Chances are that many still aren’t fully aware about what comprises online advertising. Most of us tend to associate online advertising with the banner ads we see flashing at strategic locations on Web pages. But those constitute a very small fraction of the whole. Ever noticed the interstitials (small windows that pop up while a Web page is downloading and disappear after a while), Web site sponsorships, the classifieds, advertisement mail, and link ads in chat boxes? These are among a host of advertisements that can be found on the Net.

Industry pundits believe that online advertising is "waiting to happen". Most of them however admit that the story so far has been shaky. As Binod Chaudhry, VP and regional director, Rediff.com puts it, "Yes there is a problem with online advertising today. But though the present doesn’t look so bright, the future is absolutely mind-boggling." With the exponential growth in PC sales—according to DQ estimates, India will have 10 million PC’s by 2003 at a growth rate of 42%—and the expanding Internet penetration, the power of the Net as a medium is huge. "With the boom in the IT industry and its penetration in every part of life, with dot-coms consolidating their position and offering various value additions, Web advertising will grow." adds Sreenivasan K R, head, sales and marketing, Ciol.com.

The interactive edge

Perhaps the biggest advantage that online advertising has over offline advertising is that it facilitates the advertiser to reach an absolutely pinpointed and targeted audience. On the Net, the audience can be qualified like no other medium, knowing their age, gender, income category, interests and hobbies, and most important of all, browsing habits. All this can help an advertiser decide the sites and the slots where he wants to promote his brand. As Stu Ginsburg, spokesperson for the Internet Advertising Bureau (IAB) points out, "The Internet is a terrific medium in that it permits all consumer activities to happen at one place and one time—one can advertise, brand, market, and sell all in one place using the right targeting capabilities." Chaudhry further qualifies this, "There are users that sign up asking for specific information, maybe regarding books, computers or music. These databases are undoubtedly the most potent means for mail advertising."

Apart from being economical and dynamic, what stands out is that the Internet is the only medium where mass advertising is interactive too. "Traditional advertising is usually a one-way mechanism, there is no way for customers to act on the information in the ad. On the Internet, however, interested customers can click on a banner, learn more, and actually make purchases on the spot," states Arti Dwarkadas, business director, Ogilvy Interactive. The interactive power of the Internet allows the consumer to determine the extent of the advertising message, ranging from a quick brand impression to a full-fledged session with a brand, product or service.

The Internet as a medium knows no demographic boundaries and this gives the advertisers a huge audience to tap and build brand image if not sell products. Experts agree that the general trend in advertising on the Net is driven by a brand building and brand promotion exercise and not so much by sales. As N Muralidharan, MD and VP, JobStreet India states, "Some companies have started using the Net for launching brand campaigns that tap the tech-smart folks." Companies can also benefit from Internet advertising by educating their customers about their products and technologies—the Net is immensely capable of doing that. According to Pankaj Sethi CEO Media2India, "A recent study conducted by Jupiter Media Metrix, suggests that advertisers are increasingly using the online advertising medium for brand building."

What holds the growth?

In spite of all these benefits, why is it that online advertising is yet to take off? Chaudhry believes that too much has been expected from a medium, which has been around for only four years. "Give it some time," he says, "Online advertising is still in its infancy. Ten years down the line you and I will be proud that we were around when it got started." Perhaps one problem that needs to be overcome is the mindset. Most of the corporates, who constitute the largest chunk of advertisers on the Net, are not very sure about what the Net can deliver. According to Charudhry, this is because they still prefer to do things the traditional way.

One reason why Web advertising did not take off could conceivably be the dot-com shakeout. With so many online companies closing shop, advertisers turned apprehensive about investing in online ads. But optimists believe that this so-called shakeout has, in fact, been a good thing to happen. As Sreenivasan points out, "Like any other industry the dot-com industry is going through a consolidation phase. Only those with a solid business model will succeed." Chaudhry agrees, "The failure of dot-coms is somehow creating the impression that it is the failure of the Internet, which is a very narrow understanding of the difference between a medium and a business idea."

Another genuine problem that Web advertising faces today is the infrastructural inadequacy. According to Nasscom, the number of Internet connections in 2000 was about 1.6 million and the Internet users were pegged at 4.8 million—a minuscule portion of the country’s one-billion-strong population. Then there are the bandwidth issues, especially the last-mile connectivity. Also, not being a very evolved medium like traditional advertising, Web advertising does not have a matured pricing model. Moreover, the returns are also highly unpredictable. Chaudhry agrees, "There are times when you invest Rs 5 lakh in online advertising and you get returns worth 50 lakhs and there are times when huge investments go bust."

Gradually, however, Internet advertising is becoming more organized. Advertisers are increasingly looking at ways to move beyond the much-used banner ad, either by sponsoring a portion of a site or getting their content integrated into it. "The future of online advertising continues to look bright. Broadband access technologies, coupled with lower PC prices, will ensure greater numbers of users, which in turn, will support advertising revenue models for the medium," says Sethi.

The opportunities for interactive advertising on the Web are endless; they just need to be tapped right. DQ