Online advertising in India is fast gaining acceptance and offers an ever increasing user base. Increasing awareness among advertisers and increase in Internet penetration are driving growth of the online medium and its horizontals. The market is expected to witness only a 27% p.a. growth from 2008-2013 primarily due the massive advertising budget cuts in the industry. The report provides a brief overview of the advertising industry in India and then focuses on the details of online advertising. The report touches upon the options for advertising online, technological advances and talks about the factors which influence growth. Reach of the Internet in the domestic market, the expatriate population and language & literacy as barriers have been discussed in the report. The competitive landscape identifies the online ad networks operating in the country, and highlights various services offered by them. The report also covers major PE/VC deals and successful entrepreneurial ventures in the online advertising space.

1. Online Advertising Market - India
July 2009

2. Executive Summary
Estimated to be worth INR XX bn in 20- - and forecast to register INR YY bn in 20--
Market Online Advertising accounts for just a% Indian advertising industry
Fastest growing segment in Indian advertising industry at b% CAGR from 20- - -20--
LE
Online user base of ZZ mn in 20-- despite low penetration rate of just c%; computer literacy &
P
growing penetration in urban areas alone will add significantly to the user base
Factors In addition to domestic user base, a large number of expatriate Indians, who consume Indian
influencing
growth M
content, form a target audience
A
Encouraging consumption patterns including usage, frequency and response to advertising
S
Low Internet-user/literacy-rate ratio and low availability of Indian vernacular content exhibits
immense potential since majority of users prefer accessing vernacular content
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
Trends 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
Competition 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 ADVERTISING MARKET – INDIA.PPT 2

3. •Advertising Industry
•Online Advertising Industry
•Factors influencing growth
•Trends
•Competition
ONLINE ADVERTISING MARKET – INDIA.PPT 3

4. Online medium currently accounts for just a% of the total market but
is the fastest growing sub-segment
Overview Online advertising – Share of total
• Although online advertising has been in India since
the dot-com era, the market crossed the INR XX bn Print
LE
mark as recently as 20-- d% TV
• The market was worth INR YY bn in 20-- by revenue e% Outdoor
growing at a% p.a. since 2004
MP
• Online medium’s share of total advertising market
has risen from just b% in 20-- to c% in 20--
1%
a%
c%
Radio
Online
A
b% Others
S
• Market is forecasted to grow at a slower rate of c%
p.a. till 20-- primarily due to:
Current economic environment Online Advertising – Market Size
Massive reduction in advertising budgets across major
client sectors INR bn Revenues
Pressure on prices or ad rates Share of Total Advertising f%
10 4%
• However, online is growing faster than other e%
8
segments due to fundamental drivers such as: t% 3%
Low input costs for advertisers 6 d%
2%
Increasing awareness of online usage in India among 4 c% z
marketers or advertisers b% y
a% 1%
Growth in online user or audience base 2 x
v w
0 u 0%
2004 2005 2006 2007 2008 2009F
Sources:
ONLINE ADVERTISING MARKET – INDIA.PPT 4

5. Although advertising through search engines is dominant, other
options include portals, online ad networks and websites
Advertising Options
= Ad space sold directly to advertiser
Portals = Ad space sold through intermediary
Search
PLE Websites
M
Engine
Website
Online Ad
Network
SA Advertiser
Online Ad
Network
Website
Website
Website
• ---
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
ONLINE ADVERTISING MARKET – INDIA.PPT 5

6. Domestic Internet User Base
• Large online user base of X mn despite
penetration of just a%
• Increasing penetration to significantly
widen user base
Literacy & Language Barrier Large Expatriate Population
• Despite high literacy English usage is low • Additional target audience of large and
Factors
• Minimal availability of vernacular typically wealthier Indian expatriates
influencing
content despite majority preferring to • More access and consumption of online
surf vernacular medium
growth medium, including Indian content
Positive Consumption Patterns
• Higher speed of Internet connections
• More frequency and longer duration
• Increase in response to online advertising
ONLINE ADVERTISING MARKET – INDIA.PPT 6

7. BFSI, Online publishers and IT/Telecom are the major revenue contributors for
the online advertising industry in India
`
Niche & emerging nature coupled with low barriers to entry in this industry
Trends could lead to rise in competition
Acquisitions and investments by foreign players as well as Private equity firms
is providing a boost to this nascent industry
ONLINE ADVERTISING MARKET – INDIA.PPT 7

8. The developing online advertising market in India is already witnessing
stiff competition among domestic as well as international players
Competition Most used search engine
Company 2
• Online advertising industry in India is largely
b% Company 3
dominated by search engines and portals
LE
c% Company 4
• In spite of the online industry’s long tail, u% of the
total revenues go to the top 8-10 portals/portal d% Company 5
P
3% Company 6
group sites e% f% Others
• Search accounts for almost v% of the total online ad
market by revenues
SAM
• Company 1 dominates the search advertising market
while Yahoo India has a hold on display and banner
advertising
a%
Company 1
• Company 2, an Indian based search engine and
services portal, managed w% of the total online ad Online ad networks in India
revenues in fiscal year ended March 31st, 2008
A F
• From the past 2-3 years, ad networks have started
gaining acceptance in the Indian market B G
• Currently, India has close to X online ad networks
C H
• In 20--, x% of total online ad spends were on ad
networks which is expected to increase by Y basis D I
points over the next year
E J
Source:
ONLINE ADVERTISING MARKET – INDIA.PPT 8

9. Thank you for the attention
The Online Advertising report is a part of Research on India’s Media and Entertainment
Industry Series.
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ONLINE ADVERTISING MARKET – INDIA.PPT 9