online advertising market in india 2012 sample

Online Advertising Market – India

May 2012

2ONLINE ADVERTISING MARKET IN INDIA 2012.PPT

SAMPLE

Executive Summary

Market

Indian advertising industry is expected to witness a growth CAGR of a1% over the period 2011‐2015e

Online advertising industry in India is the fastest growing segment in the advertising industry

It is divided into two types of advertisements namely a2 and a3

BFSI, Travel Telecom, Online Publishers are some of the highest spenders on the online medium for advertisements

Factors influencing Growth

Drivers Large Domestic Internet base

Positive consumer behavior & patterns towards online media

Growing proliferation of internet on mobile

Large Expatriate Population

ChallengesLack of trust in internet advertising

Literacy and language barriers

Trends Emergence of Social Media networking

Internet turning into an effective Sales medium

Growing online marketing activities from corporates

Competition

The industry in India is dominated by search engines and portals

Although India has a large network of players operating strongly in the domestic market, foreign ad networks are also making their way into the Indian market to utilize the large consumer base

Competition in the market is likely to increase with entry of more and more multinationals

Increase in private equity investments

Indian players expanding globally


•Market Introduction

•Market Overview

Indian Advertising Industry

Online Advertising Industry

•Business Model

•Drivers & Challenges

•Trends

•Competition

Traffic Statistics

•Strategic Recommendations

•Appendix


SAMPLE Online Advertising Industry – Overview

•Online advertising is a form of marketing communication on the Internet which intends to: Influence a consumer towards purchasing or taking up an action on the content displayed on the website with respect to products, ideals, or services

•The market is currently dominated by Display ads and comprises rich media, video and classifieds

•Factors such as growing internet base (computers and mobiles), growing popularity of social media networking sites are also fueling growth in the online advertising market in India

Advertising Break Up Segment Growth Rates

Display advertisements dominate the online advertisement market in India

Online Advertising Industry – Growth

INR bn

0

c3

2015e

c2

2011

c1

Others c5 c4

c10c9

c8

c7

S4

S3

S2

S1


SAMPLE BFSI and Travel industry remain the dominant advertisers on the online media in India

Display Advertisements ‐ Overview

• Display advertising market in India is estimated at INR a4 in FY20‐‐ and is expected to grow to INR a5 in FY 20‐‐

• Travel, BFSI and Telecom are the largest advertisers in this medium

• Some new advertisers that are fast evolving in the display ad space include FMCG, Education

FMCG is expected to account for a6% and Education for a7% in the display advertising spends in FY20‐‐

14%

12%

8%

Text Advertisements ‐ Overview

• Text advertising market in India is estimated at INR a8 in FY 20‐‐ and is expected to reach INR a9 in FY 20‐‐

• BFSI leads this form of advertising by holding the maximum share followed by the Travel sector

• However, industry sectors such as Telecom, Auto are fast catching up

Telecom accounted for a10% and Auto to account for a11% of text advertising spends in FY20‐‐

Display Advertisements Spends (FY 20‐‐) Text Advertisements Spends (FY 20‐‐)

High

Medium

Low

Spend

High: more than 10%; Medium: 5‐10%; Low: less than 5%

14%

12%

8% Low

Spend

High: more than 10%; Medium: 5‐10%; Low: less than 5%

High

Medium


SAMPLE X1

Description

ADVERTISER

X2

Description

X3

Description

Advertising through search engines is dominant with other options including portals, online ad networks and websites

ONLINEAD

NETWORK

WEB SITE

WEB SITE

WEB SITE

• Sells aggregated x4 to advertisers

• X5 sold in return for a fee or commission

• Offers affiliated services or solution to both parties –advertisers & publishers

In this case, ad space is sold directly to the advertiser

wherein the advertiser directly contacts the media

Herein ad space is sold through the intermediary wherein there is an ad network who

connects the 2 parties

Online ad networks effectively act as a one‐stop interface between multiple advertisers and publishersOnline ad networks effectively act as a one‐stop interface between multiple advertisers and publishers

ADVERTISING OPTIONS


Drivers & Challenges – Summary

Large Expatriate Population

Growing proliferation of internet on mobile

Positive consumer behavior & patterns towards online media

Large domestic internet base

Drivers

Literacy and language barriers

Lack of trust in internet advertising

Challenges


SAMPLE

Growing internet base coupled with options including mobile internet is providing fillip to the market

Large Domestic Internet base Impact

Total Internet Subscribers – India Number of Broadband Subscribers – India

•The user base of internet in India is constantly increasing and as such it offers a lot of opportunities for online players

•The prevalence of cyber cafes have helped internet penetration in small towns and villages, skewing the users‐to‐subscribers number to more than 4 timesMoreover, reducing cost of PCs and internet tariffs has helped in popularizing it in India

•Therefore, increasing internet penetration in India has motivated consumers to use it as a medium for various activities such as online shopping, online ticket booking etc

02015e2014e2013e2012e2011201020092008

Subscriber Base mn

Urban Subscribers

Rural Subscribers Subscriber Base mn

0

d1

2015e2014e2013e2012e20112010200920082007


Trends – Summary

Emergence of Social Media networking

Increase in private equity investments


Internet turning into an effective Sales medium

Indian players expanding globally Key

Trends


SAMPLE Online marketing activities help companies to provide real time insights to their consumers on their products


