Internet advertising to grow by 43 percent by 2011

Indian industry is hurtling towards a heady growth rate of 9-10 percent…but the media and entertainment industry is growing at double the pace. And internet advertising at 43 percent! This is according to the 2007 edition of FICCI PricewaterhouseCooper’s (PWC) annual report on the Indian entertainment and media Industry.
Here are the figures:

As the Ficci news report states:

The turnover of the entertainment industry was Rs 43,700 crore ( Rs 1 crore is 232072.4 USD) in the calendar year 2006, up from Rs 36,400 crore in 2005 and Rs 31,100 crore in 2004…the industry is expected to touch a turnover of Rs 1 trillion (Rs 100,000 crore) by the year 2011, which would mean a compounded growth rate of 18%…of all the media segments, the growth projection by 2011 for internet advertising is the highest at 43%.

While the growth in the film and television industry is expected (as incomes rise people spend more money on entertainment), and obvious (rise in television sales, mushrooming multiplexes, increasing number of TV channels,) what intrigued me were the internet advertising figures.

Take a look at the India’s internet usage, the fastest growing in the world! A March 2007 news report of the IAMAI (Internet Usage and Mobile Association of India) says:

According to comScore Networks India, China and Russia experienced the highest year-on-year growth rates in terms of Internet users. The Indian Internet population grew at 33 percent, making it the fastest-growing country of Internet users. India had over 21 million users aged over 15 years at the end of January 2007, as against 16 million a year ago.

But this excludes traffic from public computers such as Internet cafes. In fact, the actual number of active (those who have used the internet in the past 30 days) Internet users in India were almost 25 million six months ago! (IAMAI-IMRB survey). These figures take into account those who use public computers.

However, even though India is ranked eighth in the world in terms of number of internet users, the country is not ranked amongst the top 10 countries in terms of average monthly hours online per unique visitor. This is because of two major reasons:

1. The widespread use of public computers here.

2. Those who do use computers at home mostly use dial up, not broadband.

Here is a table (Dec 2006 figures) which gives a city wise break-up. Mumbai is tops, followed by Delhi, Kolkata and Chennai. The number of active users is what really counts.

With these kind of figures, its not surprising that media budgets of major companies will go for a major shake-up in the next few years. Looks like we are on the verge of crossing the tipping point where internet advertising is concerned.

Update May 2008: The Indian entertainment and media industry will touch $27 billion by 2011 with at an annual growth rate of 16.7 percent – faster than its counterparts in Brazil, Russia and China…In the other BRIC (Brazil, Russia, China, India) countries, the entertainment and media industry is expected to grow at an annual rate of 13 percent in China, 8.3 percent in Russia and 7.7 percent in Brazil (joint report by the Federation of Indian Chambers of Commerce and Industry of India (Ficci) and PricewaterhouseCoopers (PWC)was released at the Ficci-Frames 2008 global business conference on the entertainment and media industry)

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