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Digital Advertising
Industry in India
2014
1
Table of Content
Executive Summary ............................................................................................................................. 2
Internet in India .................................................................................................................................. 3
Digital Advertisement Industry Spends .............................................................................................. 4
Industry-wise Ad Spends ..................................................................................................................... 5
Digital Advertisements: Ad Avenues ................................................................................................... 6
Digital Advertisements: Spends & Growth ......................................................................................... 8
Display Ads: Standard Ads to Interactive Ads ..................................................................................... 9
Social Media Advertisement: Spends as per Ad Types ....................................................................... 9
Video Ads: Spends as per Ad Types .................................................................................................. 10
Mobile Ads: Spends as per Ad type .................................................................................................. 11
Ad Spend of Device Form Factor: ..................................................................................................... 12
Ad Effectiveness ................................................................................................................................ 13
Ad conversion Ratio ...................................................................................................................... 13
Attitude towards Ads .................................................................................................................... 13
Digital Advertisement: Region wise split .......................................................................................... 15
Digital Advertisement vs. Traditional Advertisement: US and Indian Context ................................. 16
Research Methodology: .................................................................................................................... 18
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Executive Summary As of June 2014, there were 243 Mn claimed Internet users in India out of which 192 Mn are active
Internet users who access Internet at least once a month. There has been a consistent growth in the
number of Internet users over the past few years. In urban cities, the penetration of active Internet
users is nearly 36% whereas in rural villages the penetration is 6%. There is a large part of the
population that still needs to be included in ensuring a large-scale digital adoption in the country.
The overall ad spend in India across all media is INR 38,598 Cr as of 2013 with a year on year growth
rate of 12%. Ad Spend in Television is the highest with a proportion of 44% of the overall spend.
With the rapid growth in penetration of Internet across Urban and Rural India, Marketers are
focussing more on spending their media budget on different digital avenues. The digital
advertisement spend in India was
INR 2750 Cr by the end of FY’14 with
a Y-o-Y growth rate of 30%. The
overall CAGR for the digital Ad-spend
in India is 25% from FY’2011 to
FY’2013.
Growth in e-Commerce Industry’s ad-
spend in digital media has been the
highest, contributing 18% to the total spend on digital ad followed by Telecom and FMCG &
Consumer Durables. The digital ad spends by the e-Commerce stakeholders has grown by 18% to
reach INR 495 Cr by the end of FY’2014.
Search is one of the most chosen digital ad media both in terms of ad placements as well as the
share (30% of the total size). It is followed by Display Ads and Social media Ads in terms of
proportion. Video ads, although contributing comparatively lower to the overall ad spend, have
been growing at a very high rate of of 56% CAGR since 2011. This form of advertising is expected to
grow as many marketers continue to explore multiple media formats. Further, digital Ad Spend on
Mobile devices is 14% whereas on Desktop PCs, Laptop computers, it is 86%. Although traditional
media still holds strong ground, digital advertising is catching up fast and is expected to overtake
traditional media within the next 5 -10 years.
In the current report, the reporting has been done based on the categories that have been used in
earlier versions – these are also the categories commonly used in the industry. However, given the
increasing convergence across digital platforms; in order to arrive at relevant categories combination
of various formats and platforms might provide a better representation. The attempt has been made
in this report to initiate a discussion in this vein so that the estimations are more relevant.
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Internet in India India is currently home to 243 Mn Internet users where contribution of urban users is 65% and
Rural is only 35% as of June, 2014. Internet users can be divided in two major segments: Claimed
Internet users and Active Internet Users based on the frequency of Internet usage.
Claimed Internet users are not so frequent
users of the Internet, whereas Active
Internet users access the Internet at least
once a month. As of June 2014, the
penetration of Claimed Internet users was
19.1% and penetration of Active Internet
users was 15.1%.
From the numbers given above, India
provides a huge space for the marketers to
pitch their products through digital
marketing campaigns in which online
advertisements are one of the integral parts.
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Digital Advertisement Industry Spends The gradual increase in adaptation of the Internet among urban and rural population has opened the
door to the marketers to go online and spend on digital advertisement.
Digital advertising spend in India was INR 2,260 Cr by the end of FY’13 and it reached INR 2,750 Cr
by the end of FY’14 with a CAGR of 25% y-o-y since 2011.
