Online banner ads to touch Rs 430 crore this fiscal year: IAMAI

By afaqs! news bureau , afaqs!, New Delhi | In Digital | December 18, 2009

The total online banner ad spends is estimated to grow by 32 per cent in the current financial, as compared to 38 per cent in the last financial year

The total online banner ad spend is estimated to grow by 32 per cent and touch the Rs 430 crore mark in the current financial year in India, reveals an IAMAI-IMRB 'Online display advertisement' study. The banner ad spend in 2008-09 was about Rs 325 crore. However, this is not the complete picture.

In reality, the banner advertising growth rate (in 2009-10) has actually slowed down. In the last fiscal year, banner ad spend grew by 38 per cent, as Rs 235 crore was routed to display ads in 2007-08.

A spokesperson from IAMAI clarifies that although the study is titled 'Online display advertisement', it primarily considered the banner ad spend market. Other formats of display advertisement, such as video ads, were not incorporated in it.

What could be the reason for this decline in growth? Prasanth Mohanachandran, executive director, digital services, OgilvyOne India thinks that the newer and more effective modes of digital advertising must have contributed to a lower growth rate of banner advertising. He adds that advertisers have started to experiment and must have increased their spending on other formats such as search marketing and social media marketing.

RP Singh, director, business planning, Maxus Interaction believes the same. He says, "While traditional banner advertising may have reduced in terms of growth rate, I feel that on an overall level, digital advertising has grown in 2009-10. To get a clear picture, we should look at the growth of search and mobile advertising as well."

According to an industry estimate, the sizes of search marketing and mobile advertising are expected to reach Rs 325 crore and Rs 50 crore respectively in this financial year.

As expected, the IAMAI study reveals that the growth in banner ad spends in 2009-10 will be driven by sectors such as education (Rs 34 crore), IT/telecom (Rs 68 crore), FMCG (Rs 47 crore) and auto (Rs 39 crore). Education, IT/telecom, FMCG and automobile sectors are expected to record growths of 76 per cent, 41 per cent, 46 per cent and 40 per cent, respectively.

Suyesh Shankar, national strategy director, Starcom IP believes that the faster growth and expansion through the entry of a large number of private players in the education sector could be the key reasons for the sharp rise in banner ad spend in this sector.

He says, "The education sector's expansion is driven by private players, who will spend much more money on ads to attract students. They will spend a significant advertising amount on the Internet as it is the natural habitat of their target audience."

Surprisingly, the study indicates that the traditional online advertisers - banking, financial services and insurance (BFSI) and online publishers - have not increased spends on banner advertisements significantly.

Banner ad spends in the BFSI sector is projected to increase by 17 per cent only and will reach Rs 64.5 crore in 2009-10, as compared to Rs 55 crore in 2008-09. Online publishers' banner spend is anticipated to reach Rs 107 crore in this fiscal year, compared to Rs 84.5 crore in 2008-09. What has led to the low growth of the BFSI sector in this financial year?

Singh thinks that it is the global slowdown, which has a direct impact on the marketing budgets of international banks having operations in India. He says, "Before the slowdown, BFSI online advertising market in India was largely controlled by multinational players such as Citibank, ABN AMRO and Standard Chartered, which were primarily targeting high net worth individuals in India." The economic slowdown has led to a decline in credit cards, personal and home loan selling banner ads.