The advertising industry – some disparate stats..and emergence of Online !!

So, when the dotcom boom of 1998-99 was going on, there were Indian dotcom business models based on advertising revenues, copied from US dotcom models. That the US had a 100bn$ advertising revenue and India had 1bn$ at that time was something these companies were not looking at, at all. Anyways, I was amazed at the sheer size of the advertising industry in USA and had felt that courses on marketing and advertising were so much more relevant in US b-schools as compared to those in India. The GDP of USA is about 4 times that of India, on a PPP basis. Hence, there was somewhat of a “potential” for Indian advertising industry to grow a lot.

Now, Indian advertising industry is Rs 29,000 Cr p.a., roughly 5.5bn$. US industry has increased to 173bn$. Indian industry has indeed jumped 5-fold, but still a minnow as compared to the US industry in size.

Now, moving to composition of these revenues. Out of Indian advertising industry’s 29,000 Cr, TV is 12,500 Cr, Print is 11,500 Cr. Internet advertising at 2500 Cr overtook Radio (1000 Cr), Outdoor (hoardings etc – 1500 Cr) last year. Internet was 1.5% of total industry 5 years back and is now 9%. Let’s wait to see when does it overtake Print…tough to envisage ? Consider  the US story…

Out of 173bn $ of US advertising revenue, TV is 60bn, Print is 35bn and Online is 40bn now !! Online overtook Print last year and is forecast to double yet again over next 5 years !!!

Of course, Internet penetration is much higher in USA than in India. But having said that, let’s understand that the relevant target audience in India for most of the advertised products are already “Internet-penetrated” in India. So, I won’t be surprised if Internet advertising reaches 25-30% of total revenues, from current 9%, in the next 3-4 years. Advertising-based dotcoms can probably do well now, from “industry macro-sanity” perspective.

Mobile advertising revenue in the US has reached 2.5bn$ now…was 1bn$ last year… let’s see how does that move…and remember, which country is the boss in number of mobiles !!! (I mean, after China :) )…but then, that’s another story…


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