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Advertising on the Internet: emerging issues
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Sunanda K. Chavan
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Advertising on the Internet: emerging issues - October 13th, 2010

Advertising on the Internet: emerging issues

Internet might be a catchy advertising medium. But, there are quite a few issues that need to be sorted out.

Advertising on the Net is slowly catching on. In developed economies, advertising on the Net accounts for anything between seven and 7.5 per cent of the total advertising cake. Fine, how large is online advertising in India?

Various estimates put the size of online advertising in India between Rs 24 crore and Rs 29 crore, which is much less than one per cent of the total advertising cake. Why is online advertising so small in India? Why aren't the advertisers putting their money on Net advertising? For instance, Hindustan Lever’s advertising budget is upwards of Rs 700 crore and out of this; the company spends not more than Rs 25 lakh on online advertising. Is this because Net penetration in India is not deeper? Yes, to an extent.
Slow motion

However, this might not be the case for long. For, initiatives are on to increase the number of Internet users. It is estimated that Internet subscribers will increase to around 35 million by 2008 from the current figure of one million.

Not only that, a drive is on to make Internet more affordable. For instance, the Reliance group is planning to set up 7,800 cyber kiosks in Madhya Pradesh and BSES is planning to put up 1,000 cyber kiosks in Bombay. And the UK-based WorldTel, in partnership with the Reliance group, is working at building 1,000 community Internet centres in Tamil Nadu.

There is a question here, however. If numbers are the only factor, then how is that Net advertising has picked up in Hong Kong, which boasts of 1.8 million Net users compared to some 3.5 million in India. So, there are other reasons why online advertising is going through a slow motion in India.

One such reason is this: there is no official organization in India that monitors and regulates the online advertising industry. And there is no mechanism available for tracking viewership of advertisements. Says Apurva Purohit, media director with the Mumbai-based FCB-Ulka Advertising: "While television has two people meter services, Tam (IMRB) and Intam (ORG-MARG), there is no possible mechanism to enable working out optimized schedules on the basis of ad viewer ship rather than programme viewership."

True. Only such a mechanism can help to track ad viewership patterns much more accurately and monitor television advertisements effectively. The very reason that ad viewerships in online advertising are not monitored and audited is making quite a few corporate advertisers go slow in latching on to the Internet medium. Says B Venkataramanan, group media manager of the Mumbai-based Hindustan Lever: "I am skeptical about the kind of figures most dot-coms come up with. So, we will be going about online advertising in a planned way."

All these might become things of the past with quite a few studies on online advertising in the pipeline. For instance, AC Nielsen is looking at rating Net advertisers and ORG-MARG is planning to kick off its research on Net advertising.
The cost factor

Absence of a monitoring mechanism apart, online advertising has to live with another hurdle. Many advertisers are not aware of the benefits online advertising can offer over the traditional media. What needs to be done? The advertising industry should take efforts to educate potential Net advertisers about the advantages of advertising on the Net.

Some steps have already been taken in this direction. For instance, advertising networks such as Media2Net, Rightserve and Mediaturf are doing their bid to fuel online advertising in India. Rightserve of Hughes Software is said to be spending nearly Rs two crore on seminars, advertisements and road shows for creating awareness about the online advertising concept.

There is another reason why advertising on the Net has not really picked up. And that is the perception that advertising on the Net is expensive. Is this perception right?
Compare the cost of a banner advertisement on the Net with a television commercial. Though the cost of an advertising campaign on the Net could be anywhere between Rs 15,000 and Rs 1.5 lakh, advertising in the press or television will cost upwards of Rs 50 lakh. Does this not make advertising on the Net cheap? No. For, whether advertising on the Net is cost-effective or not depends on the value per advertising Rupee.

That means, it is essential to express advertising costs on the Net in terms of cost per thousand (CPT). Here is what Amardeep Singh, a Mumbai-based media consultant with Mediaturf.com, has to say: "A thirty- second television commercial will cost between Rs 250 and Rs 300 per thousand, while a ten-second banner on a reputed site such as Rediff.com will cost as much as Rs 500 to Rs 1,000 per thousand."

