Zenith Optimedia estimates Internet advertising at Rs 460 crore

ZenithOptimedia has released its advertising expenditure forecasts for Internet advertising, pegging the industry to be worth Rs 460 crore by the end of 2008. This is a 30 per cent increase over the previous year’s Rs 360 crore.

The report further predicts that Internet advertising will grow to Rs 828 crore by 2009, growing at 44 per cent. After reaching what is probably a peak, the industry will grow by 41 per cent and be worth Rs 1,407 crore in 2010.

ZenithOptimedia has broken up Internet advertising into three categories: display, classfied and search. The media agency predicts that display advertising will contribute Rs 257 crore (56 per cent) to the Internet advertising pie, followed by classified advertising (such as jobs and matrimonial portals) at Rs 110 crore (24 per cent) and search at Rs 92 crore (20 per cent). The equation is estimated to remain about the same for the following two years.

afaqs! spoke to a few industry professionals to gauge their responses to the report. The general reaction was one of disagreement.

Vivek Bhargava, chief executive officer of Communicate2, a search marketing agency, agrees wholeheartedly. “In fact, search is growing faster in India than it is worldwide. Internationally, the share of search is 55 per cent. In India, we expect it to grow up to 60 per cent,” he says.

The reason behind this, adds Bhargava, is that every advertiser is demanding performance and measurability and search advertising provides exactly that. “This year is going to be the tipping point for search. Our clients are increasing spends three-four times on the medium,” he says.

In the classified category, too, only the revenue from advertising has been taken into account, whereas classified sites have other sources of revenue as well, such as premium services and listings.

J Murugavel, CEO of Consim Info (which owns various classified sites, including BharatMatrimony, ClickJobs, Indialist and Indiaproperty), says the figures in the report are not completely representative of the industry. “It depends on how you interpret these figures. Classified sites have mixed revenue, including advertising, listings and subscriptions.”

The mix also depends on the type of classified site. Matrimonial sites, for instance, get only about 10 per cent of their revenue from advertising. Therefore, the online classifieds market must be seen as a combination of all these aspects, rather than just advertising.

Display advertising, one of the earliest forms of Internet advertising, still has a dominant share in the industry. However, it has to keep evolving to stay on top.

Gupta suggests that display ads will keep changing with the introduction of rich media, sponsorships and the like. He also thinks performance based ads will form about 60 per cent of display advertising in the near future.

Bhargava says display advertising needs to become more contextual. “Contextual display advertising will show ads to individuals depending on their profile and preferences. I expect display advertising to become as contextual as search.”

There is no benchmark for the size of the Internet advertising industry in India, but going by the ad revenue estimates of the larger companies (two of the largest companies alone account for Rs 200 crore in display advertising), the given figure may seem a little conservative. Global trends also seem to suggest that search is close to 50 per cent of the industry, and India is catching up fast.