Internet users and subscribers in India
India is probably the first country where Internet adoption and growth rates have been slower than mobile phones. IAMAI and comScore data deviated widely for the user numbers in India. However, lets go with IAMAI figures, i.e 37 Million internet users at the end of Sept-2006.
Here are some interesting numbers from a recent equity research report released by Kaufman Bros. [PDF].
- Internet users in India are expected to grow at CAGR of 39% to 146 Million between 2005 and 2010. Internet subscribers are expected to grow at the rate of 48% to 40 Million between the same period, while broadband subscribers are expected to grow at the rate of 156%, but the number will be mere 20 Million at the end of 2010. I am skeptical about growth beyond these numbers.
- The report says that the online advertisement industry is likely to grow at CAGR of 50% between 2005 and 2010. It estimates a very modest growth rate between 2007 and 2010.(47%, 33% 22%) I would like to differ from the authors opinion because I think it will continue to grow at atleast 40% YoY between 2007 and 2010 in Rupee terms.
- E-commerce revenues are expected to grow at CAGR of 72% between 2005 and 2010 to $1.8 Billion. The lack of credible online brands was a bottleneck. With the emergence of malls and retail shopping experience, the Indian consumer is unlikely to opt for e-commerce. However, certain areas like Banking & Finance, Jobs, Classifieds, Matrimony etc will continue to thrive online.
Indians were slow to go online. India Infoline’s 5 paisa.com is a live example. It started as an Online Trading and Investment paltform but eventually opened for retail franchisee operations to grow. So did Shaadi.Com with its Shaadi Points. Online reservation of Indian Railway tickets is a big hit, not only in the Metros but also in tier-2 and tier-3 cities. The adoption of online gaming has been slower compared to its Asian peers. IPTV is likely to be a dream with pathetic broadband infrastructure. India is still looking for that killer Internet application that will make more Indians go online.
Internet India , India e-commerce , Broadband India , India Advertising
Emerging economy, Booming Online Advertising
The emerging economy of India has created a new market which barely existed – Internet Advertising. A technical research was conducted on Search Engine Marketing by IAMAI and PinStorm – The Search Engine Marketing Firm, the first of its kind anywhere in the world. The report “estimates” the market size, advertisers, cost per click with respect to different verticals(Automative, Banking and Finance, etc). Since Google(probably the largest advertising platform available for India) and its advertisers are secretive about the financial figures, the authors of the report state that these are “estimates” and are approximately correct after 100s of spreadsheets were verified by various industry leaders who approved PinStorm’s findings. Credit should goto Dr. V Vinay, the Technical Architect for this research project and Mahesh Murthy, the think outside the Box Venture Capitalist from Mumbai.
Note that, Advertisers and Internet users located in India and global Advertisers targetting Indians were the core subjects of this research.
Excerpts from the report:
- Indians query 1 Billion searches every month of which 308 Million results have sponsored links on the results page. Over 4.8 Million clicks are estimated on the sponsored links, resulting in a Page CTR of 1.55%.
- Their are over 40,000 advertisers globally including India who collectively spend $52 Million annually. Indian advertisers had an annual budget of $16 Million.
- Average cost per click paid by advertiser in India is $0.36 with $5.92 being the highest.
It’s now time to know about the Toppers:
The top 5 search buyers vertically – General Online, Retail e-commerce, Travel, Made for AdSense and Banking and Financial services. Top advertisers are Naukri + 99Acres + JeevanSathi. eBay and its affiliates. Monster & Jobs Ahead. Google for its own publicity.
Banking & Financial Services: Citigroup Inc leads HSBC by 2.5 times in ad spending. ICICI paid highest, CPC $0.89
Travel: Yahoo! Travel marginally lead over Lufthansa on the ads spending chart. Holiday Inn paid the highest CPC, $1.12
Jobs: Naukri is the top advertiser while Accenture Ltd’s jobs paid the highest CPC, $0.75
Technology: Hewlett-Packard Company lead Dell Inc by double the advertising spending. Intel Corporation paid the highest CPC, $0.66
Retail: eBay is the largest advertiser contributing 90% spending in this vertical while FutureBazaar of Pantaloon Retail India Limited paid the highest CPC of $0.6
Matrimonial and Dating: Shaadi.Com is the highest spender followed by JeevanSathi and Fropper.
General Online: Google Inc leads the pack followed by Sulekha and Yahoo Inc
Should you need any further clarifications, feel free to drop me a line. Personally I feel, PinStorm is the first Indian company to unleash the power of computing for online Advertising and Marketing. I am raising my expectations from Mr. Murthy and his team. Let’s rant in a separate post on the modelling of this research project as this is the first of its kind in the world.