With mobile devices becoming a predominant mode of Internet access among the users in India, this
number is expected to increase by 30% to reach INR 3,575 Cr by the end of FY’15.
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Industry-wise Ad Spends E-Commerce, Telecom and FMCG & Consumer durables are the top 3 verticals in terms of spending
in digital advertisements till the end of FY’2014. Of these verticals, ad spends by E-Commerce
companies constitutes nearly 18%. While there is overall growth in the absolute numbers in most of
the industry verticals the proportion of certain verticals has dipped a little.
Note:
E-Commerce includes Online retail stores, online classifieds etc.
Telecom include the Telecom & Internet service providers and handset manufacturers
IT/ITeS comprises IT Hardware and Software
Auto segment includes automotive products and auto components
Travel includes Bus, Railways and Air ticket booking along with holiday packages
Others include sectors like print media, manufacturing etc
CAGR is calculated across 3 years data from FY’12 to FY’14.
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Due to large investments by eCommerce companies in targeting new buyers from smaller towns
coupled with newer players venturing into this space, there has been a surge in the digital ad spends
by these companies.
Mobile service providers are witnessing growth in data-related revenue and ARPU. Service providers
have also started reducing prices for 3G services. Further, there are host of low-cost devices that are
being introduced and advertised through digital means.
According to the Industry experts, recent policies by RBI have been favourable to the BFSI Business
environment live relaxing KYC norms for acquiring out stationed customers, removing the lending
cap for loan against gold for non-agricultural purposes, providing flexibility to the guidelines to the
banks to import gold. Also, the online transaction numbers are increasing with assurance to the
security and ease of transaction; banks are finding it easier to target the customers online. Thus, the
sector contribution is quite high.
“My customers are niche and present online. So, I would prefer emphasizing on digital ad spend” –
Marketing communication decision maker of a Mutual Fund company.
With younger population adapting the Internet faster, Marketers of FMCG companies are finding it
easier to reach out to them through online. Thus, Industry experts feel that the company spending
will witness more growth in the digital space than the traditional media. Thus a high contribution is
expected from these in the upcoming financial year.
“Younger population for which the products of the organization targeted are present online, thus
we are planning to increase the advertisement budget for online advertisements” – Marketing
decision maker of a large FMCG company.
Digital Advertisements: Ad Avenues Various avenues for advertisements in the digital arena considered for the report are given below:
Search Advertisements: These advertisements are mostly text based and displayed mainly
as sponsored links on search engines. These take the potential customers to the advertiser’s
website.
Display Advertisements: Advertisements in the form of logos, photographs, banners, flash,
rich media or text placed at various points on a web page.
Mobile Advertisements: Advertisements like SMS, MMS, In-App ads, mobile webpage ads
optimized for viewing on a mobile screen.
Social Media Advertisements: Advertisements in the form of texts, displays, images and
videos displayed on various social media websites viz. Facebook, LinkedIn, Twitter etc.
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Email Advertisements: These advertisements are primarily commercial messages sent to a
group of people through email. These can be used to engage existing customers as well as
potential ones.
Video Advertisements: These can be broadly categorized under the display type but have
the format of a video. These are usually served before, during and/or after an online video
stream.
While the above definitions are being followed in various articles (even in the current one), it is increasingly evident that the digital media is converging ever so rapidly. A more holistic perspective is required to define the digital advertisement market size as the digital media is converging. Considering that the technology is not a hindrance, different platforms are being used to display relevant ad formats. As a result, these definitions are changing the landscape of digital ad planning. The figure, below, illustrates the popularity of using different ad formats across platforms. The time is right to alter the old definitions and bring in newer definitions based on the figure, below. The usage of different ad formats varies across various ad platforms. While all the platforms can be technologically used, the popularity of using it differs. As of now, social networking websites and mobile apps provide the most flexibility in presenting different ad formats and their popularity is also high.
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Digital Advertisements: Spends & Growth Currently, search and display constitute the major share of the total digital advertisement spends in
India. Of the INR 2,750 Cr, Search ads constitute 30% of the overall ad spends followed by Display
ads which contributes 23% and Social Media contributing 18% of overall Digital Advertisement
spends.
The proportion of spends on Search advertisements reduced and spends increased on Email, Video
and Mobile advertisements. As of FY’2014, spends on Video ads has grown by a CAGR of 56% and
contribute 12% to the overall market spends from FY’2012. The proportion of Search spends
reduced to 30% of the total spends i.e. INR 825 Cr of the total INR 2,750 Cr.
