The online ad market in India is all set for a quantum leap. Revenues from the online advertising market are estimated to jump four-fold by this year, touching an impressive Rs 50 to Rs 60 crore.

"Last year, the online advertising market generated around Rs 15 crores, the first year of significant revenue from online ads. By year 2003, the market will show phenomenal gains at Rs 500 crore", said Mr Pankaj Sethi, Chief Executive Officer, media2india.net.

With Nasscom estimating the number of Internet users to reach 23 million by 2003, the market for online advertising is seen to be rapidly growing, says Mr Shvetank Shah, Chief Executive Officer, ZDNetIndia.com.

"India is a bigger market than Singapore. Singapore has about two million Internet users currently while India sports an almost double that figure, of about four million Internet users," Mr Shah told Business Line.

ZDNetIndia.com offers services that help you learn and use any kind of technology. The company also publishes computer and media related magazines. Part of the Microland group, it is a media company that provides online advertising solutions to advertisers and web publishers.

The total advertising market in India is pegged at Rs 6,500 crore which is expected to touch the Rs 10,000-crore mark in the next three years. "Since the on-line advertising market is at a nascent stage in India, the advertising spend by corporates is minimal. But trends show that in three years’ time, about five per cent of the total advertising budget, on an average, will go to on-line advertising," Mr Sethi said.

The sectors that actively advertise on the net can be divided into two segments: Corporates that look for a target audience and those that want a mass audience. Consumer durables, financial companies and the lifestyle sector were the current big advertising spenders on the Net while the fast moving customer goods (FMCGs) were the ones on the lower part of the ad spend list, he added.

"Although FMCG companies such as Cadburys, Parle and Hindustan Lever Ltd (HLL) have started to advertise on the Net, it still hasn’t gained enough importance as a medium from other FMCG companies," he said.

Advertising units that are available on the Net are skyscraper, macro and micro buttons which is in postal stamp size; web commercials and web jingles. The most popular on the Net are the banner ads. Also ‘click-throughs’ which links the user to the advertiser’s Web page are the most preferred, according to an industry analyst.

Mr Sethi predicted that ‘web-jingles’ will become a popular form of advertising once broad bandwidth and fibre optic cables come in. "One will see a surge in the audio advertising market, mainly ‘web-jingles’ by the next one year. It will be a reality once the audio-related delivery systems are at comfort levels in India," he said.

Mr Shah says that as the Internet penetration in India catches up, rates for online advertising are more likely to go down while the volume of the market expands. Online ad rates are ascertained on the basis of ‘CPM’ which is cost per thousand banner ads. CPMs range between Rs 250 and above Rs 1,000, depending on the sites’ popularity.

"Vertical portals or vortals are more likely to charge higher as they cater to the high-end quality users. Also ad rates differ with specific channels, positions, etc.," he said.

The way that advertising agencies currently operate has also taken a new turn since the advent of online advertising. Most agencies realising the potential of the market now have a separate division catering to this medium. Ogilvy and Mather (O&M) has a division dedicated to it called O&M Interactive.

Traditionally, the cost of developing ads for other media such as print and television is pretty low with the high variable cost persisting.

This was unlike online advertising where the cost of developing ads was high, with the variable cost remaining low, Mr Shah added.