India is just waking up to online advertising. There's a long way to go, but advertisers are already upbeat about the returns offered by the emergent medium. Indiantelevision.com explores the phenomenon...

Pegged approximately at Rs 700 - 750 million in 2004 with the potential to touch the Rs 1 billion mark in the next couple of years. That's the size of the online advertising market in India.

Internet advertising and marketing is as yet a fledgling concept in India. But, if after the telecom sector, there is any other sector brimming with activity, it is the Internet. And the fact remains that where there are consumers, there are advertisers. Lately, Indian marketers have started believing in the power of online advertising and what better example than that of Hindustan Lever Limited (HLL), India's biggest advertiser. HLL recently invaded the web (and how!!) with the re-launch campaign for the new Close Up.

The Indian market is relatively small compared to the global market and is far behind in terms of research and growth of various verticals in the space. However, in terms of competence, India is at par with most countries.

In a way, online advertising is similar to other forms of communication except for the fact that on the Internet, consumer behaviour follows a model which is radically different from traditional advertising media. For one, interactivity on the Internet is something that cannot be replicated by any other medium of advertising.

HLL's new Close Up online campaign

While FMCGs like HLL have only very recently started putting their money on the Internet, the financial sectors were probably the first ones to take a bold step in this direction. Mediaturf Worldwide COO Ratish Nair says, "The financial services were already on the Internet since they found an excellent synergy between the medium and their objectives. The FMCG and others stayed away for various reasons. However, today, given that the Internet audience has achieved some kind of a critical mass, some of the sectors which kept away from it, have got on to the Internet for communication. It was also due to brand fit. For example: Axe deodorant seems to be a good fit with the online audience. Health care is still not online in a big way, though it seems but natural for them to get online. Auto and other sectors which are big abroad are still not as big in India. However, things seem to be changing with Maruti spending a sizeable amount on the Internet."

Online advertising has no doubt opened new boulevards for focused communication with the target audience. "At a time when ROI (return on investment) is more important than ever, marketers want to put their money where they see results. The online medium gives the advertiser reach, interactivity to engage with their target audience and faster response time," argues MSN South Asia director Shriram Adukoorie.

Also, advertisers are now able to leverage the potential of the online medium to cater to their specific needs. "More and more advertisers are now allocating specific budgets towards the online medium and no doubt this rise has been the truly new, big opportunity for marketers reaching out to a large target audience and looking out for faster execution and quick response generation," adds Adukoorie.

Talking about the potential size of the online advertising market, mOne India (earlier known as M Digital) business head Tushar Vyas says, "There are various numbers floating in the industry. However based on discussion with key players in the industry, we would estimate market sizes of Rs 700 -750 million in 2004. One needs to keep in mind that the lines between marketing and advertising are blurred in the online medium. It's time now to combine online and mobile advertising under one umbrella as most of the mobile advertising initiatives are using the Internet as a backbone."

Internet is one medium which allows marketers to demographically target consumers in multiple ways and the number of users is also increasing rapidly. "Today there are 25 million users in India and they happen to be in the A1 and A2 category which are those who actually have the power to spend money. The next six months will play a very critical role in all media planning that take place and Internet will be one of the mediums that media planners will have to consider," avers Yahoo! India country head Neville Taraporewalla.

The members of the Internet and Online Association - (From L to R): Aninda Shome, Upen Rai, V V Kannan, V Ramani, Neville Taraporewalla and Preeti Desai

To keep abreast with the growing popularity of the Internet in India, portal biggies like Msn.co.in, Yahoo.co.in, Sify.com, Rediff.com, Indiatimes.com and HT.com along with the online media agency Mediaturf Worldwide came together very recently to form the Internet and Online Association (IOA). The organisation has set itself a target of getting 100 million Internet users in India by 2007 and its objective is to expand and enhance content and business realisation through online advertising, e-commerce and mobile advertising. "IOA aims at bringing together the major portals to tackle issues that cannot be addressed individually. Making the industry profitable is among the major goals of the association. This would mean improving ad spend and making e-commerce more efficient for the industry as a whole," says Adukoorie.

