Online to enhance position in India

01 July 2009

NEW DELHI: Adspend through traditional media will decline by 10% in India this year, while online will see growth of over 40%, a study by Webchutney and JuxtConsult predicts.

The Digital Media Outlook 2009 was based on a survey of the top 500 advertisers in India, which together account for some two-thirds of annual advertising spending in the country.

It values the national ad market at $4 billion (€2.9bn; £2.4bn), with TV taking a 51.4% share, and print a further 27.4%, while online is responsible for just 5.4% of all revenues.

Internet penetration currently stands at 4.2%, or 47 million users, in India, while TV has a reach of over 50%, a total that falls to 40% for mobile, and 20% for print and radio.

However, TV spending levels will decline by 14.3% in 2009, with print registering a drop off of 16.5%, while the web will see its total improve by 44%.

Mobile adspend is also set to increase by 615%, rising from 5 crore rupees (£1m: €744k; £634k) last year to 38 crore rupees in 2009.

Sidharth Rao, ceo of Webchutney, thus predicts this could "be the year when digital finally gets the spotlight."

The banking, financial services and insurance sector contributes 17% of online advertising revenue at present, compared with 6% of total adspend.

By contrast, the FMCG sector delivers 6% of internet ad sales, measured against 33% of all adspend, with the IT sector registering a quarter of all web outlay compared with a 6% share of total annual marketing expenditure in the country.

Some 60% of survey respondents said they used the web to "increase awareness", while 56% employ the medium to boost sales and market share, and 46% to build or differentiate their brand.

However, only 9% saw the internet as a "cost effective" advertising tool, and just 5% viewed it as an "effective" way to target young consumers.

With regard to their specific online activity, 80.9% of participants either currently use or have previously utilised ad networks, with 69.6% saying the same for display ads.

This figure fell to 65.6% when it came to employing one or more of the growing number of social media portals, declining further, to 47.6%, for using mobiles and other similar devices, and to 38.8% for viral ads.

However, over the course of this year, it is predicted that online adspend through the FMCG sector will expand by 353%, while the financial category will cut back its channel outlay by 35%.

Consumer durables will see growth of 19%, with IT companies posting an upturn of 70%, and utilities' firms seeing an uptick of just 1% overall.

Data sourced from Livemint; additional content by WARC staff