banks/Financial 3%

Automobile Ads 2%Insurance Ads 2%

Computer/Laptop/Printer/Scanner 2%Entertainment Sites 1%

Base: 1.8 Mn Active Users who have clicked on online advertisements

SOURCE: I-Cube 2008

The above table shows the number of Active 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.

CONVERSION

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Product Categories Clicked Online Ads Searched for Information

Product Bought

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%

Base: 1.8 Mn Active Users who have clicked on online advertisements

SOURCE: I-Cube 2008

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 through

financial advertisers is more preferable for Insurance products.

6.13 REACH AND FREQUENCY

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MEDIA REACH FREQUENCYTelevision MORE LESSRADIO MORE LESS

MAGAZINES LESS MORENEWSPAPER MORE LESS

WEB MORE MORE

Reach and frequency are the means by which we develop an advertising schedule that is both

effective and efficient. Reach is simply the percentage of persons in a target population that is

exposed to an advertising schedule at least once. Frequency simply measures the number of

times a person sees your message in a given advertising schedule. One person may see your

commercial three times over your advertising flight. That would be a frequency of three.

In the above table we can clearly see that for Television, Radio etc the reach is very high because

many people are exposed to these types of media. When it comes to frequency these types of

media lagging far behind because there are very few people who actually see an ad on TV or

hear an ad on a Radio, they would just switch channels. As for Magazines the reach is less but

the frequency if more because people would keep referring to the magazines time and again.

When it comes to the Web, the reach and frequency both are on the higher side. To a particular

target audience the reach is more and for a particular website, people keep coming to the

websites n number of times.

Effect on other media

On the basis of the above finding, we can say that people are shifting more towards web

advertising. We can see more and more people glued on to the internet as it is a information

resource centre and with many social networking sites coming up, we can only see the online

advertising budgets of many companies sky rocketing. People are depending more and more on

the internet for news and other updates. We can very well conclude from the graphs below.

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SOURCE: I-Cube 2008

SOURCE: I-Cube 2008

We can see that newspaper circulation has declined over the years and online ad spending has

increased.

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6.14 SWOT OF ONLINE ADS

Strengths:

• Monetary advantage

• Wide spectrum of regonition

• Behavioral advertising

• Ease of advertising

• Easy measurement of advertisements

Weaknesses:

• Cluttered appearance

• SPAM & unsolicited mails

• Internet reach is limited in India

• Cannot replicate print ads

• Misdirection

Opportunities:

• Fastest growing medium for advertising

• Many innovations possible

Threats:

• Technology changes very fast

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7 CONCLUSION

To conclude I would like to say that internet is the future for advertisements in India. But at this

moment it is at a very nascent stage as compared to the situation in other countries. The

advertising revenue of Google and Yahoo combined is more than the prime television channels.

With the advent of broadband internet connection in India and especially in the rural areas, the

future is bright owing to ample opportunities for advertisements on the internet.

With the advent of 3G technology in India, online advertising is surely going to increase further.

Two big advantages of 3G for India would be I the areas of health care and M-commerce. India

being a big market for entertainment and is also a movie crazy country, 3G would be a biggest

source of revenue for the publishers.

Internet advertising is on an all time boom and is bound to take Indian advertising on an all-new

level. If we are to believe the results of a latest research facts show that that approximately 30

million dollar is solely generated by online advertising. Going by this fact one can have an idea

of the immense potential of advertising medium Internet and the future of online advertising. The

main strength of Internet as an advertising medium is its ability to reach out to a vast audience at

one go. Internet advertising is also not bound by limitations such as time and accessibility as one

can surf the net at any time of the day making your advertisement available 24 X 7 unlike

television ads to which the viewers can’t go back or the newspaper ads that go in the waste once

they are read in the morning.

There are a lot of innovations possible in online ads like page peel off, video ads etc. so we

should develop such ads which are mostly viewed or make the users view the ads. This will not

only help the publishers in increasing their revenue and will also help the advertisers to attract

their target customers.

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8 RECOMMENDATIONS

The publishers and also the networks should work on more innovations for the advertisements as

the advertisements now-a-days are more a nuisance than informing or branding. Technology can

go a long way in helping to create more and more innovative advertisements on the internet. The

publishers and the networks should also keep a check on the technology as it is one thing that can

get obsolete very fast.

The market is poised for huge growth, specially considering the fact that the traditional advertisers

(FMCG, Consumer Durables, etc.) still form a small proportion of the overall online display

advertising market in India . Further, the medium has a high viability for opening up a new segment

of buyers altogether – the SMEs which form a substantial chunk of businesses in India.

In order to grow the market, the online display advertising industry in India needs to develop globally

accepted performance measures that also cut across various other media vehicles like television, print

and radio. This would allow true media meshing. With the distinct advantage of online in terms of

the number of hours spent online, immersive experience that online can offer and the contextual

delivery of messages, online advertising is bound to emerge a winner.

Further, the online publishers need to continue developing better user experiences so that online ads

are not seen as a nuisance, rather are sought after.

All in all there are exciting times ahead for the online display advertising in India.

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9 BIBLOGRAPHY

Books:

• Judy Strauss (2009), E-marketing –– 5th Edition, PHI Learning Pvt Ltd

• Adrian.J.Slywatzky (2009), How digital is your business, Crown Business

• Damian Kyan (2009), Understanding the digital market, Kogan Page

Websites:

• www.wikipedia.com

• www.techcrunch.com

• www.articlebase.com

• www.web-advertising.suite101.com

• www.indiatimes.com

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