The ad spend on Display is going down at a CAGR of 4% from FY’2012. This can be attributed to the
newer forms of digital advertisements that are emerging. Ad spends on mobile devices have grown
by a CAGR of 46% and that on Social Media are at 41% since FY’2012; they amount to INR 385 Cr and
INR 495 Cr respectively as of FY2014. Spend on video is growing with a CAGR of 56% and reach INR
330 Cr by 2014.
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Display Ads: Standard Ads to Interactive Ads As observed earlier that the display ads contribute 23% to the total spends on digital ads and seems
to have matured significantly over the years. The evolution is more due to a shift from standard
display to a more dynamic and engaging ad unit. In order to ensure the content to be more
personalized, various technologies are applied. In terms of the formats, Display ads can be classified
as following:
Image (GIF/JPEG)
Simple Flash
Rich Media without Video
Rich media with Video
Looking at the share of these types of Display Ads, Rich Media without videos constitute a major
proportion followed by Simple flash advertisements. Rich media contributed 40% of the total display
ad share. But marketers feel that the usage of Rich media with video is expected to grow
significantly by the end of 2014-15. Shift can be happen towards putting up more content on rich
media without video followed by Simple flash.
Social Media Advertisement: Spends as per Ad Types According to the marketers, Social media is the place where it is easier to reach out to the
consumers. While 2012 was known for marketers to plunge into the social media market space, FY’
2013-14 is the year for increasing the investments in various avenues of Social media advertisement.
In the current age of SMAC (Social Media, Mobility, Analytics, Cloud), marketers are taking the
advantage of available demographic information of the consumers and generating better insights
with the various social media analytics tools. Thus, this form of medium can easily provide a better
platform in defining marketing strategy. Majority of social media savvy organizations prefer to post
generic updates instead of brand updates on a daily or a weekly basis. They use tools for online
monitoring, response management, or managing social media platforms. Thus, Social media is an
integral part of their strategy formulation.
The type of Social media ads that are been tracked in this report are as follows: -
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Text links
Display (includes Stamp Ads)
Video
Sponsored/ Promoted Tweets & Posts
The total social media spend in India is close to INR 495 Cr by the end of FY’ 2014. Out of the
advertisement types mentioned above, sponsored/ promoted tweets & Posts contributes the lion
share of 40% followed by Displays and Text links.
The share of videos seems to be less but is it expected to reach 20% of the total revenue by end of
FY’ 2014-15. Developing on a sustainable and better connectivity infrastructure in terms of 3G
networks may boost the usage of video content in social Media; since social media is mainly
accessed through mobile devices.
Video Ads: Spends as per Ad Types With the growing population watching videos online, marketers are bundling the online ads with the
video content as ‘forced view’ (pre-rolls, mid-rolls and post-rolls) advertisements. The video
advertising market is currently divided into three main types of video ads:
In-Video Ads (expandable ads and Overlays)
Standard In-Stream Ads (Pre, mid and Post Rolls)
True View Ads
The size of the overall Video spends market has reached Rs 330 Cr. and Standard In-Stream Ads
constitute the maximum proportion. The contribution of standard In-stream (Pre, mid and Post
Rolls) is 75% followed by True view Ads (15%) and In-video Ads (10%).
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Mobile Ads: Spends as per Ad type Mobile ads constitute INR 385 Crores which is nearly 14% of the total spends – they are categorized
as follows:
Mobile Web Ads
SMS/MMS Ads
Mobile TV and Video
In-App Advertisements
In- App Advertisements form nearly 40% to the total spend on Mobile ads followed by Mobile Video,
TV, SMS and MMS ads and Mobile Web Advertisements.
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Ad Spend of Device Form Factor
According to I-Cube 2013, India has 110 Million Mobile Internet users in India and it is expected to
grow every year. The primary drivers for this steady rate of growth are as follows:
Rapid penetration of Smartphones and Tablet PCs
Increase in 3G subscriber base and Introduction of 4G
Low priced smartphones aggravating the mobile Internet traffic among lower income groups
Availability of mobile applications across all the standard operating systems.
Increase in availability of video content, rich media.
Although close to 86% of digital advertisement spend happens for Personal computers which
primarily includes Desktop PCs, Laptops, Netbooks; there has also been an increase in percentage of
spend on Mobile devices (Mobile Phones and Tablet PCs).
