Are brand advertisers utilizing the online media effectively?

There are debates whether there are 30 million or 40 million users but the numbers are not small, it’s a sizable number…may be less compared to 120 Million Chinese internet users or total population of India. We are talking about 40% of PC literate/English speaking population already on internet in India.

  •  As per some of the data thrown in conferences I attended in last 6 month..Internet advertising market in India stand at $50-$60 million which is about 1.5 USD per user per year
  •  As per some public domain information…Average internet user generates about 2000 page views in a year.
  • Keeping above data in mind average price of a page view in India is about 0.001 USD or 4 paisa for a impression…On CPM terms it would equate to about a dollar or INR 40 a CPM.
  • Compare this with any available media in India, I think it’s a fraction of cost you would pay to appear on TV, newspaper or even mobile. I have been told that even direct SMS messaging company charge about atleast 4 times this cost.
  • Even if you compare this number to internationally available numbers it’s about 1/4th the rates prevalent in US and Europe.

Well having analysed the numbers lets me try to analyse on what could be the fundamental reasons on why internet advertising is exceptionally cheap in india,

  • As per many reputed research firms internet advertising in developed market already account for 6.5% of the overall ad spend.
  • Indian advertising market is estimated to be more than 5 billion or 20,000 Crores.
  • 6.5% of 5 billion is more than 325 Million, compare this with actual market of 50-60 million. Which accounts for mere 2.5% of spend?

Either I am wrong in the way I am doing analysis or Indian brand advertisers are not utilizing the online media to the full potential. If the scenario continues I could imagine that due cash flow crunch pure online publishers will face issues and there could be underinvestment in fresh content in country.

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