Online Advertising Market - India

SA

MP

LE

Executive Summary

Market

Factors

influencing

growth

Competition

Trends

Estimated to be worth INR XX bn in 20- - and forecast to register INR YY bn in Online Advertising accounts for just a% Indian advertising industry

Fastest growing segment in Indian advertising industry at b% CAGR from 20- -

BFSI, Online publishers and IT/Telecom are the major revenue contributors

Niche & emerging nature of medium coupled with low barriers to entry could lead to greater competition

Acquisitions and investments by foreign players as well as Private Equity firms is providing a boost to this nascent industry

Largely dominated by search engines and portals

d% of the total revenues go to the top 8-10 portals/portal group sites

Online Ad networks have started gaining acceptance in the Indian market in the past 2-3 years

Around X ad networks exist as of 20 -- , accounting for e% of the total online ad spend

Online user base of ZZ mn in 20-- despite low penetration rate of just c%; computer literacy & growing penetration in urban areas alone will add significantly to the user base

In addition to domestic user base, a large number of expatriate Indians, who consume Indian content, form a target audience

Encouraging consumption patterns including usage, frequency and response to advertising Low Internet-user/literacy-rate ratio and low availability of Indian vernacular content exhibits

•

Advertising Industry

•Online Advertising Industry

•Factors influencing growth

•Trends

SA

MP

LE

Online medium currently accounts for just a% of the total market but

is the fastest growing sub-segment

• Although online advertising has been in India since the dot-com era, the market crossed the INR XX bn mark as recently as

20--• The market was worth INR YY bn in 20-- by revenue growing at a% p.a. since 2004

• Online medium’s share of total advertising market has risen from just b% in to c% in

20--• Market is forecasted to grow at a slower rate of c% p.a. till 20-- primarily due to:

Current economic environment

Massive reduction in advertising budgets across major client sectors

Pressure on prices or ad rates

• However, online is growing faster than other segments due to fundamental drivers such as:

Low input costs for advertisers

Increasing awareness of online usage in India among marketers or advertisers

Growth in online user or audience base

Overview

Share of Total Advertising

t% INR bn 0% 1% 2% 3% 4%

Online advertising – Share of total

e% Print d% 1% b% TV Outdoor Radio Online c% a% Others

SA

MP

LE

Although advertising through search engines is dominant, other

options include portals, online ad networks and websites

Portals Websites Online Ad Network Online Ad Network Advertiser Website Website Contributes online ad space to the network

Online ad networks effectively act as a one-stop interface between multiple advertisers and publishers

Online ad networks effectively act as a one-stop interface between multiple advertisers and publishers

Search Engine

= Ad space sold directly to advertiser

= Ad space sold through intermediary

Advertising Options

• Additional target audience of large and typically wealthier Indian expatriates • More access and consumption of online

medium, including Indian content

• Higher speed of Internet connections • More frequency and longer duration • Increase in response to online advertising • Despite high literacy English usage is low

• Minimal availability of vernacular content despite majority preferring to surf vernacular medium

Domestic Internet User Base

Large Expatriate Population

Positive Consumption Patterns

Literacy & Language Barrier

Factors

influencing

growth

• Large online user base of X mn despite penetration of just a%

• Increasing penetration to significantly widen user base

`

Trends

Acquisitions and investments by foreign players as well as Private equity firms

is providing a boost to this nascent industry

Niche & emerging nature coupled with low barriers to entry in this industry

could lead to rise in competition

BFSI, Online publishers and IT/Telecom are the major revenue contributors for

the online advertising industry in India

SA

MP

LE

The developing online advertising market in India is already witnessing

stiff competition among domestic as well as international players

a% Company 1 b% Company 2 c% Company 3 d% Company 4 3% Company 5 e% Company 6 f% Others

Most used search engine

Competition

• Online advertising industry in India is largely dominated by search engines and portals

• In spite of the online industry’s long tail, u% of the total revenues go to the top 8-10 portals/portal group sites

• Search accounts for almost v% of the total online ad market by revenues

• Company 1 dominates the search advertising market while Yahoo India has a hold on display and banner advertising

• Company 2, an Indian based search engine and services portal, managed w% of the total online ad revenues in fiscal year ended March 31st_{, 2008}

• From the past 2-3 years, ad networks have started gaining acceptance in the Indian market

• Currently, India has close to X online ad networks • In 20--, x% of total online ad spends were on ad

networks which is expected to increase by Y basis points over the next year

Online ad networks in India

J E I D H C G B F A