The Hindu Business Line : It pays to be seen

Online advertisers are realising the potential of the Internet. And in turn, Web site owners are getting their due. A snapshot of the action in cyberspace.

TRENDS in prices of online advertisement have kept pace with the volatile demand for online space. At the peak of the dotcom bust, advertisers turned their noses in the air and paid up only if viewers clicked through the ads and came onto the advertisers' own sites. At the time, it did not matter that the viewers actually saw the logos and that brands did get some publicity.

Now, the tables have turned. While web site owners aren't exactly turning `pricey', they are getting their due, say industry watchers.

Ramesh Kumar, chief operating officer at Cricinfo (a Wisden Group company), feels, "Considerable advertiser education has happened over the last two years. Most advertisers are slowly waking up to the realities of the online medium and what it can deliver in terms of value." So, the industry is witnessing a turnaround from a point immediately after the bust when, "advertisers gave a knee-jerk reaction and used `unrealistic' methods to include the Internet medium in their media plan."

What exactly is this turnaround? Some popular sites that host the ads are now insisting on payment for just putting up the brand or the logo on their site. In other words, every time a person accesses the site and views the advertiser's logo or brand, the latter pays up. This, the industry calls the `impressions' model. It is named after the `page impressions' that a viewer leaves behind every time he views a Web page.

Says Kumar, "Several leading Web sites prefer the impression-based model since it helps them: look at more sponsorship value for the advertisers; keep the focus on their product and strike the right balance between content and advertisement; and manage the user experience (so that the Web site does not have to push intrusive ads to `force' clicks)"

Cricinfo is an example of a site that does not overtly favour the pay-per-click model. Says Kumar, "We have resisted the urge to be heavily skewed towards building advertising models on click basis because: we believe that in most cases an impactful sponsorship, along with some `call to action' advertising, works well for our users, for the advertisers, and for us."

CineSouth, a Web site that offers cinema-related content, also shuns `pay-per-click' advertising. Says T Chandramohan, its CEO, "We have never accepted this model for advertising, even for BharatPlanet.com (an NRI services site that has now been merged with TTK Healthcare)."

Does that mean that Web sites have actually mastered the art of making viewers pay for content thereby reducing dependence on advertising revenues? Says Chandramohan, "Yes. Fropper.com (an Indian friendship and dating site) and Chennaionline.com and our own site are examples."

Another aspect to this is that after the dotcom shakeout, there are only a few significant `horizontal' online publishers left in the market. Their revenue model is not just advertising; they also sell a whole bunch of products and services on their sites.

So, says Arun Natarajan CEO, Venture Intelligence India, a publisher that aggregates information on private equity deals, "it makes sense for them to price their prime ad inventory (for example, on the home page and other key sections) at a minimum rate. Below this minimum rate, they would rather promote their own wares. Apart from their own e-commerce offerings, publishers can also run ads from Google AdSense and get paid `per click' on the highly relevant, keyword-driven ads that Google serves on their site pages."

However, there is no widespread agreement that the `impressions' pricing model would dominate. Ajit Balakrishnan, CEO, Rediff.com, feels that most sites that charge for specialised and proprietary content, including the online edition of The Wall Street Journal, `have achieved only a modicum of success."

He feels that in the long run, the `pay-per-click' model would dominate online advertising. Is it because it is cheaper for the advertiser? Balakrishnan is almost amused at the question. He asks, "Guess the highest price an advertiser would pay for one click-through?" The answer is an astounding $1,00,000. After clarifying that this was an advertisement by a law-firm in one of the global sites, he says, "A click-through nets Google an average of 40 cents."

The pay-per-click model, feels Balakrishnan, has brought in small-time advertisers who otherwise would not have considered putting up their wares online.

Currently, both Rediff and Sify, two sites that offer online shopping as well as content on the Net, offer advertisements based on both impressions as well as per-click.

Says Surya Mantha, vice-president, Sify, "An `impressions' (pricing) model gives a competitive advantage to portals such as Sify. The overall effectiveness of any campaign, however, depends not just on the `traffic' (i.e., the number of page views or impressions) but also on the quality of the communication."

And understanding this "quality of communication" is what has led to advertisers becoming more online-savvy, feels Preeti Desai, president of the Internet and Mobile Association for India. She says, "Advertisers today understand that it is not only just branding, or just click-throughs or just pay-per lead generated, but a combination of all three."

She sums up the debate best with: "Two or three years ago, an advertiser would not have automatically paid for a page impression. Now he understands that there is value in a page impression. After all, you can't really separate branding from response."

Who prefers what?

Says Balakrishnan, "Brand advertisers favour sponsorships and pay per view pricing whereas advertisers who seek to sell products favour per click or per lead generated."

Sponsorships would allow advertisers to pay a fixed rate for their advertisement to stay on the site for a fixed period.

Financial Services, travel and online services such as matrimony- and job-related sites have contributed to the bulk of the Rs 107-crore online advertising market. (That figure, indicated for 2004-05, is to grow to Rs 162 crore in 05-06.) Balakrishnan says, "In India, the current 100 per cent year-on-year online advertising growth is being driven by financial services, auto, FMCG and dotcom verticals in jobs and matrimony."

Says Preeti Desai of IAMAI, "Apart from the regular `Financial Services and Tech' advertisers, we have seen an increase in budgets of automotive, consumer durables and consumer electronics verticals." She feels that if the travel sector and online banking services shift significant advertising budgets online, they could grow exponentially in e-commerce value terms.

bharatk@thehindu.co.in

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