IAMAI: Online banner advertising at Rs 350 crore by 2009

Durgesh Gupta - Televisionpoint.com | Mumbai
The Internet and Mobile Association of India (IAMAI) and IMRB International have released a report on the online banner ad market in India. The findings of the report are based on an annual survey of 65,000 individuals and 12,000 households in 30 cities in India.

IAMAI estimates that the size of the online banner advertising market in 2007-08 will be Rs 235 crore. The agency expects it to grow by almost 49 per cent to Rs 350 crore by the end of 2008-09.

The study also revealed that banking, financial services and insurance (BFSI), online businesses and information technology-enabled services (ITES) with 25 per cent, 25 per cent and 13 per cent shares respectively, were the leading advertisers in the 2008 fiscal.

The other major categories are auto, FMCG (fast moving consumer goods) and consumer durables. The education category is expected to show the fastest growth from 4 per cent to 7 per cent. This is possibly because this category targets the youth segment.

Subho Ray, president IAMAI, said, "In 2007-08, a total of 1.23 crore people clicked on an online advertisement. This was a substantial increase from 56 per cent for the year 2005-2006. Loans by banks and financial institutions and job-sites lead the pack of top 10 categories for which advertisements were seen and recalled. Hotels and holiday packages were top among the products and services that were bought after clicking on an ad."

Ray pointed out that, "Though the online advertising market will grow at a pace of 49 per cent, the growth of online expenditure per user stumbled at 29 per cent. This reflects that spending on advertising is not keeping pace with the rising number of Internet users."

The report shows that the online banner ad spend per Internet user is only about $ 1.20 (Rs 52.50), which could be $ 1.60 (Rs 70) by the end of the year. This figure is quite low as compared to global standards and shows that the ad spends in banner ads are not keeping pace with the growth in Internet users.

The low ad spend on banners could also be attributed to the increased spends in other forms of online advertising, such as social media. In the UK, the online ad spend per user is $ 188, and in the US, it is $ 143.

The report reveals that people are increasingly noticing online banners. In 2006, 56 per cent of the active Internet users clicked on an online ad. In 2007, this figure was 80 per cent. Computed on a base figure of 15.4 million, this implies that 12.3 million people clicked on an ad in 2007, the report says.

The report shows that after seeing these ads, 41 per cent of the users looked for information on job sites, 35 per cent visited education and training sites and 27 per cent looked for information on investments.

Some of these ads were converted into purchases. Around 4.3 per cent bought hotels and holiday packages, 3.8 per cent acquired loans from banks and 1.4 per cent bought computers, laptops, printers or scanners.

The also report reveals that 65 per cent of the users are less likely to buy a product after seeing an online ad. Around 65 per cent said they don't like clicking on online ads as they are distracting and 58 per cent said they usually ignore online ads.

According to an expert in the advertising industry, "The online advertising expenditure per Internet user is far from the satisfactory level because the Internet is yet to become mainstream media. Usage of the Internet is still restricted to urban areas. Apart from this, mobile advertising is posing a big threat to online advertising. The subscriber base of mobile users is huge compared to the number of Internet users."