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Online Advertising seems to be the buzzword in the Advertising Industry these days. It is exciting for all of us in the Internet AD world to note that our media, which is still less than 3% of the total Media bought, receives over 50% of the voice share by the Industry gurus and the press. This attention is largely fuelled by the almost 100% year-on-year growth of this medium and the various industry reports suggesting that 80% of all media bought by 2020 would be digital media.
The proof that Internet Advertising works comes from the excellent growth registered by the early adopters such as the jobs, finance, travel & matrimony businesses. These are the businesses who trusted Internet with a large share of their AD budgets and they are the one’s who have to stood to gain returns.

As much as the small success of the Internet Media excites us, what remains a concern is whether we are ready to face the rude challenges thrown up to this industry.

The Challenges…

Adoption of The Medium
With so much of hype around the medium the bitter truth still remains that only 20% of the advertisers have adopted the medium. The biggest challenge today is that Internet is increasingly getting branded as a ROI medium. A few doubts still remain in the minds of the marketers and they doubt whether this should be the medium of choice when it comes to ROI.

There is no problem with seeing the internet as a ROI medium but is approach to the measure of ROI correct. What needs to be corrected is that marketers need to consider Internet advertising as a tool beyond the lead generator. It is high time that we used the more advanced AD Matrix to measure ROI’s on Internet. The Internet might be at the early stage of e-commerce but it is for sure the most preferred & high engagement medium when it comes to influencing one’s perception about a brand or a purchase decision. But, how many (I am sure not many…..) marketers are really using the right Matrix to calculate the ROI.

Check out the success of the I-Coke platform in China – a community of 20 million users and still growing- and the Adidas worldwide platform. When you consider these examples, you will put aside all inhibitions about the possibility of successfully building Brands and Communities on Internet. I am sure these were campaigns launched with goals that beyond CPC, CPL & CPA!

Marketers just need to be more innovative & evolved with the quarterly sales targets not being the “be all and end all” of it.

Critical Mass
It is very disheartening for me when a client says, “well I like everything that Internet can do for me. But you know I am a mass brand and the reach of Internet in India today is not exciting enough for me to put serious time and money behind it”.

Whether the Internet in India has already achieved the critical mass or not is ofcourse, a very subjective and debatable topic. There is still huge growth potential for both the increase of user base and quality inventory. Many more local ideas are available to create compelling content to fuel the growth of Internet in India. It is true that not every business created on the Internet will have the potential to come out with an IPO. But as long as it is an idea with some value for an Internet user, trust me you will be able to run a decently profitable business. We need more entrepreneurs who can fill the huge gap of quality inventory vs demand.

Infrastructure
Whether it is the Internet or the Mobile, bandwidth continues to remain the big roadblock to unleashing the true potential of the medium. Most innovative advertising solutions are bandwidth hungry and to a large extent the growth of broadband and internet advertising are directly proportional. We are all waiting for 3G to make our mobile phones the true convergence device and suddenly we would add up 130 million users. Advertising on the Mobile is going to be big and would give an immediate upside to Online Advertising. Internet advertising agencies will have to gear up to service the needs to Mobile advertising as a lot of Internet Advertising is going to converge with the hand held device.

People
The average age of executives in India’s Internet AD agencies is between 26-27 years. Why are the traditional advertising guys who know so much about Advertising shy of choosing the Internet? Why is it that not many creative gurus of the leading advertising agencies are willing to do Online Advertising? They all believe that Digital is the future yet they are not adopting it. Is it that they are unwilling to learn Online or the clients are willing to invest almost nothing on the Online Creatives. The same guy who spends almost Rs. 25 lakhs on a TV commercial finds if difficult to invest even a lakh on Online Creatives.

Offline Agencies Vs The Online Agencies
As much as the marketers agree that Online is a high engagement medium for the consumers, they also need to realize that the job of Online Agencies is equally high involvement. It will be unfair when the fee’s paid to Online Agencies is benchmarked with the fee’s paid to the Offline agency. The scale and involvement are both not in favor of the Online Agencies to be compared to the offline agencies. Yes you may find a few desperate-for-business agencies taking your mandate on unviable business terms, but be rest assured that the bigger loss is that of the advertiser because he will never receive his money’s worth with this approach. This approach unfortunately also leads to creating a wrong perception towards the effectiveness of the medium.

Localization Of Medium
Finally, there is serious dearth of local Internet inventory today. A lot more needs to be done whether in terms of local/regional content, vernacular advertising, more targeted IP & behavioral advertising. This will not only make Online advertising more targeted & relevant for the national players but shall make way for the yet to be tapped huge SME advertiser market. In a country where organized retail is less than 2%, the potential of the unorganized SME advertiser is too large to be ignored. Companies such as Google Ad Sense and TYROO are doing a great job in helping consolidate the local publishers and advertisers.

While these are all very real challenges being faced by the industry, I am sure they are not insurmountable. The Internet AD world will slowly but surely grab a much larger share of the advertiser’s pie in times to come.

Comments:

1. As far as the hard work is concerned, Online Agencies work much more than Offline Agencies in terms of client satisfaction and ideas or idea implementation. Given the fact that as compared to an Outdoo hoarding/Bill Board on a highway - you are bound to see it for a second if not read it or understand it ; But for Online agencies the job is much tougher to get an idea/concept which will hold that ‘Close Window’ button of the recipient and actually make him see or read what your collateral is.

2. In India,increasing share of online in the advertising is a good sign.Since various studies suggests that it is one of the best ways top reach the customer.More and more people started depending on internet for their needs .Automobile,banking,matrimonial and real estate information portals are gaining popularity.

And if you have your own thought please share with us.

Source: http://www.thinkingaloud.in/2007/02/07/challenges-facing-the-indian-online-advertising-industry/