Digital advertising, a competitive threat

Companies are latching on to social media as they come up with innovative ideas to connect with their customers.

From stand-up comedy on bad investments (HDFC Life) to Ranbir Kapoor entertaining fans (Lenovo) to asking people to share interesting titbits on cricket (Pepsi) to several selfie clicking initiatives, Twitter has been abuzz with many ad campaigns. And it’s not just the usual FMCG, consumer durable and auto companies that are increasingly visible on Twitter and Facebook, media companies too are taking to such platforms.

Take, for instance, Color TV’s ‘Pappu’ campaign on Twitter for its ‘India’s Got Talent’ programme which generated quite a buzz. But, digital advertising, though gaining in popularity, is still small. As against the ₹33,100 crore, spent by companies on advertising on TV and print, the spend on digital advertising totalled only ₹4,350 crore, last year (FICCI KPMG Industry Report).

Digital advertising has, however, grown at a stupendous rate — quadrupling from ₹1,000 crore in 2010 to now. As companies up their digital ad spends, this could in due course of time pose a credible threat to the revenues of television broadcasters and newspapers.

TV broadcasters and newspapers earn a substantial part of their revenue from advertisements.

Zee Entertainment derives over half its income from this source as does Sun TV Network.

Within print media, advertisements on an average account for about 67 per cent of the revenues. For some such as DB Corp, the publisher of newspaper Dainik Bhaskar , the share is a much higher 75 per cent.

With the number of internet users multiplying, which will get a further boost from the Digital India Initiative, digital advertising will eat into the share of media companies’ revenues.

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