Online marketing

activities on the rise

•Corporate concerns in the current market scenario have realized the importance of correct and efficient marketing activities in order to promote their products and services Since more number of consumers are now preferring the online medium to make their purchases as well as for searching information, companies are looking to create appropriate visibility for their products

•Companies are finding the online medium more efficient in comparison to television and print ads as it can engage the consumers actively thereby promoting real time engagement and awareness about the products Moreover, Internet is a cost effective advertising medium for the companies and helps in immediate interaction with end users

Some of the activities observed in the online advertising domain are as follows

Advertisers promoting social messages

• p1• p2• p3

Aim to increase brand exposure

• p4• p5

Auto, banking, insurance, education and travel

• p6


SAMPLE Private: Domestic Company – Player 1 (1/3)

Key People

Products and Services

Company Information Offices and Centres – India

Registered Address

Tel No.

Fax No.

Website

Year of Incorporation

Name Designation

Registered Address

New Delhi

Category Products/Services

Advertising Online Advertising


SAMPLE

Financial Snapshot Key Ratios

Financial Summary

• Company incurred a net profit of INR f1 in FY 2011, as compared to net profit of INR f2 in FY 2010

• It reported total Income of INR f3 in FY 2011, registering an increase of f4% over FY 2010

• Earned an operating margin of f5% in FY 2011, a decrease of f6 percentage points over FY 2010

• The company did not report any debt to equity ratio both in FY 2011 and FY 2010

Particulars y‐o‐y change (2011‐10)

2011 2010 2009 2008

Profitability RatiosOperating Margin ‐3.76 2.54% 6.30% 6.46% N.A.

Net Margin ‐3.61 1.42% 5.03% 5.35% N.A.

Profit Before Tax Margin ‐3.76 2.54% 6.30% 6.46% N.A.

Return on Equity ‐88.66 49.71% 138.38% 146.62% N.A.

Return on Capital Employed 19.22 ‐13.20% ‐32.42% ‐119.06% N.A.

Return on Working Capital ‐19.24 9.82% 29.06% 44.13% N.A.

Return on Assets ‐15.70 8.82% 24.52% 25.94% N.A.

Return on Fixed Assets ‐365.25 328.56% 693.80% 555.88% N.A.

Cost RatiosOperating costs (% of Sales) 3.76 97.46% 93.70% 93.54% N.A.

Administration costs (% of Sales)

N.A. N.A. N.A. N.A. N.A.

Interest costs (% of Sales) N.A. N.A. N.A. N.A. N.A.

Liquidity RatiosCurrent Ratio ‐1.69% 1.41 1.43 1.47 1.54

Cash Ratio 137.90% 0.15 0.06 0.21 0.15

Leverage RatiosDebt to Equity Ratio N.A. N.A. N.A. N.A. N.A.

Debt to Capital Ratio N.A. N.A. N.A. N.A. N.A.

Interest Coverage Ratio N.A. N.A. N.A. N.A. N.A.

Efficiency RatiosFixed Asset Turnover 67.67% 231.31 137.95 103.87 0.00

Asset Turnover 27.41% 6.21 4.87 4.85 0.00

Current Asset Turnover 14.95% 2.01 1.75 2.62 0.00

Working Capital Turnover 19.69% 6.92 5.78 8.25 0.00

Capital Employed Turnover 27.20% 35.00 27.51 27.40 0.00

Improved Decline

Profit / Loss

Total Income

0

1

2

3

4

5

6

20110

20102009

ProfitINR mn

Total IncomeINR mn

Private: Domestic Company – Player 1 (2/3)


SAMPLE Key Recent Developments

Description News

Overview

•Operates as a wholly owned subsidiary of b1 plc whose primary activity includes b2, b3, b4 and b5

• It provides services to more than b6 blue‐chip clients and agencies with over b7 staff across the world

• ‐‐ uses b8 core online advertising channels namely search, affiliate and email

Buy Out

• B9 and b10 have jointly acquired performance marketing firm b11• The Board of b12 has entered into a sale of and purchase agreement for the disposal of one of its trading agencies b13 to that of b14 and to b15 However, both the concerns will continue to run separately wherein b16 will be the MD of b17 and b18 will be headed by b19

Private: Domestic Company – Player 1 (3/3)


SAMPLE Traffic Statistics – Player 1

Ranks Most Viewed Sub‐Domains

Audience Snapshot Technical Details

Global RankGlobal Rank

India RankIndia Rank

ReachReach

Y1

Y2

Y3

Z1 Z2

Age (Years)Age (Years)

GenderGender

Y4

Y5

Unique Page Views/Day(%)

Unique Page Views/Day(%)

Time (mm:ss)Time (mm:ss)

Search Engine Redirection (%)

Search Engine Redirection (%)

Y7

Y6

Y8

Average Load Time (Secs)

Average Load Time (Secs) Y9


Thank you for the attentionThe Online Advertising Market – India 2012 report is a part of Netscribes Business Services Industry Series.For more detailed information or customized research requirements please contact:

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website

morethan10

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ofsales

time

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