Anurag Gupta’s message is perform -- or perish

Anurag Gupta

Managing Director, dgm India

From the perspective of an advertiser’s objectives, there are two broad genres -- one is advertising for brand saliency and the second is advertising for generating business or acquiring customers. Performance marketing refers to the second genre of advertising. Marketing managers are increasingly allocating more monies towards advertising for performance and the internet is the only medium that is truly capable of specific measurement in terms of ‘cost of acquiring a customer’ or ‘cost of generating a transaction’.
Advertisers are using the internet as a direct response medium. A medium where they can actually specify their objectives in terms of cost per acquired customer. It is estimated that almost 70 per cent of the online advertising in India is happening for ‘performance’. Google alone enjoys close to 25 per cent share of the total online advertising in India. It is also estimated that 50-60 per cent of banner advertising is also happening for performance.

However, advertisers have still not exploited the true potential of Internet as a medium that can increasingly deliver ROI objectives of advertisers. It is very fashionable to talk about ROI, but the fact is that the offline agencies are still grappling with understanding the Internet and most of the online agencies are still using primitive tools and technologies

Here is a look at the four main channels of online advertising and how they fare in terms of performance advertising:
Banner advertising - This is by far the most developed channel which is now 6 to 7 years in existence. However, 90 per cent of online advertising revenues still go to only the top 8 to 10 portals or group sites. Unfortunately, most of the advertising is being sold directly by the publishers to the advertisers. The concept of ad networks is still evolving in India. The early play is being seen in networks like Tyroo, Komli and Ozone. Ad networks play the role of aggregating inventories from large number of publishers and making it available to advertisers to largely drive their performance-related ad campaigns. The fact is that almost 50 per cent of inventories across all publishers would remain unsold, leading to a huge opportunity for both the publishers and advertisers. Anyone listening?

Search marketing - Pay per click (PPC) or search marketing is a relatively newer channel which has been in existence in India for around two years. It is currently registering faster growth rates vis-à-vis display advertising. Google is the dominant player, cornering 70 to 80 per cent of share in searches happening and taking more than 95 per cent revenues. Yahoo Search Marketing is trying to boot up. MSN Ad Centre is not present in India. Local Engines like Guruji, Dwaar and OnyoMo are trying to set up their business. Another peculiarity in the Indian search market is that Google is itself servicing advertisers. This could lead to potential conflict of interest as a publisher’s objectives may not necessarily dovetail in with the advertiser’s objectives.

It is very fashionable to talk about ROI, but the fact is that the offline agencies are still grappling with understanding the internet

On the service providers or agencies side, there are hundreds of service providers, most with primitive services. Advertiser need to realise that low-cost traffic is not always the answer. It is low Cost of Action that is relevant. Also, the use of appropriate technology is quite rare in India. Most service providers are not using Web Analytics; Automated & API integrated Bid Management and optimisation systems – all of these are essential tools to get best returns from spends on search engines. Natural search remains a black box. These are the actual search listings that are returned by Google. This is such a massive opportunity for advertisers. However, advertiser should be careful because the use of unethical practices (in trying to get up on the search page) can lead to entire website being blacklisted by the search engine.

Email marketing - Most players do not use good tech solutions to send e-mailers and there are negligible credible third party databases and lists. Large e-mail portals are the main players who send third party mailers to their client base. Here, again there is a massive potential for action generation and CRM.

Affiliate marketing – Essentially, affiliate marketing is promotion of an advertiser’s or merchant’s offer by a large number of independent websites, (publishers or affiliates, as they are known) – in return for a consideration when the traffic referred by the affiliate generates a desired action. Affiliate networks like dgm, Commission Junction, Trade Doubler and Link Share in developed markets bring advertisers and affiliates together on one platform to enable the tracking of the actions generated.

Globally, affiliate marketing is a significant channel for online performance advertising. It contributes to almost 25 per cent of the online spends. A Marketing Sherpa report indicates that Affiliates worldwide will earn $6.5 billion in bounty and commissions in 2006. Moreover, most of the advertisers are not using good solutions for analytics, resulting in them underutilising the very power of accurate measurability that the internet provides. This leads them to be unsure of the source of traffic, unsure of the user journeys on their websites. And, moreover, they do not have any way of un-duplicating their sales in case multiple traffic sources have referred a single user over different periods of time. Currently, dgm India is the only affiliate marketing company in India, a subsidiary of UK-based dgm.

Online advertising accounts for a mere 2 per cent of the total advertising spends in the country. One of the reasons for this can be the lack of awareness advertisers have of how to exploit internet as a media for driving revenue objectives. This gets compounded by lack of cutting edge tools and techniques available with the existing agencies. I believe that the internet presents a huge opportunity for advertisers looking to acquire customers and looking to maximise ROI.

Technology enables targeted activity and measurability, but one needs right technology and organisations who understand using those technologies and solutions. It is also important to understand that it is ‘returns’ and not spends that really matter.

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