FMCG Internet ad spend to grow four times in 2009-10

By afaqs! news bureau , afaqs!, New Delhi | In Digital | July 01, 2009
Digital Media Outlook 2009, an annual report released by Webchutney, estimates that the Internet ad spend by the FMCG category will increase from Rs 16 crore in 2008-09 to Rs 72 crore in 2009-10

Interactive agency Webchutney has released the findings of its first annual report, called Digital Media Outlook 2009, which figures out the digital advertising usage trends of about 445 brand owners in the country.

The results of the study are based on in-depth interviews of marketers conducted during January-March, 2009. Of the 445 respondents interviewed, 72 per cent were marketing heads, 15 per cent were marketing communication heads and 13 per cent were brand heads.

Although the report revealed that 82 per cent of all the marketers interviewed carried out advertising activities on the Internet medium, their advertising spend on digital media was much below the traditional media spend in 2008-09.

The report estimated that the 445 advertisers in India spent close to Rs 5163.26 crore in advertising. Of that, about Rs 278 crore (5.4 per cent) went into Internet advertising in 2008-09. Television and print took 51.4 and 27.4 per cent of their total ad spends respectively.

It is also revealed that the overall ad spends from the 445 advertisers will fall by 10 per cent to reach Rs 4,653 crore, but the ad spend on digital media will grow by 44 per cent (from Rs 278 crore to Rs 399 crore) in 2009-10.

Of the Rs 278 crore spent on Internet advertising, about Rs 64 crore (23 per cent) was contributed by marketers related to Information Technology (IT) and online business. Banking, financial services and insurance (BFSI) brands put in about Rs 47 crore (17 per cent), while consumer durable and consumer services brands accounted for Rs 53 crore and Rs 19.4 crore respectively of the total Internet ad spend in the last financial year.

Interestingly, the study reveals that the online ad spends by the FMCG category, which contributed about Rs 16 crore (6 per cent) to the total Internet ad spend in 2008-09, will grow four times to reach Rs 72 crore in 2009-10.

In an e-mail response to afaqs!, Sidharth Rao, chief executive officer, Webchutney, says, "I think the FMCG companies shied away from the Internet so far as they were unaware about the usage of the medium optimally for their marketing objectives."

Surprisingly, the ad expenditure by the BFSI sector will decline from Rs 47 crore in 2008-09 to about Rs 30 crore in the current financial year.

Of the total Internet ad spend by the 445 marketers in 2008-09, 26 per cent was routed to develop and maintain brand specific websites, while another major chunk (15 per cent) was towards ad networks. About Rs 39 crore (14 per cent) was spent on display or banner advertising and Rs 36 crore (13 per cent) went to social media marketing. E-mail marketing and viral advertising was pegged at Rs 33 crore and Rs 14 crore respectively. Only 365 marketers out of those who responded divulged the break-up of their spends.

Mobile Internet advertising is still small as only Rs 5.28 crore (2 per cent) went into it. However, the survey estimates that spends on mobile Internet advertising will grow by 600 per cent and reach Rs 37.7 crore in 2009-10.

The report mentions that the majority of marketers perceive the Internet as a source of generating leads. 43 per cent of the surveyed advertisers agreed that they consider the Internet as a lead generation medium, while 26 per cent believe that the Internet is apt for brand building and creating awareness. Only 17 per cent of the respondents mentioned that they will prefer to use the Internet for consumer engagement.

The study was conducted in association with an Internet research firm, JuxtConsult.

© 2009 afaqs!