The implication: value per Rupee spent on advertising is higher in the case of television. That is efficiency is higher in the case of television advertising, while in absolute terms advertising costs are lower as far as the Net is concerned.
Fine, but how are rates fixed for advertising on the Net?

It is a difficult poser considering the fact that rates for advertising on the Net have no rationale behind them. For instance, Rediff.com just adopted the international rate charged by Yahoo.com. Other websites in India just took the Rediff.com's rate as a benchmark and adjusted their rates accordingly. But, the issue here is this: since the number of Net users in India is limited now, these Indian rates are not justified.

What are the emerging trends as far as cost of online advertising is concerned? Currently, rates for a simple banner advertisement on the Net need to come down. Already, Mediaturf is working in this direction. It wants to bring down the cost of Net advertising at least by 50 per cent. Mediaturf believes that when the rates come down, volumes should go up.

And that has been the international experience. In the USA, when the rate for a full banner advertisement fell from US $33.22 to US $30.52 per thousand impressions, online advertising outlays too rose during the same period.

The wastage factor

There are other reasons why advertising on the Net is not currently seen by advertisers as cost-effective. One of them is the quality of desired responses. In many cases, sums spent on advertising on the Net have not been deployed properly. There are instances where advertisements have just been lifted and put on the banner.

Though there are many early adapters in India, there is a big gap between these adapters and the mainstream users. And most advertisers have too small budgets for advertising on the Net to be bothered about wastages.

There could be wastages in online advertising, but one should not forget that interactivity is the hallmark of online advertising and here it is possible to target the audience by demography, psychography and technography. So, advertising agencies need to take into account these factors while developing strategies.

But, wastages can be eliminated and online advertising can be made more effective through various strategies. Some of them are: strategic tie-ups, sponsorships and banner exchanges. For instance, the FMCG major Colgate-Palmolive has entered into a strategic tie-up with the Calcutta-based FirstNet Solutions' portal Yantram.com for promoting its Fresh Energy Gel toothpaste on the portal

. And Coca-Cola has appointed Hungama.com, an Indian portal for promotions and contests, as its e-marketing partner. Coca-Cola has gone ahead and launched a new Web promotion dubbed Maaza Puzzle to promote its popular brand Maaza and has also kicked off a series of e-promotions for the Hindi film "Hum To Mohabbat Karega".

Meanwhile, tie-ups for banner exchanges are also taking place. For instance, Bidorbuy.com has tied up with Indiacar.com and Intel has sponsored a festival section on Satyam Online.

Targeting imperatives

Accurate targeting is another strategy to eliminate wastages in online advertising. Currently, such targeting based on parameters such as geographic location and search keywords is possible.

Yes, Satyam Online is offering customised solutions here and portals such as Indiainfo.com and Rediff.com offer keyword targeting. It is possible now to measure campaign performances on a real-time basis and make necessary changes. Ad networks such as Rightserve are offering such services based on their continuous online reports.

Moreover, targeted advertisements based on the profile of users are also possible. To make this possible, it is essential to have lists such as registered e-mail users and such lists can offer profiles of users.

But the question is how many sites in India have a large base of registered users? Perhaps Rediff.com has a base of eight lakh registered users and Jobsahead.com has a base of about 1.50 lakh users.

Another way wastages can be eliminated is by having advertisements based on the content of the site. Consider the example of an advertisement from Toyota Motor Sales on the weather site Intellicast.com.

This website for outdoor recreation enthusiasts has been running a campaign for Toyota Motor Sales and this campaign depends on the weather. If the weather is sunny, the solara is shown with the top down, and if it is cloudy or raining, the top is shown up. How many such ads are visible on Indian websites?

Profiling tools too should help in cutting down wastages in online advertising. Mediaturf has gone a step further by beta-testing an advertisement in a bid to gauge an user's

behaviour, the number of times he views an advertisement and his preferences in terms of content when he is surfing on a site.

Other waste-eliminating strategies for online advertising are: contextual selling using demographic and psychographic data to match ads with content that fits and dynamic customization or click stream analysis that helps to modify advertisements in real-time.

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