At Vishwak, we believe on the potential of the Internet and the innovative advertising
that's possible in Web to keep the Online industry growing. Yes, the slow-down is
affecting this industry too, much worse than expected. Still countries like India,
Indonesia and China are showing reasonable growth even in this recession climate.
And the online Ad industry is very different that it was in the Dot-com days. Today
we have seen for many of our customers in Vishwak, their online revenues constitute
10-15% (the variation depends on how successful is their sales and new products team)
of their overall revenue. For many of them their primary media (Newspaper or TV) currently
yields majority of their revenues but that's been affected by this slow-down. If you
take by medium, globally advertising expenditure in Internet is around 11%
today.
In a recent
forecast released by Zenith Optimedia, a unit of the Publicis Groupe S.A., the
global ad spending is likely to slow by 6.9% to $453.2 billion. Ad expenditure in
India is likely to grow at 6.4% growth (down from 18.9%). The internet
is the only medium we expect to actually attract higher ad expenditure in 2009,
thanks to its accountability and innovation in ad formats. We forecast 8.6% growth
in internet expenditure in 2009, down from 20.9% in 2008. New formats are enjoying
greater growth (29.8% from Internet video and rich media, 29.7% from
internet radio and 11.9% from podcasts), but these represent only 12% of US internet
expenditure between them. Once a modicum of confidence returns to the market we expect
the growth of internet advertising to pick up again, to 11.3% in 2010 and
15.3% in 2011. We expect its share of the ad market to rise to 14.6% in 2011,
up from 10.4% in 2008. However, in recent years the number of sites on the web has
increased about twice as rapidly as internet ad expenditure, most of which goes to
a handful of big players. A number of internet companies that have based their business
model on advertising may find their model unsustainable now that credit is drying
up.
Another report, this one from eMarketer reinforces this by predicting that online
ad dollars will jump about 5% by 2013 (see the above chart). "The spending
shifts predate the recession," says David Hallerman, eMarketer senior
analyst. "But the current economy is reinforcing the new advertising models—and
making them more permanent". "Digital marketing offers compelling
benefits, especially for cash-conscious companies," he continues. "Marketers
can more readily measure the results of Internet advertising than with most traditional
media. This produces more-efficient advertising and higher ROI, which in turn pushes
traditional media to compete with lower pricing."