Online advertising revenues are expected to grow by as much as 25 per cent this year. Online ad revenue will be to the tune of Rs 150 crore this year � up from Rs 120 crore in 2004. The figure might even touch an estimated Rs 350 crore in 2009, more than 100 per cent over the 2005 estimate.
Consumer advertisers continue to represent the largest category of advertisers (at Rs 82 crore), accounting for 69 per cent of 2004 annual revenues, up from the 40 per cent last year. The largest categories under the consumer umbrella include retail, automotives, leisure, entertainment, and packaged goods.
As a percentage of 2004 total revenue, computing and financial-services accounted for 22 per cent and 20 per cent respectively, with telecom and pharmaceutical and health care rounding off the total at 4 per cent and 6 per cent respectively. These findings have been revealed in the Online Ad Spend Report 2005 carried out by eStatsIndia, a first generation Internet research and consultancy firm based in New Delhi.
Advertisers today, the report said, have come a long way from the basic nuts-n-bolts online advertising days to serious off-the-shelf online ad spending. From traditional 4 per cent allocations to the online medium (of their total ad budget), today advertisers are not shying away from a 10-12 per cent allocations on their online ad spends.
However, factors like low PC penetration, high broadband tariffs and low content on Internet still inhibits the growth of this market. The online ad spending market in India still has a long way to go, the report said, and went on to add that compared to worldwide trends, the share of online ad spending in India as a percentage of the total ad market is still as low as 3 per cent and leaves a lot to be desired.
According to the report, the online ad spending patterns have always been a typical B2C (business to consumer) phenomenon. However, some leading B2B (business to business) players are picking up the cue from the B2C market and are all set to emulate them. New segments like pharmaceuticals and telecom are also picking up and the market will see increased spend from these segments in the near future.
In 2004-05, the B2C market was around Rs 700 crore. The market is expected to grow at 43.91 per cent to touch Rs 5,499 crore by the end of 2009. E-travel, including railways, airlines (domestic and international), no-frills airlines, hotels, e-tours and travels, constitute the biggest segment in the B2C sector at Rs 550 crore.
The B2B market was Rs 1,600 crore in 2004-05 and is expected to grow at 55.55 per cent to touch Rs 23,710 crore by the end of 2009. In the B2B category, small and medium enterprises (SMEs) are the real growth drivers. The largest revenue earner in this segment is e-procurement, which would soon see more players entering this space.
New B2B players from highly unconventional sectors like agriculture are emerging on the scene who intend to take online ad spend very seriously in the near future. In the B2C space new segments like beauty, spas, cosmetics and wellness segments are the latest ones picking up stakes in the online ad market.
In the online ad spending market, paid search leads the space in India. According to the report, paid search shows very promising growth patterns year on year. However, this trend is expected to slow down over the next two years. Classifieds closely follow the paid search category and the third most important category is that of rich media formats. Job portals lead in terms of online ad spending for classified listings followed by the matrimony market.
Online spend on rich media formats also show very positive growth trends and this will increase over the next few years. This category will comprise a major share in the overall online ad budget of advertisers.
The only shortfall has been in the category of email ads and slotting fees � the fee charged for premium ad placement and/or exclusivity. These two categories are the only ones showing a slow growth pattern although the report felt it would recover in the coming few years.
