Waiting for the click trick

Written by Rakesh Raman | Updated: Dec 3 2007, 04:28am hrs
Most media companies hate to hear that the online ad market is not picking up steam. Alas, thats true. A microscopic analysis of the market indicates that despite hype and euphoria, the online media business has been a pretty humdrum affair. And the tardy pace at which the global market is moving is visible in India, too. Lets see what figures say. In the current year, with a meagre 6% share, web advertising is expected to fetch only $30 billion globally for online properties. On the other hand, the share of print ads will be a good 40%, while TV will get 38% of the estimated global ad spend of about $450 billion. This proportion also holds true for the tiny Indian ad market of about $4 billion.

Worse, no rosy picture is about to pop up. ZenithOptimedia predicts that online ads worldwide will see a 28% jump this year, while the market for other ad forms will grow only at 3.7%. However, the percentage growth will always be higher on a smaller revenue base. The researcher also forecasts that web ad spend will grow to $43 billion by 2009. It will still be under a tenth of the total pie.

So, has the dotcom promise failed to live up to its hype The answer lies in the market polarisation that is happening. According to the Interactive Advertising Bureau and PricewaterhouseCoopers, in the US, for example, the top 50 sites (of the nearly 150 million sites online) collected over 90% of the online ad revenue in the first half of the current year. Likewise, in India, the top few media groups continue to grab most of the business.

Some media companies tow fragmented brand strategy, creating niche vehicles for even the tiniest market segment. Its hard for them to create sufficient content to attract surfers, so instead of minute-by-minute updates, they become daily, weekly or sometimes even monthly bulletin boards, and surfers trail off. Then there are consolidated properties or portals that cover everything from bread to Bollywood and cricket to computers.

Only those niche products can hope to survive that have a very strong value propositionlike matrimonial or job sites. Plus, simple reproduction of print content for online carriage merely serves as an outreach tool. Moving from pulp to digital form needs special treatment to make content stickier for online readers who are mostly in a hurry. Though specialised information search sites like Google and Yahoo attract millions of visitors and hence advertisers, few Indian companies have had the technological wizardry for such innovation.

Understanding consumer behaviour is also important for online media companies. Visitors who come to scout for a match on a matrimonial site, for example, would not be too eager to click on a shirt brands ad window to compare prices or whatever. If they do, it could be a slip of the mouse. How often does an X corner lead you to the brands site instead of erasing the very ad thats blocking your view This explains why orthodox metrics based on display space/period and clickthroughs (yes, your mis-click actually pays somebody some cash) are turning obsolete.

Nielsen//NetRatings has suggested the time spent on the site by a visitor as an important parameter for advertisers to gauge a sites popularity. But even this is a flawed measurement tool. The upshot is that the online media doesnt seem to have a reliable popularity measurement mechanism (the equivalent of circulation or readership numbers).

Moreover, most advertisers see a distinct advantage in traditional media. Print ads are comprehensive at a single, clear glance. But online ads are digitally convoluted, if not irritants (as pop-ups are). Video ads have bandwidth constraints. So the message is simple: the Internet may be gaining critical mass, but its commercial future is still iffy, at least by way of ad support.

Any new revenue ideas

The writer is a technology market analyst. These are his personal views. Email: rr_thakur@yahoo.com