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June 20, 2000
The Rediff Business Special/Neena Haridas
Dot-coms boost sagging ad world fortunes
Skeletons tumbled out of cupboards at pavilions. Bookies began making themselves scarce. Administrators shook in their boots. Fans screamed for blood. But it wasn't just tainted cricketers or bookies on the lam who were shaking like the proverbial aspen leaf as more and more revelations of match fixing came to the fore. Hit almost as hard as the cricketing world was the creative tribe of ad-men.
With cricket icons falling from grace, the advertising industry, which depends heavily on these players for mileage and billing, faced an unprecedented dilemma: corporates began slashing their ad-spends.
However, the dark clouds of gloom upon the ad-men's countenances were swiftly dispelled by the sunny world of dot-coms.
The dream merchants were in for a lifting of spirits, with the advent of big money from the dot-com companies. With a plethora of dot-coms dotting the world, the ad industry has managed to slowly extricate itself from the quagmire of depression.
Says Suhel Seth, chief executive officer, Equus Advertising, "When the cricket controversy broke out, the advertising industry was the first to be hit. With honorable names falling like nine pins, the corporate world quickly drew in the reins. Many of the high-budget ads were stopped because the brands did not wish to bring in any negative publicity. It was like a pall of gloom descending on the industry and many thought that they would have to begin the new fiscal on a low note. But then the dot-com mania happened."
From print, to electronics and outdoor media, dot-coms flooded the market with high-budget ads, contests and interactive campaigns. Says Seth, "A ten-minute drive through the city is enough to get feel of the money that is being pumped into the market. Unfortunately in Delhi, billboards have been banned and, hence, dot-coms have to satisfy themselves with kiosks."
But it does not end with kiosks and billboards (in areas where they are allowed), print campaigns have been hitting the national dailies with amazing frequency. In fact, indya.com shocked the city with a page-one full-page ad campaign in The Sunday Times of India. According to market sources, the advertisement cost Microland in excess of Rs 30 million. The last time a page one was bought by a company was early 1999 when Iridium launched its satellite services in India.
According to market analysts, close to Rs 12 billion has already been pumped into the print medium on account of dot-com advertising. Marketing guru Shunu Sen compares the Indian dot-coms with the US scenario, "According to Competitive Media Reporting (CMR), all dot-com companies in the US that spent money on traditional-media advertising shelled out $ 1.4 billion in the first nine months of 1999, a 291.3 per cent increase from the $ 349.1 million spent in the same time period in 1998. The trend in spending throughout 1999 has been greatly increasing. Hence, in India too, the beginning of the ad blitz will be in the traditional media."
However, the deluge on electronic media is less compared to print media. Says Sen, "Only the big companies are tapping the electronic media because it more expensive and works only if a certain brand awareness already exists." Some of the high spenders on television include indya.com, zatang.com, etc.
There is reason for this, of course. "Since the Internet is still nascent in India and e-commerce is yet to happen in a big way here, dot-com companies have to address their target audience through conventional media. Once they get the traffic, they will focus their advertising budget on the Net itself. But till then it will be boom time of the traditional media," says Sen.
However, the boom has dampened a bit of late, owing to the swings on NASDAQ. With poor sentiment hitting dot-coms all around the world, the Indian ad world have also had to swallow a bitter pill.
Says Abhinav Dhar, Dhar & Hoon ad agency, "The dreaded 'cost-cutting' is also entering the dot-com market. Venture capitalists who have already invested funds in dot-com companies have started pressuring them to become cost-conscious. After all, it's their money that is at stake. Another reason could be the difficulty in raising money in the subsequent rounds of funding. Even if the funds are available, the valuations have touched the bottom. It is no longer possible to rake in huge amounts of money against minimum dilution of equity. This is forcing dot-coms to rethink their media plans and rewrite their ad budgets."
But Sen feels that this is not bad weather. Says he, "It will prevent unknown dot-coms from pouring in ad money down the drain. If all the dot-coms cut down on their ad-spends, the competitive positioning of a particular company, so far as the viewer's mindspace is concerned, will be unaffected. However, there is one dark side to this story: the fall in dot-com ads will have an adverse impact on all kinds of media who had, in recent days, begun to depend heavily on dot-coms for their revenues."
Several online advertising and media entities have entered the field to corner expected revenues of $ 150 million within three years. "This industry is going to boom. The growth rates will more than triple from the present levels," says S Ramakrishnan, chief of Intercept Consultancy.
India's online advertising revenues are slated to increase from $ 2.5 million in 1999 to $ 150 million in 2003. About five per cent of total advertising business is expected to shift to the Internet from the present 0.2 per cent.
"India's online advertisers' growth will be much steeper than in the US as IT awareness is high in India.
"The penetration of computers is also high as there is multiple access to each computer due to mushrooming growth of browsing centres. Our ads reach 22 million people around the world," he says.
Independent forecasts put worldwide online advertising spending at $ 33 billion by 2004. In the Asia Pacific region, the figure is estimated at $ 3.3 billion, or about six per cent of total advertising.
Be that as it may, the outdoor media will still gain from the mushrooming dot-coms. The outdoor advertising media in India is worth about Rs 18 billion. Explains Sen, "Even if ad-spends on the television and print media fall a bit, that money will be spent in outdoor advertising because it is cheaper and is yet able to hit the target audience. In Delhi, billboards are banned. Thus, the money is spent on kiosks and bus shelters. However, in Bombay and a few other metros outdoor advertising is catching on fast. Earlier, most of this space used to be taken up by consumer durables. However, now it is the dot-com ads that buy these spots."
Explains a senior executive at indya.com, "Outdoor advertising is cheaper than conventional media and it has good reach because the billboard always screams out."
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