India Online Advertising , Internet India , Search Marketing , India Marketing
TRAI recommendations on 3G spectrum released
TRAI today released its recommendations (PDF) for 3G spectrum allocation in India. The allocation and also the waiting list, if any of telecom service operators should be determined through a process of auction. Only licensed telecom service operators will have the eligibility for participation (Zee which had sought 3G spectrum for Mobile TV is no more eligible) in the auction. Reserve price for spectrum in the 2.1 GHz band shall be:
- Rs. 80 Crore for Mumbai, Delhi, Category A circles
- Rs. 40 Crore for Chennai, Kolkatta, Category B circles and
- Rs. 15 Crore for Category C circles.
This implies a base price of Rs1,050 crores for all India presence above which the auctions will be held. Recall, the GSM association had offered Rs300 crores for the spectrum. The regulator has recommended three sets of frequency bands – 450 mhz, 800 mhz and 2.1 ghz. The allocation of 3G should be treated as a standalone exercise and not as an extension to existing 2G spectrum. Stiff penalty for non-compliance. The 3G services are expected to be available at most places in India by Q2-2007.
With the current recommendations only 5 operators can be accomodated. Bharti Tele-Ventures Limited, Reliance Communications Ltd (RCOM), Tata Indicom, Hutch and BSNL are the major five operators with all India presence. Idea Cellular and Aircel are also catching up with their recent license approvals but are unlikely to make it to the first round of 3G auction.
Indians likely to go the Mobile TV way
I have been covering the IPTV Hype in India since July. Questionnaire sent to IOL Broadband Limited(Partners for MTNL’s TriBand IPTV) and Bharti Airtel Limited were unanswered even after months of following up. Maybe they are not ready yet ?
Cable TV guys who operated in a secured environment for over a decade are now facing the heat from DishTV India and Tata Sky Dish TV. IPTV still in nascent stages is unlikely to see the huge demand witnessed by Dish TVs, because the situation of broadband is still pathetic in India.
However, their is a new entrant to give you a run for your money, Mobile TV. Star TV India, Chief Executive, Peter Mukerjea is very optimistic about the prospects of distributing his channels content over Mobile phones, converging towards Mobile TVs. In a statement he said,
“Today, we already have The Great Indian Laughter Challenge video clips available on the mobile phone. We are looking at making available more shows on the wireless medium now.” He also added that, In India, 70% of the revenues for content distribution over Mobile Phones is retained by the Cellco while the content developer gets the rest. He hopes to see this equation change to 70% in favor of content developers very soon.
Insiders learn that video clips of Star Plus’ most popular serial, Kyunki Saas Bhi Kabhi Bahu Thi, could be made available on mobile phones. I would be inclined to agree with Peter as the average Indian is so addicted to his Mobile that he is willing to spend few more bucks to carry his favorite TV shows and clips with him. Your thoughts, critics are welcome.
Security compromised at Business Today ?
Business Today is one of the leading publishers of Business magazines in India from the house of India Today publications group. For some reason, I blindly don’t enter my credit card. The first thing I check is if the web-page accepting my credit card details is secure or not. In the event of such an exercise, even before I entered my details I found that the security of the website has been compromised. You can check out yourself, if you click on this link, it will open a page as shown below.
Mobile Retail Market in India touches $16Billlion
The retail segment of the fastest growing Mobile market in the world has touched USD 16 Billion(Rs75,000 Crores) and rising 20% YoY. What does Mobile retailing include ? Mobile retailing is not just selling fancy handsets and accessories. The big chunk of it is selling pre-paid currency. Approximately 80% of the subscribers are in the category of pre-paid.(Source: Bharti Airtel Limited, Q2 Report). Surprisingly, the Indian consumer electronics market is estimated at mere $5.5 Billion(Rs25,000 crores)
With such a huge potential for the mobile market, several players are entering the organized mobile retailing sector. Mobile NXT was the first one to enter directly into the business without any retailing background. While Mobile Magic was a state wide distributor and opted to go for its own branding. UniverCell Telecom was a distributor too and opted to go for online mobile retailing. ConvergeM and MBazaar are owned by India’s famous retailer, Pantloon and are expected to roll out 120 stores by 2007 and are also planning for concept mobile stores. Others in line to get a slice of Mobile retail market are are Essar Telecom, ITC Limited’s eChoupal for rural mobile marketing and DCM Shriram through their Hariyali Kissan Bazaar once again targetting the rural Indian consumer.
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