The dotcom business is booming all right, spreading happiness all around. But the biggest gainer from the prosperous new economy has been the traditional media, which has made a fast dotbuck in advertisement revenues.
In the 13 months from January 1999 to January 2000, dotcom companies have spent over Rs 35 crore in print advertising. More important is that almost all of this business has flowed in after September.
Of the Rs 35 crore, less than Rs 1 crore was spent till September. December and January 2000 each accounted for nearly Rs 12 crore. The top five spenders accounted for Rs 23 crore. The rest came from over 125 other companies. February trends just go on to confirm the surge.
Rediff.com, the numero uno advertiser, has spent nearly Rs 7 crore from October to January with an average of Rs 1.5 crore every month. Indiatimes, which comes second, used up over Rs 5 crore in the three months from November to January. Satyam Online, the third biggest advertiser, spent close to Rs 6 crore in those three months.
The biggest beneficiaries have been the leading English dailies. The Times of India (TOI) in Mumbai accounts for about 50 per cent of the total spend. Rediff spent half its budget on Bennett & Coleman (b&c, owners of TOI) publications. Indiatimes, another b&c venture, spent most of its budget in-house. Satyam devoted over a third of its budget to b&c. TV got nearly Rs 10 crore in the same period. Of this, nearly Rs 9 crore was spent in January, almost Rs 8 crore coming from Zeenext, Zee Telefilms own dotcom.
Media planners see total ad and promotions volumes growing to anywhere between Rs 100 crore and Rs 200 crore this calendar year, with the lions share going to print. Once dotcoms have their audio-visual advertising organised, TV will gain to finally account for 20 per cent of the revenue pie. Other activities like outdoor and promotions will garner another 10 per cent.
The dotcoms are working at both enlarging the Net viewership pie and upping their share of it. Theyve to build their brands rapidly or fall by the wayside. "The first few months are crucial," agrees Jayesh Vaidya, ceo of the newly-launched youth portal, Chaitime. com. Brand awareness assumes larger proportion in the virtual world. As Sunil Mirani, director, Planetcustomer, says, "in the physical world there are chances of your product being noticed in some shop window by chance. But in the virtual world the customer wont see it till he knows of it".
Little wonder then that while a Rediff spent Rs 7 crore in the year, a Mercedes-Benz spends Rs 4.5 crore and Bausch & Lomb spent Rs 2 crore on Ray-Ban till it was sold off. Industry estimates lead players like Rediff and Indiainfo to spend anywhere between Rs 30 crore and Rs 50 crore this year on aggressive brand-building. Says Ajit Balakrishnan of Rediff: "By year-end, there will be 10 million people online and we want to make sure we reach them." Balakrishnan sees his advertising peaking this year.
The problem is, with dotcoms mushrooming by the day, existing firms have to scream louder to be heard. Mohana Pillai, president, Pacific Internet, which has only recently become more visible, agrees his company "will definitely have to increase (its) voice as more players come in".
And finance is no problem. Venture capitalists expect a bulk of their funds-even up to 50 per cent in medium-sized fundings of up to Rs 10 crore-to be ploughed into brand-building. "This is windfall gain for the traditional media," feels V. Ramani, executive director, Euro rscg, which has 21 dotcom clients, "and its making the most of it. " As a result, dotcoms say, contrary to the general belief that theyre given the red carpet treatment, they have to instead pay a premium to advertise. And since most of the money is going to premiere newspapers of every metro, they are in a position to command.
In Mumbai, for instance, TOI would account for over 5 per cent of the business. "The dotcom boom will rake in over Rs 80 crore for TOI, nearly twice what the financial boom yielded," estimates a media planner. Dotcoms receive no waivers of position (on a page) premiums agencies otherwise manage to negotiate for clients. On the contrary, publishers are asking them for monies upfront-no credits here.
"Clients typically advertise intensively for a short period of time to get the numbers (of viewers/visitors) they want and then reduce their intensity of advertising till the next phase," says Sai Nagesh, vice-president (media), Contract Advertising. The next phase comes six months after a site is up. Nagesh sees many resorting to the flighting method where they advertise intensively for about two weeks every quarter. The purpose here is to reassure and retain old members while inviting the fence-sitters to their site.
By 2001, the number of dotcoms hopping on to the Net are expected to double and the outgo in advertising will increase at least by 50 per cent. Also, feel industry sources, in two to three years time, a consolidation process will start whereby more than half the players will fall along the way. Only about 40 per cent of the current numbers will remain but they will keep the market buoyant. Mass advertising will get rapidly supplemented by relationship marketing and tactical promotions. Still, dotcoms will remain the biggest spender for the next five years. Says Mirani: "The Internet revolution is real and as revolutionary for mankind as the industrial revolution and the printing press." Echoing the general sentiment, he says that the dotbuck may pause "while the wheat separates from the chaff" but will not stop.
The print and electronic media cant but be happier as they sit quietly and count their blessings.