NEW DELHI - Internet advertising in India
is fast moving from flashy boxes and sponsored
links to the new buzzword: search-engine marketing
(SEM).
By end-2006, US advertisers will
spend US$22 billion of their marketing budgets
online, half of which will be pumped via search
engines. Worldwide SEM is set to cross the $25
billion mark by 2010. India is following the
trend.
In 2005, total online ad
expenditures in India exceeded Rs4 billion
($88 million), of which
Rs2.36 billion was SEM, out of which
Rs720 million was spent by
companies in India, and the rest from enterprises
abroad.
About 90 Indian brands spend more
than Rs1 million a year on search-engine ads.
According to an industry study by the Internet and
Mobile Association of India (IAMAI), more than
40,000 advertisers are posting ads on search
engines in an attempt to grab attention.
The study says that of the 1 billion
searches in a month, more than 300 million feature
ads, of which 5 million are clicked. On average,
an advertiser in India pays Rs16 per ad.
The top spenders are job sites,
matrimonial search engines and banks.
Interestingly, the top five SEM players are
Internet companies: Naukri, Jeevan Saathi, eBay,
Monster and JobsAhead, Google, Yahoo, Citibank,
HP, and World Space Radio.
Industrywide,
the study said the biggest SEM spenders are retail
companies, followed by technology, travel and the
automotive and banking industries, with
non-governmental organizations and property
markets also advertising.
According to a
Business World report, Taj Hotels, Naukri.com and
MakeMyTrip.com were among the top users of search
engines for marketing. Travel sites routinely buy
and deploy more than 3 million keywords each on
search marketing campaigns.
How does SEM
work? Let's say one searches "holiday Mauritius",
which throws up more than 1,000 options. A company
can pay to have a link to its website appear every
time anyone anywhere searches for those words.
This is also known as the "pay-per-click".
SEM involves bidding for the right word on
search engines such Yahoo, Google and MSN. The
greater the number of words that a company bids,
the lower the cost of acquiring results. On
Yahoo's recently launched search-engine marketing
platform, the keyword "travel" had the highest bid
of Rs55.
Another strategy is to buy wider
combinations of words - for instance, "cheap
hotel" - at a higher price, because of better
conversion. One option is to buy misspelt words.
According to the study, the word "hote" had been
bid on for Rs5.50. Even a typo can pay off on the
'Net.
The IAMAI report says many users do
not distinguish between the real results on the
left side of a page and the sponsored links on the
right side, with 5-40% clicking on the sponsored
links.
Some popular keywords in the Indian
online advertising industry are "cheap",
"discount", "flight", "MBA", "laptop" and "home
loan". E-commerce boom Of course,
companies are advertising on the Internet because
there is a direct impact on e-sales. It is well
established that those who study an ad on the 'Net
are likely to buy online.
In 2005-06,
major online shopping sites such as Fabmall,
Rediff, Indiatimes and Sify have enticed Indian
consumers to spend Rs11.80 billion on their
websites. This is just small slice of the retail
market in India that stands at a huge Rs520
billion, but it's more than double the Rs5.7
billion the dotcoms earned via Indian e-shoppers
in 2004-05.
IAMAI reports that in the past
two years, online purchases have nearly
quadrupled, from 200,000 in 2002-03 to 790,000 in
2005-06. According to Goutam Thakar, country
manager of eBay India, "online, a piece of jewelry
sells every six minutes, a mobile handset every
seven minutes, a fashion garment every 13 minutes
and an MP3 player every 17 minutes".
He
said it is not only urban people who engage in
online shopping. Small towns (perhaps with
inadequate real retail presence) are driving the
growth of online shopping portal eBay India with
as many as 40% of shoppers coming from these
sectors.
The National Association of
Software and Services Companies (NASSCOM), an
industry group, pegs the current e-commerce market
in India at more than $500 million a year. That is
up 300% from 2004-05. The business-to-consumer
(B2C) e-commerce market is set to grow to Rs23
billion in 2006-07, according to a study by IAMAI
Power Shopper 2005.
A number of Indian
companies have realized the importance of online
space. Pantaloon, a garment retailer, has plans to
launch "futurebazaar.com" next month. The site
expects to net revenues of Rs3 billion in the
first year. Eight months ago, Aditya Birla Group's
Madura Garments, with brands such as Allen Solly
and Peter England under its umbrella, started
selling online.
Fabmall has introduced the
concept of e-gift certificates, which companies
can distribute to their employees. Fabmall
executives say Infosys, Wipro and ING Vyasa have
already bought the e-gift certificates for their
employees.
By many accounts, the lifestyle
category is emerging as a key area for online
shopping. This ranges from jewelry and garments to
rare stamps and coins. EBay officials say that
small-town shoppers buy online furniture, such as
bean-bag chairs, that may not be available in
their city.
Technology items, such as
mobile phone and cameras, until recently
considered mind-block items that had to be touched
before they could be bought, are now burning up
the 'Net. According to the Internet and Online
Association of India, 40% of online shoppers
surveyed said they bought electronic gadgets
online.
Google, the world's largest search
engine, recently announced the launch of Google
Checkout, which competes with eBay's PayPal online
payment system. A slew of Internet travel firms,
such as MakeMyTrip, Yatra, TravelGuru and
ClearTrip are doing brisk business. The total
online travel market is expected to cross $550
million next year, with online rail and air
bookings increasing their share to 24%.
But the highest sales are still for
cheaper products such as rakhis (armbands
that signify brother-sister bonding) and sweets.
For instance, on Rakhi Day (in August this year),
Sify and Fabmall sold hampers worth Rs7.5 million,
with 35% of the purchasers being non-resident
Indians.
The potential for growth is high.
Online sales during the festive Diwali and Ramzan
period last year saw an 117% increase from 2004.
The Indian online matrimonial market is
estimated to be worth $200 million, and most of it
is still unorganized. Thakur says eBay is
confident of ad revenue of Rs 23 billion in
2006-07. Worldwide, he says, e-commerce is growing
at the rate of 28% but in India, being a younger
market, the growth is projected at 51% in the next
three years.
India's Internet population
currently stands at 38.5 million, a 54% jump from
2004, and is likely to hit 100 million by 2007.
Some 25% of regular shoppers are in the 18-25 age
group, and 46% are in the 26-35-year range, the
most tech-savvy sections of any society.
Priyanka Bhardwaj is a New
Delhi-based writer.
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