Online ad

The current Indian online ad space is estimated at Rs 500 cr & is expected (by Zenith Optimedia) to grow to Rs 2250 cr by end of 2010, overtaking spends on Radio, cinema & outdoor ad.

Display or banner, ads account for two-thirds of the market. And Yahoo is the leading force here with revenues upwards of Rs 100 crore, while MSN's revenues are estimated at Rs 25 crore. And search-related advertising (where advertisers pay to get ads inserted next to relevant search queries) is a Rs 50-crore market completely dominated by Google. Many feel this segment will mirror its rapid global growth. Search users and page views are not outpacing the market growth.However, revenues from search are slated to grow very fast.

The worry, and challenge, for Yahoo is that the online ad market is shifting from banners to performance-based advertising (where advertisers can measure the effectiveness of their campaigns based on the clicks they get). This is being driven by automated ad networks, which aggregate websites' inventory and serve them up to advertisers. It's here that Google has made rapid strides with its AdSense network—as well as its own properties like Gmail, Orkut and YouTube—to grab a little under half of the entire online ad pie. "The advertisers' journey begins with too much of Google...there's a stage when it's only Google."

What Yahoo has is lots of content and dominance in the e-mail and instant messenger (IM) spaces. Internet usage patterns in India are completely driven by such tools for communication, and a possible consolidation of e-mail boxes (IM is already interoperable) would have a big impact on other players like Rediff, Indiatimes and AOL. MSN too will gain as Hotmail has decent numbers, but has been losing active users. Hotmail has been steadily losing marketshare, while Gmail has moved up. But Yahoo has been maintaining its lead.

Then, in content, Yahoo has a loyal following for its cricket vertical, online games, photo-sharing site Flickr and has forayed into local languages, while MSN is strong in entertainment, travel, and is pushing video content.

Yahoo also the third-largest mobile content provider in India, a key edge in what is being seen as the future market for the Internet. Globally, both Microsoft and Google are in a furious race to develop mobile advertising and content platforms. In India, Microsoft has its Windows Live platform (with Vodafone), while Yahoo has tied up with Reliance for its OneSearch mobile engine. Last year, Google, signed up for a mobile search deal with Airtel. Says idc's Singh: "Mobile is the place where development would happen in the future. Since this space is still evolving, both Microsoft and Google have a headstart."

Yahoo & Microsoft lack an effective social networking platform to take on Google's Orkut. Microsoft has a small stake in new challenger Facebook.

But what the Yahoo & MSN really need is a cracker of a search engine—and that will be tough. "Google may not lose market share, but Microsoft may be able to protect its office products and software—this was entering into the danger zone with Google coming out with its own set of office products."

In store TV

It helps advertisers catch the attention of time starved commercial-bludgeoned shoppers at the point of sale. Retailers can keep their captive audiences updated on the latest schemes and promos, and get a halo effect in the bargain as they are likely to be seen as modernised and high-tech. If nothing else, they can also sell airtime for client advertising to monetise the network. Not to forget that it helps shoppers feel connected and, above all, empowered.

In-store television networks is a phenomenon that’s fast gaining currency across big retail in India. Though not prodigious by any account—industry estimates put this year-and-a-half-old industry at Rs 50 crore, with 8 to 10 major players flaunting 8,000-odd screens across the country—the potential is easy to gauge. The growth projections are sure to draw more players to retail TV.

Out-of-home television does not compete with TV as a medium. But it helps build the frequency of TV and other forms of advertising because an increasing number of people spending more time out-of-home especially in retail clusters like malls, cafes etc.

But does in-store communication with shoppers actually work?

• Statistics show that 60-70% of brand purchase decision happens in store.
  
• Moving messages attract 40% more attention than static signage.
  
• About 78% of retail television viewers say they find it helpful.
  
• 42% of retail TV viewers prefer to shop in a store that has video displays, according to various dipstick studies done by retail managers and their agencies.

Of course, store TV operators warn that the gains may not be quantifiable all the time. Yet, such narrowcast networks remain the best bet for target marketing because the audience is tightly defined by time, place, and activity.

