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Online advertising represents less than 10 per cent of companies' overall corporate ad budgets. However, with the domestic Internet populace crossing the 42-million mark, advertisers are seeing great potential in the sector.
This also explains Google's acquisition of DoubleClick for $3.1 billion, Yahoo's purchase of 80 per cent of Right Media for $680 million and Microsoft paying a whopping $6 billion for aQuantive.
Recently, the ad firm WPP pocketed 24/7 Real Media for $649 million. All the acquired companies have one thing in common - they are all online advertising companies.
Back home, the online advertising market grew to Rs 450 crore (Rs 4.5 billion) in 2007 and is expected to reach Rs 2,250 crore (Rs 22.5 billion) in 2009, according to IAMAI estimates.
Google, probably the biggest online platform, seems bullish about targeted, contextual marketing in India. Contextual advertising, which is core to Google's value proposition, works by connecting buyers and sellers in a relevant way whether a consumer is looking for a product or service.
Focused targeting and performance-based orientation has helped online marketing grow exponentially. Google's advertising platforms, AdWords and AdSense, have enabled businesses around the world to advertise on the same platform and reach users in an effective, relevant way.
"More importantly, Google uses intelligent targeting technology to place ads relevant to the content on partner sites through keyword targeting. For instance, if a consumer is reading about a new car in the market, Google's contextual targeting places a relevant ad of a sedan in India, from an automotive advertiser, adjacent to this article. This allows advertisers to connect with consumers at that particular moment when he is completely receptive to the information," says a Google spokesperson.
A 2007 report by the software industry association group Nasscom estimates the number of broadband subscribers, currently 1 million, to be 20 million in three years. By 2010, the total number of Internet users in India will grow to 100 million.
Vivek Bhargava, CEO of Communicate 2, a search engine marketing company, says, "Indian companies are interested in advertising that is based on the cost of sale and search marketing is the only medium that allows accurate measurement, whereby one can calculate the cost of acquisition of each customer."
Advertisers have started to demand more return on their marketing spend and companies like Google plan to provide tools like a web-based "dashboard" for allowing advertisers to track media buys across all advertising formats. Google's rivals Microsoft and Yahoo, too, have similar plans and are adding companies to deliver the next generation of advertising.
Gaming could be another evolution for online commercials, feels Anurag Bhatnagar, practice lead for Sapient. "In the coming year, online gaming, currently a Rs 21-crore (Rs 210 million) market, will grow phenomenally," adds Bhatnagar.
Clients will seek a new breed of digital agency - one that combines superior creative services with advanced technology and deep programme management, and also deliver personalised brand experiences and measurable ROI-driven online marketing campaigns.
According to Rajiv Dingra, founder and director of WAT Consult, a web 2.0 strategy consulting company, brands want to invest money on engaging online audiences through web 2.0 microsites, social networks, blogs and other such tools.
Dingra, who has worked with brands like Nokia, HSBC, Rediff, Fritolays, Giftex, MAIA Intelligence, Games2win and TribalDDB, says, "2008 should be the year when companies will realise that banning their employees from accessing social networks and blogs isn't a solution and many will move towards setting up their own employee communities in order to tap the vast possibilities of their employee contacts and what it can bring back to the business".
He also seems bullish on corporate blogging. "I expect Indian companies to launch their own corporate blogs. This would help companies to `talk to' their target audience rather than `talking at' their target audience, which they do with conventional one-way communication channels like advertising.