The advertising industry entered 2009 with the hope that the economic slowdown would be a big chance for the digital medium. The reasoning was that marketers would cut or optimise advertising spends, which could lead advertising monies to the digital medium, sold on the plank of measurability and accountability.
Did this optimism turn into reality? afaqs! reviews the year 2009 to explore what happened to the internet advertising industry.
The big picture
As per the ZenithOptimedia Advertising Expenditure Forecasts report released in December 2009, except internet media, advertising expenditure on all traditional media formats -- TV, print, outdoor and radio -- grew at a slower rate in 2009, as compared to 2008 and 2007.
For instance, the ad spend on internet media -- including display, classified and search marketing -- was estimated to have increased by 25 per cent in both 2009 and 2008. The internet ad spend was estimated at Rs 437.5 crore in 2009, as compared to Rs 350 crore in 2008 and Rs 280 crore in 2007.
In comparison, the ad spend on TV was estimated at Rs 9,013.3 crore in 2009, vis-à-vis Rs 8,501 crore in 2008 and Rs 7,396 crore in 2007. It increased by Rs 512 crore (6 per cent increase) in 2009, while it increased by Rs 1,105 crore (15 per cent increase) in 2008, when compared with the TV ad spends in 2007.
A similar pattern was estimated in print ad spend as well. The expenditure on print advertising stood around Rs 10,297 crore in 2009, as compared to Rs 9,102 crore in 2008 and Rs 7543 crore in 2007.
The digital relevance
Though there is no industry body to track digital ad spends on a regular basis, as per industry observers, only a few sectors, such as automobiles, information technology, FMCG, education and telecom showed an increase in online ad spends in 2009.
Although their spends are minimal, FMCG advertisers have also increased their ad spends on digital media in 2009. Sidharth Rao, chief executive officer, Webchutney, a digital agency, says, "In 2009, many FMCG advertisers switched from plain vanilla banner ads and opted to use the interactive power of digital media to engage their target audience."
"And for IT companies, the spends on digital media could have gone up to 20 per cent of their total spends in 2009," estimates, Sandeep Singh, business head, brand and media solutions, Quasar, a digital agency.
Another significant development for the digital media in 2009 was patronage of political parties - both national and regional. This was significant because political parties have traditionally been in favour of mass media. In 2009, most political parties such as Congress (I), Bharatiya Janata Party (BJP), Nationalist Congress Party (NCP) and Shiv Sena used online marketing for Central or state assembly elections.
"Together, all political parties spent around Rs 40-50 crore on digital media in 2009," estimates Atul Hegde, chief executive officer, Ignitee Digital Solutions, the agency which handled the digital marketing campaign of the Congress.
The other positive development for the digital industry last year was that marketers did not just concentrate on just a few online or prominent publishers for digital advertising. They leveraged the service of online ad networks, which became an integral part of marketers' digital media plans in the last year.
Prasanth Mohanachandran, executive director, digital services, Neo@Ogilvy and OgilvyOne (India) points out, "Online ad networks were mainly used by advertisers related to BFSI, IT, telecom and online publishers." He claims, "Advertisers started to route about 30 per cent of their total digital ad spend to ad networks, which also includes Google Network, in 2009."
Akshay Garg, business head, Komli Media, an ad network company, opines, "Brand managers became more comfortable and curious about the possibilities offered by the digital media in 2009. As a result, they explored the option of ad networks, as it offered them the opportunity to expand their reach online beyond popular websites and helped them to target their audience precisely."
He adds, "Prominent ad networks are capable of providing a reach of about 40-50 per cent of the total online population."
That the relevance of digital media has increased can also be gauged from the fact that a few prominent advertisers opted to break their advertising campaigns on digital media in 2009.
"General Motors (India) ran its reassurance campaign titled 'There for you - There for India' first on digital media, and later complemented it by ads in the traditional media," says Gupta.
"We shifted the entire advertising budget from traditional to online media for our NIIT Imperia brand," discloses Santosh Nair, senior vice-president, strategic marketing, NIIT.
Besides, automobile and education sector, a few BFSI companies also shifted their focus to the digital media. As Anisha Motwani, executive vice-president, marketing and chief marketing officer, new markets, Max New York Life, says, "About 5 to 8 per cent of our advertising budget was shifted from traditional media, such as outdoor and television, to online media."
The fluctuating rates
The cost-per-thousand (CPM) ad impression rates continued to decline in 2009. According to industry estimates, the CPM rates on homepages for many horizontal portals saw a decline as high as 40 per cent in 2009.
"The decline in the CPM rates happened mainly between April and September. The CPM rates improved in the post-September period, when the economy started to recover," says a senior online media planner from a leading digital agency.
Even the costs of homepage innovations - which are not sold on the basis of number of ad impressions - also recorded a decline of up to 15 per cent though these discounts were offered only to a few big and regular advertisers only.