TAG Media operates 650 screens across Spencer’s, Foodworld, Fabmall, Indiabulls Mart and Trinethra.

Currently, most of these networks play content related to store products and promos as well as stock brand offers. But as the market becomes crowded content differentiation will be key. Says Partho Dasgupta, managing director and CEO, Future Media. “Everyone wants a good deal at every range—be it value for money shopping or at lifestyle shopping. Consumption is also a way of entertainment. Keeping these factors in mind, the content on Future TV is a blend of advertising/promotions, programming and a live element via a news ticker by Times Now.” In fact, the programming on Future TV consists of 4 separate feeds that cater to the 4 different retail formats of Pantaloon, Big Bazaar/Food Bazaar, Central and HomeTown. “While the feed at Pantaloon has more emphasis on lifestyle-based programmes, Big Bazaar lays emphasis on gags and humour-based content,” he adds. To engage shoppers, store networks also host interactive contests for their viewers. Future TV, for example, has hosted contests such as Future Cup contest and Future TV Box Office that have gained tremendous response and have started building loyalty, according to the company.

To make the screens effective, one has to Install screens at the right places & invest enough in content. The store networks are yet to be part of the media planners’ agenda. It’s an emerging medium and most retailers and advertisers are still exploring how to use it to maximise RoI. It should be used tactically to influence shop-floor behaviour rather than as a strategic brand-building tool.

Much of the communication on store networks now is driven by the advertisers and retailers. Media planners are always one step behind (the advertisers and media owners). Only when advertisers, as a matter of policy, set aside a portion of their budgets for advertising over store networks will agencies begin to have a point of view.

Word of mouth most powerful sales tool in India

Nielsen most recently surveyed consumers on their attitudes towards 13 types of advertising – from conventional newspapers and television ads to branded web sites and consumer-generated content.

As a consumer one is exposed to advertising in various media but what touches ones chord is either a very innovative message or a product, which is good value for money. Word of mouth brings with it a big “trust” factor, which is quite often missing in other forms of advertising. Indians by nature, tend to believe a friend or an associate while evaluating a product,” said Sarang Panchal, Executive Director, Client Solutions, The Nielsen Company.

87 % of Internet accessing Indians still trust recommendations from others over any other kind of advertising, making word-of-mouth advertising the most powerful tool in the industry today, according to a recent Nielsen survey. India comes 4th among the top 10 countries globally which trust in recommendations from consumers, with Hong Kong leading the list with 93 %, followed by Taiwan, Indonesia & India. 7 of the top 10 markets that rely most on “recommendations from consumers” are in Asia.

Ads in newspapers rank second (77 %) in India and also globally among all media categories at 63%.

To What Extent Do You Trust the Following Forms of Advertising?

1. Recommendations from Consumers - 87 %
2. Newspapers - 77 %
3. Consumer opinions posted online -73 %
4. Brand Websites - 72 %
5. Magazines - 71 %
6. TV - 65 %
7. Email I signed up for - 58 %
8. Radio - 55 %
9. Brand Sponsorships -52 %
10. Search Engine Ads - 41 %
11. Ads before Movies - 41 %
12. Online Banner Ads - 38 %
13. Text Ads on Mobiles - 24 %

The Nielsen survey found that new platforms like the Internet are beginning to slowly catch up with conventional media in terms of advertising revenues. Though the overall reach of Internet in India is yet to be widespread consumer opinions posted online and brand websites still make it to the list of top 10 countries (at 3rd and 6th position respectively), which trust these unconventional forms of advertising. Global consumer opinions posted online make it to the 3rd most trusted advertising form with 61 %.

“This result clearly shows that Indians are not averse to new forms of advertising and is a welcome sign for marketers to explore different advertising opportunities, which are very cost effective too! Blogs and Social Networking sites are becoming a big tool in the western world to generate consumer opinion, especially regarding new product launches. Though in a nascent state and popular with only certain sections of the society, these have the potential to become an interesting advertising avenue for the marketers” added Panchal.