But has this medium of advertising arrived in the real sense of the term? Offers Vyas, "Internet has always provided a quality, captive audience and as a medium has started getting attention from the advertiser that it always deserved. The growth can be attributed to initiatives by a few savvy marketers, online divisions of advertising and media agency and media owners.

A glance at the brands mentioned below reveals that the advertiser base for the online medium is widening and an increasing number of advertisers are considering online as a part of their media mix.

Naukri.com and HSBC Bank's online ads on leading portals

MSN India has over 60 advertisers including HLL, Britannia, Coke in the FMCG sector; Maruti and Tata Racing in the Auto sector; ING Vyasa, Citibank and ICICI in the finance sector; Popcorn, Mukta, Virgin Records and Paramount in the entertainment sector and Cox and Kings, Singapore Tourism, Malaysia Tourism and India Tourism in the travel sector. On the other hand, Yahoo! India's clientele includes the likes of ICICI Bank, Citi Bank, ICICI Direct, HDFC Bank, Pepsi, Motorola, Samsung, HLL, ESPN, Discovery Channel, Shaadi.com, Baazee.com, Bharatmatrimony.com, Thomas Cook, the Department of Tourism and many more. Rediff's advertising clientele also includes the likes Citi Bank, Bharatmatrimony.com, Pepsi etc.

Samsung's ad on Rediff.com

On the other hand, Mediaturf Worldwide's client base is also widespread. Nair elaborates, "We have direct clients and also work with agencies like Grey Worldwide, Group M, Initiative Media, and others. Our clients are Citibank, IBM (through Mindshare), ICICI Bank, Prudential ICICI AMC, Tata AIG, HDFC Standard Life, ING Vysya, Metlife, Jetairways, Intel (through Euro RSCG), Kerala Tourism and Department of Tourism (through Grey Worldwide), Maruti (through Initiative Media), Accenture, etc."

mOne primarily works for Group M and other WPP client based in India which means handling two out of top three online advertisers in India. "Last year, mOne had more than 20 active clients and the number is expected to grow this year," says Vyas.

Baazee.com - Big bet on the net

So the fact of the matter is that advertisers are slowly realising the power of the Internet. Also the perception that the online audience consisted primarily of teenagers, is a myth and marketers are now grasping that too. "The Internet audience is primarily Sec A1, A2 and B1 and most of the purchasing power is there. Therefore, while it may not make sense for a brand like Hamam soap to get online; brands like Close-Up and Axe have an excellent fit with the online medium. The current crop of advertisers on the net have treaded cautiously, done small activities and checked the response to the communication and subsequently taken the plunge to spend large monies on the Internet," says Nair.

Speaking about the much talked about HLL's new Close Up campaign on the Internet and what it spells for the online advertising market in India, Rediff.com chief marketing officer Rohit Verma says, "The Internet has the reach of the print medium and the impact of television, hence it combines the advantages of both. The Close Up campaign got a lot of visibility on the Internet." Verma is of the opinion that the print medium is not very popular with today's youth and for an audience that buys products like automobiles, household goods etc., the Internet was the appropriate place to tap them. "This audience is not consuming too much of news but are on the Internet most part of the day, so it is a good place to get their attention," says he.

No doubt HLL is a big spender in the offline space (the largest spender on television); however, in the online space, the company features among the top 10 spenders. Nair says, "All along we have seen financial advertisers on the Internet and the common refrain from non-financial clients was that the medium is suited for financial clients and not for FMCGs, durables, etc. Seeing the likes of HLL on the Internet, I am sure the other clients who have so far stayed away from the online space might well be starting to think about spending here. However, the HLL activity seems to be more of a branding exercise than the performance linked activity which most financial clients do. In that sense, it is an encouraging sign for the industry."

