FROM SUMAN MUKHERJEE'S DESK

(With inputs from the internet)

Indian Advertising Industry: Internet Advertising:

The Indian advertising industry has evolved from being a small-scale business to a full-fledged industry in the last one decade. It has emerged as one of the major industries and has broadened its horizons, be it the creative aspect, the capital employed or the number of people involved.

Thus in short, Indian advertising industry in very little time has carved a niche for itself and placed itself on the global map. They have come a long way from being small and medium sized industries to becoming well known brands in the business. Mudra, Ogilvy and Mathew (O&M), Mccann Ericsonn, Rediffussion, Leo Burnett are some of the top agencies of the country.

Indian economy is slowing limping back to normalcy and the market is on a continuous trail of expansion. With the market gaining grounds Indian advertising has every reason to celebrate. Businesses are looking up to advertising as a tool to cash in on lucrative business opportunities.

Growth in any business leads to a consecutive boom in the advertising industry as well.Today advertiments is not only limited to Television and Print media, but is also spread across Internet and mobile telephony.  

The Indian advertising companies today handle both national and international projects. This is primarily because of the fact that the industry offers a host of functions to its clients that include everything from start to finish including client servicing, media planning, media buying, creative conceptualization, pre and post campaign analysis, market research, marketing, branding, and public relation services.

Keeping in mind the current pace at which the Indian advertising industry is moving it is expected to witness a major boom in the times ahead. If the experts are to be believed then the industry in the coming times will form a major contribution to the GDP. With all this there is definitely no looking back for the Indian advertising industry that is all set to win accolades from the world over.

Now let us take a historical overview of the Indian advertising industry and examine how advertising spend has undergone a change over the years.

The Indian advertising industry has been evolving at a fast pace over the past few years owing to the prolifieration of means of communication and the emergence of new distribution channels.

Currently India has a low advertising spend as compared to other economies----this is not going to remain for ever. Creativity leakage is a major issue confronting the industry.

The television advertising is expected to register high rates of growth, as India is expected to become Asia's leading cable market by 2010.

According to some estimates, the Indian advertising industry is expected to grow 61% by 2010 (with advertising spend climbing to Rs.36,731 crore).

It is true that Internet advertising only comprise of, as little as 1.8% of the total gamut, but the way it is growing is fabulous. TV and print are here for long decades and internet has been active only for last couple of years, but seeing its growth prospects it is assumed that very soon it will reach to a significant mark..In the internet space Northgate Technologies Ltd occupies a niche space and its fundamentals are only going to improve in the coming days; as the worst seems to be over for the company.

As per report by ZenithOptiMedia, “..expect advertising expenditure in India to increase from 0.50% of the gross domestic product (GDP) to 0.53% over the next three years,”

Worldwide, the ad industry is expected to grow 6.7% to reach $61 bn and Internet advertising is expected to surpass magazine advertising; and the upswing will be triggered by quadrennial events like Olympics, US elections, World Cup Soccer, etc.

As far as Indian market is concerned: Internet advertising contributes only 1.8 % of the country’s total advertising spend. Internet medium is set to witness a high growth in the next 5 years. 

For every hundred rupees spent by advertisers, Rs.91 is spent on television and the print media while the outdoor media accounts for Rs.5. The rest is divided between cinema, radio and the Internet.

The Indian entertainment industry (Film, Multiplexes and Television mainly), too is expected to grow by CAGR of 18% to reach Rs. 1 trillion numbers by 2011.

Though these numbers may sound great (and most of the times theoretical), what is really important and worth noticing is the rise of ad networks by newspapers/magazines worldwide (after all they are the ones who have a strong relationship with local advertisers as well as readers) which are essentially competing with ad networks from Google/Yahoo/MSN and online companies.

Case in point – Forbes has launched Forbes Audience Network and is reaching out to bloggers and related community. Others like CNet and Reuters are following the suite.

Hence considering all these cases and finding that www.facebook.com's business model has more or less clicked, we can expect better days ahead for Northgate Technologies Ltd. The company has taken some urgent measures to trim down its excess fat and make it slim. The company has restructured its operations by closing down its operations in China, Hong Kong, US and some places in India to stop further loss of capital--futher restructuring is going on.....The company is also looking for a CDR package....  

The shares of Northgate Technologies Ltd, which were trading around Rs.1500, a couple of years back have fallen to the current price, which I think is a little absurd, considering the future growth prospects. Its www.globe7.com is now again open (You can click and see that it is working).

Moreover, online advertisements have started to pick-up as the US and Emerging economies have once again started to look strong. I sincerely hope that those of you who have  bought the scrip around the current  market price will not be disappointed in the next 6 months time frame. Any positive news will be placed in this blog, for the benefit of the small investors.