Income Group in India (1995 - 2006)

Income Groups in India over the past 10 years (Source : EY)
Figures above bar are million households

Ad industry - winds of change - new media, products & consumers

In the past few years, the ad arena has undergone a sea change. The means of communication have expanded & multiplied. It is new distribution channels and additional product & consumer categories that have forced this change.

In this hyper-productive market, a new product is launched almost every day. The change & rise in awareness among consumers is witnessed across all socio-economic strata, regions & towns. The consumers are evolving fast. As a result, they have started dictating market trends. To be the custodian of the brand, one would have to reach out to future consumers before they demand a new idea to match their lifestyles.

Agencies would have to rethink their roles. They must realize that they are not here to tell consumers what they must consume; instead, they are here to keep consumers interested in a particular brand by breaking through the clutter with interesting concepts.

Although approximately 70% of print & TV advertising is admittedly run-of-the-mill & repetitive, brands such as ITC Bingo & IDEA are reflecting a new form of communication. About 10 years ago, communication was far more polite, but today, to break through the clutter & take control of things, creative are sharp. They have to be like this to communicate benefits & to value consumers’ time & needs.

To capture the consumers attention, the ad agencies need to revise the old model of consistency, which revolves around showcasing the same idea or thought for as long as possible. The agencies can now go interactive via digital media. Example: Parachute ad by McCann Erickson (It won Yahoo! Big chair award). It gave consumers an opportunity to send a “gorgeous” wish as video greetings through the Internet. It received over 200,000 hits on its website in the campaign period (Jul – Oct’07), about 66,000 views of the video greetings & 55,000 audio & video mobile greetings in 1 month. These initiatives were reflected in sales, too, which went up 96%.

New media is far more complex in terms of technology & reach. Ads communicated via the Internet & cell phones have a shorter life. Consumers guide the terms of new media. They decide if they want to see a particular pop up ad on their computer screen, or read a promotional message on their mobile.

The trick lies in creating a commercial that will transit from one medium to another, keeping the basic idea intact. For instance, JWT’s gang of girls commercial was created to intrigue & evoke curiosity about the product. It offered a platform for consumers to interact, by guiding them to a website, which was promoted through outdoor, TV & print ads.

The new media road is largely less traveled in India. Though the mobile phone is now emerging as the 4^th screen, ads are still restricted to SMSes.

“To accept this new form of media, we need to be more confident about ideating for something that will cut across all forms of media. Secondly, our infrastructure & mechanism needs to be in place,” says Ashish Mishra, VP Strategic Planning at Mudra.

Acording to industry estimates, BTL(below the line) ad is growing at the rate of 22-25% & is expected to reach 50% in the next 2 years. At present BTL media stands close to Rs 10,000 crores.

Top 5 segment leaders in Print ad space

Segment-wise leaders in Print ads (Source: AdEx India, a div of TAM Media Research)

Year 2004

1. Educational institutions
2. Corporate/ brand image
3. 2-wheelers
4. Cars/ Jeeps
5. Properties/ Real Estate

Year 2005

1. Educational institutions
2. Corporate/ brand image
3. 2-wheelers
4. Cars/ Jeeps
5. Properties/ Real Estate

Year 2006

1. Educational institutions
2. Properties/ Real Estate
3. Corporate/ brand image
4. Cars/ Jeeps
5. Independent retailers

H1 2007

1. Educational institutions
2. Properties/ Real Estate
3. Corporate/ brand image
4. Cars/ Jeeps
5. Independent retailers

Top 5 Print ad space leaders

Company-wise leaders in Print ads (Source: AdEx India, a div of TAM Media Research)

Year 2004

1. Maruti Udyog
2. Bajaj Auto
3. Govt of India
4. LG Electronics
5. Samsung India Electronics

Year 2005

1. LG Electronics
2. Bajaj Auto
3. HP
4. Hero Honda
5. Tata Motors

Year 2006

1. LG Electronics
2. Bajaj Auto
3. Tata Motors
4. HP
5. Reliance Communications

H1 2007

1. Maruti Suzuki
2. Bajaj Auto
3. Tata Motors
4. Reliance Communications
5. HP