Online Advertising Market - India

Transcription

1 Online Advertising Market - India July 2009

2 Executive Summary Market Factors influencing growth Trends Estimated to be worth INR XX bnin 20--and forecast to register INR YY bnin 20-- Online Advertising accounts for just a% Indian advertising industry Fastest growing segment in Indian advertising industry at b% CAGR from Online user base of ZZ mnin 20--despite low penetration rate of just c%; computer literacy & growing penetration in urban areas alone will add significantly to the user base In addition to domestic user base, a large number of expatriate Indians, who consume Indian content, form a target audience Encouraging consumption patterns including usage, frequency and response to advertising Low Internet-user/literacy-rate ratio and low availability of Indian vernacular content exhibits immense potential since majority of users prefer accessing vernacular content SAMPLE BFSI, Online publishers and IT/Telecom are the major revenue contributors Niche & emerging nature of medium coupled with low barriers to entry could lead to greater competition Acquisitions and investments by foreign players as well as Private Equity firms is providing a boost to this nascent industry Competition Largely dominated by search engines and portals d% of the total revenues go to the top 8-10 portals/portal group sites Online Ad networks have started gaining acceptance in the Indianmarket in the past 2-3 years Around X ad networks exist as of 20 --, accounting for e% of the total online ad spend 2

3 Advertising Industry Online Advertising Industry Factors influencing growth Trends Competition 3

4 Online medium currently accounts for just a% of the total market but is the fastest growing sub-segment Overview Online advertising Share of total Although online advertising has been in India since the dot-com era, the market crossed the INR XX bn mark as recently as 20-- The market was worth INR YY bn in 20-- by revenue growing at a% p.a. since 2004 Online medium s share of total advertising market has risen from just b% in 20--to c% in 20-- Market is forecasted to grow at a slower rate of c% p.a. till 20-- primarily due to: Current economic environment Massive reduction in advertising budgets across major client sectors Pressure on prices or ad rates However, online is growing faster than other segments due to fundamental drivers such as: Low input costs for advertisers Increasing awareness of online usage in India among marketers or advertisers Growth in online user or audience base Sources: SAMPLE INR bn a% u 2004 e% Revenues Share of Total Advertising b% v 2005 t% c% w % a% c% b% d% x 2007 d% Online Advertising Market Size e% y 2008 Print TV Outdoor Radio Online Others f% 4% 3% 2% z 1% 0% 2009F 4

5 Although advertising through search engines is dominant, other options include portals, online ad networks and websites Advertising Options = Ad space sold directly to advertiser Search Engine Online Ad Network Portals s SAMPLE Advertiser Online Ad Network = Ad space sold through intermediary Contributes online ad space to the network Online ad networks effectively act as a one-stop interface between multiple advertisers and publishers 5

6 Domestic Internet User Base Large online user base of X mndespite penetration of just a% Increasing penetration to significantly widen user base Literacy & Language Barrier Despite high literacy English usage is low Minimal availability of vernacular content despite majority preferring to surf vernacular medium Factors influencing growth Large Expatriate Population Additional target audience of large and typically wealthier Indian expatriates More access and consumption of online medium, including Indian content Positive Consumption Patterns Higher speed of Internet connections More frequency and longer duration Increase in response to online advertising 6

7 BFSI, Online publishers and IT/Telecom are the major revenue contributors for the online advertising industry in India Trends ` Niche & emerging nature coupled with low barriers to entry in this industry could lead to rise in competition Acquisitions and investments by foreign players as well as Private equity firms is providing a boost to this nascent industry 7

8 The developing online advertising market in India is already witnessing stiff competition among domestic as well as international players Competition Online advertising industry in India is largely dominated by search engines and portals In spite of the online industry s long tail, u% of the total revenues go to the top 8-10 portals/portal group sites Search accounts for almost v% of the total online ad market by revenues Company 1 dominates the search advertising market while Yahoo India has a hold on display and banner advertising Company 2, an Indian based search engine and services portal, managed w% of the total online ad revenues in fiscal year ended March 31 st, 2008 From the past 2-3 years, ad networks have started gaining acceptance in the Indian market Currently, India has close to X online ad networks In 20--, x% of total online ad spends were on ad networks which is expected to increase by Y basis points over the next year SAMPLE Most used search engine Company 1 Company 2 a% b% Online ad networks in India A B C D E Company 3 c% Company 4 d% Company 5 3% Company 6 e% f% Others F G H I J Source: 8