Ronnie05's Blog

Why SMBs will drive “online and mobile first” ad markets in India

Posted in Social context, media and advertising by Manas Ganguly on April 20, 2011

Of all the media and advertising channels available i.e Television, Print, Radio, TV and Cinema, the latest entrants, Online and Mobile advertising hold out the maximum promise, and growth in topline numbers in advertisement industry in India will be driven by these channels. Thats what is prompting a lot of International media houses to consider India as one of the hottest Online and Mobile advertising destinations.

Consider this, the size of Indian advertising markets is Rs.25000 crore ($5 billion) of which Online advertising contributes Rs.1000 crore which is roughly 4% of the total. This is dwarfed by the ad industry in Brazil which is approximately $20 billion.

The 4X number in case of Brazil is simply because of the fact that there are more advertisers in Brazil compared to India. There are 26.1 million registered SMB/SMEs in India, contributing 45% of industrial output, 40% of exports, employing 60 million people, create 1.3 million jobs every year and contributing to 22% of India’s GDP (by 2012). Of these 26 million, only about 100K ever advertise, a lot of them in very local and un-organized terms. The reluctance to advertise is because of them being RoI concious.

Within the existing paradigm of media channels, SMEs/SMBs donot find their moneys worth advertising or are simply unable to advertise. Downscaling the media channel costs and increasingly affordability while being location specific is a critical success factor for these SMEs/SMBs. A pickle maker in Trichy has no ambitions of advertising to residents of Mumbai. His immediate concern is his town and its outskirts, leave aside the district as well. Secondly given the 4-5% efficacy ratio for advertisements in terms of target group, the whole exercise of large scale advertisements through traditional media channels is a Loss-of-RoI exercise.

That is where the location specificity, target audience relevance and scalability (both up and down) will be important success factors for Online and Mobile ads.Products that cater to this ‘online and mobile first” market will create an extraordinary phenomenon and increase the advertising pie in India. Guess you know what exactly makes Google and Facebook interested in the pickle maker from Trichy by now.

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