Marketers while closely monitoring the digital advertisement market space, are of the opinion that
the introduction of 4G and stability in 3G infrastructure will definitely improve the usage of Mobile
devices in accessing digital ads across avenues like mobile standard in-stream ads and rich media
ads.
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Ad Effectiveness
Ad conversion Ratio
With the numerous avenues of advertisement discussed above, it becomes important for
advertisers, content developers and publishers to measure the effectiveness of the various forms of
advertisement. Below are the scores of various types of advertisements based on I-Cube Net
Commerce Report 2013.
Although sponsored links in search engines have the highest reach in terms of users who have seen
these ads, ads in social networking sites are the ones the users have clicked the most and ultimately
got influenced from.
Attitude towards Ads
Internet users find the online ads to be relevant and informative. Based on the broad attitudes, the
reactions of the users can be bucketed into separate categories: Relevance of the information,
Influenced by the digital ads, Hindrance by digital ads and Being Sceptical of the digital ads.
Close to 60% of the Internet users find online ads being relevant for a particular product search.
Majority of the users are of the opinion that Online Ads are informative.
Most of the Internet users also feel that the Online Ads are interesting and nearly 60% click an ad if it
is relevant to their purpose. It thus, indirectly stimulates the purchase online acting as an influencer.
Thus, making more information available to the customers online will help the marketers to reach
out to the target segment.
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Nearly 40% of the Internet users feel that the online ads are a nuisance mainly due to the fact that it
distracts the users from the content of the webpage. Also they are sceptical about going to the
redirected webpage. Thus, marketers should step up to make online ads more reliable, authentic
and ensure proper content so as to ensure that users feel safe and enthusiastic to access online ads.
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Digital Advertisement: Region wise split Worldwide ad spend is INR 626,853 Cr out of which major contribution is expectedly from North
America, followed by APAC. The Y-o-Y Growth spending is anticipated to be at a quite higher
proportion for Middle, East and Africa. The overall pattern towards the contribution remains the
same.
Although being an underdog in total ad spends, ad spend in the digital avenues has gone up by 71%
from 2013 to 2014. Japan has shown a decline in digital ad spend (by around 7%). China is the largest
spender in the digital ads with 45% of the overall ad spend in APAC in 2013
Digital Ad spend Y-o-Y growth in India is quite similar to that of Brazil. Although ad spend is quite
low, the rate of growth in digital ad spend in Indonesia is among the highest.
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Taking into account the top 3 digital ad spending geographies, the ad spends Y-o-Y growth
proportions show a percentage point increase in the growth for North America while in APAC it is
depicting marginal decline.
Digital Advertisement vs. Traditional Advertisement: US and Indian
Context Looking at the Media consumption in the US which has predominantly been Television and other
traditional media, close to INR 398
Thousand Cr is spent on advertisements in
the Television media. The ad expenditure
in Television will grow by around 3% to
reach around INR 411 Thousand Cr by the
end of 2014.
With advancement of technology and
faster adaptation of technology, Industry
spends in digital advertisement avenues
have reached a figure nearly INR 258.5
Thousand Cr with an overall growth rate
close to 17%. The market size of digital
spending is expected reach to INR 304.3
Thousand Cr by the end of 2014.
The Ad expenditure in India, compared to
that in the developed economies like US, is still at a very early stage with majority of the spend on
advertisements still being made on Television. Ad spends on Television stood at INR 16.9 Thousand
Cr in 2013 and is expected to grow by around 12% to reach INR 18.9 Thousand Cr by the end of
2014. The growth spends in this medium is slowing down over the years. On the other hand, ad
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expenditure in Digital Media is growing at a very rapid pace of 30% and will reach INR 3.6 Thousand
Cr by the end of this year.
Due to the increasing adoption of Internet in India and high ceiling for growth, there is an immense
potential for growth for ads in digital media in the country. With the right impetus on increasing the
awareness and improving the infrastructure for Internet in India, digital media will surely be the
media of choice for marketers and advertisers in India in the next 5 to 10 years.
Challenges with Digital Advertisements
Although there has been a rapid growth in the digital forms of advertisements across product
categories, according to the marketers and industry experts, it is facing quite a few challenges which
are impacting its growth significantly.
