Online advertising in India: How to make the big leap

The Indian online advertising market size is estimated between 150-175 crores and is growing at more than 50% year-on-year. Almost 70-80% of online advertising is happening on a handful of large sites like Indiatimes, Rediff, Yahoo India , Google India, Sify, Moneycontrol and MSN India. Compared to print and television the number of players and market size is still very small. To exponentially grow the online advertising business, I feel that the Indian Internet portals can do better by focusing on the following:

Selling accountability

Search advertising globally is already as large as banner / display advertising. What makes search advertising so special? Well two main reasons, firstly search advertising is contextual so it leads to better response and secondly and more important the entire cost is based on performance (clicks) i.e. an advertiser only pays when someone clicks on his ad.

The Internet portals who depend on banner advertising will increasingly have to face this challenge – they will made to be more and more accountable by their advertisers who use the medium to advertise and increasingly start using tracking tools to evaluate the performance of their campaigns (in terms of number of clicks/ leads etc). One needs to remember that Internet is the only truly accountable medium for advertisers and further it is so easy to track performance of an internet advertising campaign.

The Internet portals will like the advertising deals to be on impressions (Cost per thousand or CPM basis) rather than on performance (Cost per click or CPC basis). I do not understand this logic, as the advertisers in due course of time will calculate down to the last paisa the cost per unit of performance (per lead or per click) even in the CPM deals. Accordingly the cost of CPM itself may drive down in case of low performance delivery! A manifestation of this can also be happening in form of advertisers insisting on larger banners as they will naturally tend to give better response!

So, rather than lamenting about Internet being over accountable, the Internet portals should actively start selling and positioning Internet on its true strength of accountability. They should also learn from listing models like Naukri etc where the only criteria for advertising is performance!

Self help model : Target small advertisers

How do we grow the advertising pie? One of the ways is obviously to get more and more new advertisers to start advertising online. Currently all Indian portals are grappling with getting the offline big / national advertisers to start spending online. This is proving to be a daunting task itself, however, no one is focusing yet on the smaller advertisers. One of the problems with approaching these people will be the small ticket / order value. The cost of servicing these clients will become very high. This is where Internet technology can come into play. It can allow an advertiser to set up and manage his own campaign on a site. I have not yet seen any such offerings from Indian portals. Maybe we should learn from Google who have thousands of advertisers using self enablement / help model and advertising on their sites.

Of course one can argue that Google’s self enablement model works on text based ads, but I am sure we can extend the same logic to self-enable display / banner advertisement campaigns.