Video, E-Commerce Drive India’s Online Ad Market

by CXOtoday News Desk    Sep 04, 2014

online ad

The online advertising market in India will reach Rs. 3,575 crore by March next year, a 30 percent rise from Rs. 2,750 crore recorded in March 2014, according to joint study by the Internet and Mobile Association of India (IAMAI) and IMRB International, which also estimates that in the next one year, spends on video advertisements will grow 56 percent annually and contribute 12 percent to the overall market share of digital advertisements.

The study ‘Digital Advertising in India’ notes that in the overall digital advertisement market at present, search and display are the top two contributors. While search advertisements constitute 38 percent of the overall advertisement spends, display advertisement constitute 29 percent, followed by social media that contributes 13 percent of the overall digital advertising spends.

The study estimates the proportion of spends on search advertisements will reduce and spends on e-mail, video and mobile advertisements will increase.

The report also shows the contribution of search spends falling 30 percent of the overall digital advertisement spends by March 2014, contributing Rs. 825 crore to digital advertisement market.

The advertising spends on mobile devices are growing at 43 per cent per annum and social media at 41 per cent and touched Rs. 385 crore and Rs. 440 crore during 2014. The advertising spend on video grew at 51 per cent and reached Rs. 303 crore, while that on e-mail grew at 16 per cent to reach Rs. 88 crore.

Online advertising market will also boom as companies are increasing their digital marketing budget in order to satisfy customer needs and also to boost their revenue. A recent Gartner survey predicts digital marketing budgets by companies across verticals to rise by 10% in 2014 from last year, which is a decent figure to begin with.

Experts believe online ads are booming and will continue the limelight only if they’re attached to a video. Take for example, online news sites or web portals, which appear more like a television today than a newspaper. Key websites especially the B2B ones are featuring video much more prominently on their home pages, often prompting visitors to press play before they begin to read, noted IT/Telecom specialist Angshuman Das.

“A major reason is commercial. At a time when other categories of advertising dollars are shrinking, video ads are booming. Websites are adding more video inventory to keep pace with the demands of advertisers. They can also benefit from the higher cost-per-thousands  that ads on those videos command,” he said.

On industry-wise spends, e-commerce, telecom and FMCG and consumer durables are the top three verticals, the study said.

In another report published early this year IAMAI pointed out that digital or e-commerce market grew by 33% to Rs 62,967 crore last year as against Rs 47,349 crore during the corresponding period of 2012. At present, there are over 2.5 crore online buyers and more than 21.3 crore internet users in the country, according to the Association.

According to Accel Partners’ India E-commerce Report 2014, the number of online buyers is likely to grow by more than double to reach about 40 million in 2016. The report further stated that a major part of this growth may come from the increasing use of the online channel by the younger generation mainly in the 19-24 age group.

In tandem with the growing nature of online shopping, one would expect an increase in online ad spending in new categories like fashion, jewellery and home decor. The GMV of online fashion category has doubled since last year and it is expected to grow by 400 per cent over the next three years, thanks to sites such as Flipkart and Jabong, believe experts.

Interestingly, online marketers should take note of the fact the Tier 2 cities seem to be growing faster than Tier 1 cities in terms of e-commerce adoption and tap customers , while customizing and personalizing their services.