Even with a high penetration of Internet or digital users in urban cities, the magnitude of
investments in ad spending do not justify when compared to the other media avenues. Investments
in digital media is still an afterthought in the overall media spends. Spends per digital user is
significantly lower when compared to spends made per television viewer, specifically considering the
context in urban cities. Due to limited spends in digital avenues for advertisement, operational
issues such as training and imparting skills, as well as strategic spending on digital avenues post
significant challenges.
A possible solution is to formulate a measurement platform that offers substantive insights into user
behaviour in interacting with digital media that is converging quite rapidly, as illustrated in previous
sections. The results from this measurement platform, that measures the multi-faceted interaction
across various digital devices presenting disparate content, if communicated effectively could help in
furthering the spends by the large stakeholders in various industry verticals.
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Research Methodology: The findings presented in the current edition of the report have been derived by conducting both
primary as well as secondary research. This report tracks data for the Indian Financial Year,
showcasing the information captured from various data sources for FY 2010-11 (April 2010-March
2011) and FY 2011-12 (April 2011-March 2012). Estimations for FY 2012-13 (April 2012-March 2013)
have also been provided.
Primary Research: Interviews were conducted with Internet users and online ad industry players and
information collected on Internet usage in case of the former and volume of online advertising
business managed by the latter.
Internet Users: Structured Face to Face (F2F) interviews were conducted with 81,000 individuals
among 21,000 households spread across 35 Cities during I-CUBE-2013, a syndicated product of E-
Tech, IMRB International.
Industry Experts: In-depth interviews were conducted with stakeholders of the online advertising
industry in India, including ad agencies, media agencies, online publishers, ad networks, mobile ad
networks as well as advertisers.
Secondary Research: Secondary research was done to understand the structure and dynamics of the
digital advertising market in India. Information from various published sources was used to perform
data validation check. Information collected from both secondary and primary research was
thoroughly analyzed to prepare this report.
CITIES BY STRATA
Top 4 Metros Delhi, Mumbai, Chennai and Kolkata
Other 4 Metros Bangalore, Hyderabad, Ahmedabad and Pune
Small Metros (More than 1 Mn population)
Coimbatore, Jaipur, Lucknow, Ludhiana, Visakhapatnam, Patna, Guwahati, Kochi, Vadodara, Indore, Surat, Nagpur
Non Metros (Between 0.5 to 1 Mn population)
Aurangabad, Belgaum, Aligarh, Bhubaneswar, Raipur
Small towns (Less than 0.5 Mn population)
Alappuzha (Alleppey), Ujjain, Sambalpur, Faizabad, Panipat, Kolaghat, Baleshwar, Philbit, Amreli, Chickmagalur
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About Internet and Mobile Association of India (IAMAI)
The Internet and Mobile Association of India [IAMAI] is a young and vibrant association with ambitions of representing the entire gamut of digital businesses in India. It was established in 2004 by the leading online publishers, but in the last ten years has come to effectively address the challenges facing the digital and online industry including mobile content and services, online publishing, mobile advertising, online advertising, ecommerce and mobile & digital payments among others.
Ten years after its establishment, the association is still the only professional industry body representing the online and mobile VAS industry in India. The association is registered under the Societies Act and is a recognized charity in Maharashtra. With a membership of over 160 Indian and MNC companies, and offices with in Delhi, Mumbai and Bangalore, the association is well placed to work towards charting a growth path for the digital industry in India.
Contact Details
Nilotpal Chakravarti C-36, Basement, East Of Kailash, New Delhi - 110065
Tel: +91-11-40547601 | Fax: +91-11-40547603 | http://www.iamai.in
Published By – Dr. Subho Ray, President, on behalf of Internet and Mobile Association of India
About IMRB International
eTech Group | IMRB International (a specialist unit of IMRB International) is a research based consultancy offering insights into IT, Internet, Telecom & emerging technology space.
Our continuous link with industry and a constant eye on the pulse of the consumer ensures that we can decode the movements of technology markets & consumers. To our clients we offer an understanding of the present market environment and a roadmap for the future.
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Research Team for this Report
Tarun Abhichandani, Group Business Director
Abheek Biswas, Insights Director
Abhishek Mukherjee, Research Manager
Contact Details
eTech Group | IMRB
BIRD - IMRB International
‘B’ Wing, Mhatre Pen Building
Senapati Bapat Marg, Mumbai
www.imrbint.com
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