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March 17, 2008

Ever since the first banner advertisement was sold online 15 years ago, online advertising has come a long way. It is estimated to be a $42-billion industry in the US, and has proved to be a growth engine for companies like Microsoft and Google. Internationally, online advertising is projected to grow six times faster than traditional media through 2009. By 2010, online is forecast to represent one-tenth of all advertising spending.

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But all is not hunky dory, say technology-media-telecom (TMT) experts at Deloitte Consulting. According to a report by the consulting firm, online advertising in 2008 will see obstacles such as growing apathy towards this medium. The report says: “According to a recent survey in the US, many consumers find that internet advertising is more intrusive than print, and consumers preferred to view print advertising to advertisements on the web. Many suggested the websites should offer consumers the option of blocking advertisements.” Secondly, this year will see growing opposition to a key feature of online advertising, which is tracking of online behaviour whose main purpose is to enable the delivery of targeted advertising. “In 2007, resistance was already being manifested in the form of organised lobbies and a ‘do not track’ campaign,” adds the report. Confidence in online advertising could be further undermined if high-profile industry figures continue to question publicly online advertising revenues and valuations, feels Deloitte.

Yet, fears of a slowdown in online advertising in the West—buttressed by recent talk of Google’s ad share in the US dropping for the first time in two years—doesn’t necessarily imply the same would happen in India. Says Jaspreet Bindra, India Country Manager, Online Services, Microsoft: “The US online advertising market is a mature market and is a $45-billion industry. We have a long way to go in India as we are still trying to grow this medium. Such obstacles are not valid for India.”

The Indian online advertising market is just about Rs 400 crore, which is less than 1 per cent of the total ad market which is worth Rs 20,000 crore. While the total advertising market, including print and television in India, grew at 20 per cent last year, the growth in the online advertising market has been higher, at around 60 per cent. Clearly, internet advertising has a long way to go in India before it does slow down.

Anusha Subramanian

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