Banner advertising formats, such as road block, page takeover and expandable rich media banner ads are usually classified under 'homepage innovations' and are sold on a fixed cost for a full day basis. Carrying out homepage innovations on leading horizontal portals can cost between Rs 2-10 lakh, depending on the type of innovation and the popularity of the site. It is estimated that leading horizontal sites earn about 20 per cent of their total ad revenue from these homepage innovations.
Sanghvi believes that another reason for the decline could be the allocation of ad spends on video advertising. "Portals must have noticed that advertisers started spending a good amount of their money on video advertising. To counter it, they lowered their CPM rates, to attract media planners and advertisers."
The next level of engagement
The year 2009 saw an inclination among a few marketers to use or experiment with the already available online marketing formats such as banner ad, microsite and social media platforms in a more engaging way.
For instance, Reliance Mobile, to promote its GSM services, launched a banner ad, in which it integrated the banner with the mobile phone. The ad enabled internet users to feed their own and a friend's mobile number in a text-box provided in the banner ad and click on a button to make a one-minute phone call to the friend from the banner ad itself, for free. Tribal DDB, the digital agency that handles the online marketing duties of Reliance Mobile, claims that about 1.9 million unique users called through the banner, within a period of one month.
In December, direct-to-home TV service provider Tata Sky experimented with a banner ad in which Twitter was integrated, so that real-time conversation between visitors and Tata Sky's 'Actve Puppet' was made possible, inside the banner itself. The ad was live for only two days (three hours each day) on MSN India's homepage and was aimed to promote the on-demand services of Tata Sky. The campaign was conceptualised and executed by the digital agency, Media2Win.
Another example, where a traditional online advertising format was used innovatively, was of Hindustan Unilever (HUL). In April 2009, the FMCG firm launched a microsite, Stay-Sharp.in, for its premium tea brand, Lipton Yellow Label.
The site carried the world's largest jigsaw puzzle, comprising 25,000 pieces, which internet users were supposed to solve jointly, within a period of eight weeks. The campaign's aim was to convey that the tea brand contains an ingredient named Theanine, which helps a person to stay sharp and focused. About 1.91 lakh online users registered with Stay-Sharp.in to solve the puzzle and make a world record. OgilvyOne, the agency that conceptualized the campaign, claims that the 25,000 - piece jigsaw puzzle is now certified and recorded by the World Record Academy.
In the video advertising space, advertisers experimented with ad formats beyond pre-roll and post-roll. For instance, brands such as Tata Sky, Bharti Axa, Kurkure, Sports Illustrated and Nokia N95 tried branded video player skins. "Advertisers started to allocate about 10 per cent of their total digital ad spend on video advertising in 2009," says Singh.
Although few brands created a higher level of engagement inside the old formats of online advertising itself; various brands tried to put the interactive capabilities offered by social media platforms, such as Facebook and Twitter, to good use.
For instance, Vodafone established a Facebook brand page, titled Zoozoos, in April 2009, and used the brand page to release their popular Zoozoos TVCs exclusively on Facebook, even before they were aired on TV channels.
Zoozoos are special characters with big egg-shaped heads, created by Ogilvy India to convey Vodafone's value added service (VAS) offerings.
Within 15 days of its launch, the Zoozoos brand page was followed by more than 65,000 Facebook members; the number of fans had reached 332,201 by the end of the year.
Various digital media savvy marketers also adopted Twitter.com to communicate with the online audience. Some of the prominent brands, which created their Twitter accounts in 2009, were: Fastrack, Honda Jazz, Kingfisher Airlines, MTV, Mint, Bangalore Mirror, The Hindu, IBNlive.com, UTVi, Cleartrip.com, Travelguru.com and Naukri.com.
The birth of new digital agencies
Not many new digital agencies came up in 2009. Interestingly, Quasar, a WPP and Smile Interactive Technology Group (SITG) owned digital agency, launched its second full-fledged interactive agency, Blazar in November. Setting up a full-fledged, second digital agency is a rare phenomenon in India.
Other than Blazar, two new agencies, 22 Feet and Coffee Digital, were also launched by two creative professionals, who quit their jobs to start these agencies.
22 Feet was set up by Brijesh Jacob, an ex-executive creative director at Grey Worldwide; while Coffee Digital was launched by Kamlesh Mehta, who quit RMG Connect as senior creative director.
The IAMAI and AAAI connection
The end of year 2009 was marked by the coming together of two industry representative bodies -- The Advertising Agencies Association of India (AAAI) and the Internet and Mobile Association of India (IAMAI) - to accelerate the growth of the digital medium in the country.
On how the IAMAI-AAAI collaboration would help online publishers, Sanjay Trehan, head, MSN.co.in, believes, "From a publisher's perspective, it will mean that once we align with the apex ad industry association and their digital constructs, it will ensure a smoother working relationship, timely redressal of grievances, a better collective against delay in payments and a common forum against defaulting clients. All in all, it augurs well for the nascent digital industry and being a part of the larger picture can only help. Also, the voice of the digital publishing industry can be better heard now."