Financial sectors booming on the Internet - ING Vyasa's online ad

At the end of the day what is important is the way one communicates ideas to the clients and excites them which in turn will make them buy into this idea as ROI is what is at the top of the mind for marketers. Says Taraporewalla, "We have to show the clients that the ideas are deliverable and if they won't convert into some form of traffic, eyeballs or mindshare then obviously the client is not going to look at it."

Internet, being an interactive medium automatically falls under a bracket altogether different from that of the traditional media. So the benefits are most likely to be more too. Vyas lists three generic benefits that the online medium offers - interactivity, personalisation and contextual communication clubbed with the fact that the Internet is the only medium which can potentially operate seamlessly across all stages of consumer decision-making process.

Indian Airlines too makes a presence on the Internet

Nair on the other hand, says, "What the Internet offers is not just being a medium for communication but it can also be the 'marketplace'. Not only do you communicate to your audience but can also 'sell' to the audience at the same time. The audience is further empowered in terms of getting all information as and when he needs it to make a qualified judgement. Hence, the Internet covers all the elements of the buying or purchase cycle. This is something which no other medium can do."

"By incorporating an online component into the marketing mix, advertisers can stay closer to the consumers throughout the marketing cycle - from initial brand awareness right up until the actual point of purchase. It also helps to deliver the most focused target audience for its advertisers. MSN India has over 12 million unique users," says Adukoorie citing the advantages that online advertising offers.

It's Pepsi time on Yahoo!

Referring to Pepsi, an elated Taraporewalla says, "If you log on to pepsizone.yahoo.co.in, you will almost feel that you have landed in Pepsi land. The print or any other medium of communication will not be able to do since they are passive modes of communication. Now we have also added multimedia to the Pepsi zone on Yahoo!, wherein one can see a commercial as many times that he wants."

Since advertising on the Internet has finally arrived in the country, the chief worry marketers have had and will continue to harbour is how to monitor advertising on the Internet? But the distinctiveness of the Internet lies is its ability to measure ROI in some form - be it with leads or clicks. While this can become a noose round the neck for online publishers, it has been instrumental in making the financial segment big on the Internet.

I see ICICI...

In the case of Yahoo!, there is an online monitoring system in place internationally. Taraporewalla said, "Once someone becomes an advertiser with us, within 48 hours of the campaign going online, we give them all online statistics for their ad campaign. For example: How many times was the innovation seen, the number of people who clicked on it. The click rates actually communicate how good the communication has been."

MSN's Adukoorie believes that it is rather difficult to put a metric to online advertisements because there are different formats of ad products that the advertisers use based upon their campaign. "However, a common industry body, the Internet Online Association (IOA) has been formed which will provide a third party viewpoint and help understand the medium better," said he.

Technologies like Double Click, Real Media etc. are available for third party monitoring reports and mOne provides these reports to their client and has also set up a system wherein they measure ROI at each stage of activity - that is - cost per impression, cost per click, cost per lead etc. The agency is also in the process of testing some of the mOne proprietary tools from the Europe and US markets. Vyas says, "The setting up the right objective at the beginning of the campaign is very critical and if the benchmark or expectation is wrong then one will never able to get true picture."

Ford Ikon leaves a mark on the net among the Automobiles sector

Nair says, "In terms of monitoring, across the world, top online advertisers use third party ad-servers to count impressions and clicks and other advanced tools if they need to measure other metrics. However, like all good things in life, costs money and advertisers should be willing to spend on it in order to be able to get the benefits of measurements systems." On a lighter note, he says, "The financial sector is very particular about money spent and they tend to check all expenditure for performance to the extent of even tracking the cost per customer acquired or cost of servicing a customer. When they have increased their online spends, I am sure they have overcome their worries."

In terms of reach, the Internet can actually measure the absolute reach of people who were exposed to the communication unlike the traditional mediums of advertising.

The issue then arises whether the ad has been effective or not and whether it has generated brand awareness and brand preference? Here, all the mediums of advertising will be looked at similarly. The only difference is that most clients are comfortable with the offline space, whether or not they have done any research; they are uncomfortable with the Internet medium.

So the question still remains - Has Internet as a medium of advertising arrived in India?