By Mukta Malhotra

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 organisation 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 optimised schedules on the basis of ad viewership 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 sceptical 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 roadshows 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 has 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 customisation or clickstream analysis that helps to modify advertisements in realtime.

Online constraints
As efforts to eliminate wastages in online advertising take off, efforts are also needed to eliminate the attendant constraints. In online advertising, one can stream audio and video technologies together with faster bandwidths and delivery channels in a bid to present the same idea with the use of sound, music and visual imagery and make interactions with the banner possible.

But, this is not possible in India, thanks to the existing bandwidth problems. However, soon bandwidth will cease to be an issue.

Despite the bandwidth constraint, the Coco-Cola television commercial is being aired in Zeenext.com. This initiative has been taken by Mediaturf and a Bangalore-based software programmer, who have found a way to use the Net to air commercials with the dial-up mode and thus overcoming the bandwidth constraint. Anyway, with massive investments coming in bandwidth, there could be a glut soon.

Sure, India has an advantage in online advertising, thanks to the fact that online advertising depends so much on technology and software programming.

So, the days of innovative banners and convergence of real-time advertising are not far. But, effective online advertising calls for skills in consumer and relationship management.

The prospects are of course bright for online advertising. E-commerce will only help the spread of online advertising. Estimates are that in a couple of years online advertising could touch Rs 300 crore, two per cent of the total adspend in the country. And Nasscom's estimates are that online advertising could touch Rs 750 crore by 2002.

That is good news for online advertising.

The DoubleClick Case Study
Here is the DoubleClick Case Study, which looks at global branding in the context of Internet advertising. Excerpts:
Objective: Brand the Virtual Gaming Technology sites throughout the world. Drive traffic and create new business with users in specific countries throughout the world.

Campaign description: As many as 13 different banner ads were created in five different languages (English, Spanish, Arabic, Japanese, and Mandarin Chinese). These ads were targeted at users in over 40 countries on AltaVista Search and other DoubleClick Network sites.

DoubleClick served appropriate language ads to users visiting DoubleClick sites from the countries Virtual Gaming Technologies specified.

For example, an user entering AltaVista from Japan would receive an ad in Japanese, while an user entering from the Middle East would simultaneously receive a Virtual Gaming ad in Arabic.

Results: Over 41,000 users visited the Virtual Gaming Technology site through DoubleClick targeted banners. Over 11,25,000 total banners were served.

Response rates were as high as 29 per cent with an average of 3.6 per cent. The average response rate on the Web is less than two per cent.

Client comments: DoubleClick’s global solution enabled us to target users around the world in their own languages. We attracted new customers from countries that we would have had an extremely difficult time reaching. We are very pleased with the outcome.
Courtesy: the DoubleClick websiteInternet advertising and globalbranding
As an advertising medium, Internet is a treasurehouse of opportunities. It is necessary to understand the medium so that opportunities can be grabbed by the collar. Excerpts from Jupiter Communication and AdRelevance reports:

Internet advertising has the potential to be the most effective form of advertising the world has ever known. These are the words of the senior analyst, David Halprin, author of the eAdvertising Report brought out by eMarketer.

The report also points out that the online trend has exceeded all analyst expectations. Composite 1999 online ad revenue projections from about 15 researchers were US $2.6 billion in January 1999, US $3.1 billion in December 1999 and US $3.6 billion in April 2000.

According to the projections of the eAdvertising Report, US Web advertising spending will reach US $6 billion by year-end 2000 which is an increase of 69 per cent since year-end 1999. By 2004, the market will become 3.5 times its size this year. It will reach US $21 billion.

And it will be the size of the global population that will fuel online advertising globally rather than any particular innovation in online advertising. Jupiter Communication has predicted that the number of people online will grow from 300 million users to 800 million users in 2005. Though this will throw up a lot opportunities, it will be equally challenging.

Driving traffic
The moot question is this: are advertising agencies geared for it? No. The report by Jupiter Communication contends that most companies are ill-prepared to take advantage of all those emerging opportunities.

Everything is not as rosy as it might seem. Despite the fact that the number of advertisers has grown approximately 62 per cent, sizable portion of online companies are still filling ad space with banner ads promoting their own products and services.

Advertising by publishers on their own sites accounts for almost 20 per cent of all available online advertising inventory according to a research conducted by AdRelevance. AdRelevance looked at house advertising on the 500 highest trafficked ad-supported sites between January and April 2000 and arrived at this conclusion.

A survey conducted by IMT Strategies, an international new media research company, sprang a few more surprises. Most of the users on the Internet (45%) discover websites using search engines, the next medium to discover websites was recommendations (19%) and a whopping 20 per cent attribute it to random surfing.

In fact 2.1 per cent cited "by accident" as their primary means of finding new sites and they outranked virtually everything in which marketers are actually spending money on television, banner ads, newspaper and radio, each of which was the top pick of fewer than 1.5 per cent of respondents. Does that mean reduction in Internet advertising by dot-coms?

Online retail advertising
However, it is a different story for the online retail sector. It has been online advertising that is growing their businesses.

It has been observed that the more successful online retailers are using online advertising to both drive traffic and build awareness of the brand while the less successful companies have little or no online advertising.

The latest AdRelevance figures shows that there is a strong connection between online advertising and engaged users. An analysis of the top three visited online retail segments in the month of April - books-music-movies, flowers-gifts-greeting cards and computer hardware-software - uncovered a strong and a very positive correlation of 0.83 between advertising impressions and engaged visitors (-1 would indicate a perfect negative correlation and 0 would indicate no correlation, while +1 would indicate a perfect positive correlation). Of the top three categories, flowers-gifts-greeting cards had the lowest correlation at 0.78, while the more competitive sectors of books-music-movies and computer hardware-software both show high correlations of 0.82 and 0.87, respectively.

New trends
So what is the catch? Industry observers have got a solution brand that can innovate and adapt to the increasingly fragmented media mix online and offline, realise and overcome traditional inefficiencies in the way in which they communicate with consumers globally.

As per the eAdvertising report, growth in the online market will be affected by a number of trends: advertisers and their agencies will continue to tinker with critical issues such as measurement, standards, return on investments and privacy; web ads will be embraced by large consumer marketing companies and attain a more strategic position within corporate marketing budgets; and online advertisers will continue to struggle to achieve a measurable return on investments. The growth rate in the industry will slowdown as the industry stabilises and future trends become more clear.

Meanwhile, Baby Bob, an ad character from the Internet will be making a leap to becoming a television star. Baby Bob, the talking spokesbaby star of ad-supported, free ISP Freeinternet.com's ad campaign, will be the first one to have a prime-time, half-hour television series based on a character originating as an Internet and advertising campaign character.