International BusinessAd spend on social media set to grow by 44 per cent
Social media sites have enjoyed a steep surge in popularity, but fail to attract advertisers at the same pace. Only 13 per cent of the total Internet ad spends have gone into social media initiatives for the year 2008-09, according to a recent study of the top 500 marketers in India (Digital Media Outlook 2009 report by Webchutney).
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However, things are looking up for this sector. In FY 2009-10, the report predicts, ad spend on digital media by the top 500 marketers is likely to grow 44 per cent — from the current Rs 278 crore to around Rs 400 crore.
One sector which will contribute most to the rise in ad spends on social media, is the fast moving consumer goods (FMCG) sector. FMCG brands are increasingly logging on to online advertising since their target audience uses social media, notes the report. Examples of online advertising in the FMCG sector abound. For instance, Coca-Cola India in August 2009 launched its campaign for Sprite first on the Internet. Pepsi, ITC Group, and Colgate Palmolive are some other FMCG brands that have begun using online advertising in a big way.
The Webchutney report pegs current online spend of the FMCG category at around Rs 16 crore, and adds that the spend is expected to increase to almost Rs 72 crore in 2009-10.
In India, Facebook tops social media spends, followed by Orkut and LinkedIn — but all earn revenue less than Rs 10 crore.
Neville Taraporewalla, head — Microsoft Advertising, Microsoft India, admits: “Search is far ahead of social media. Social media is used differently (Brands go on social media for word-of-mouth factor).” Apart from MSN, Microsoft owns Bing, Windows Live Planet and Facebook. He reasons that not many brands are comfortable with social media because of the user generated content (UGC) element. “Brands fear that they will have to put up with uncontrolled and inappropriate content from consumers,” he adds.
Mahesh Murthy, founder and CEO of Pinstorm, points out that regular ads designed for display media don’t work well on social media. The ads that work well on social media are those which engage and involve the users — those that have games, forwarding or other social activities built in. There are very few such agencies which create such ads today.
Google is optimistic though. Parminder Singh, business head, Google India, says: “With the growing popularity of social networks, many advertisers are showing great interest in tapping the audience on these platforms. But the context and objectives of the campaigns on social networks is different from campaigns on other media platforms — so it’s not a fair comparison.” Google owns Gmail, Orkut and YouTube.
Social media is more popular with youth brands like apparel, accessories, electronics and automobiles. Regular advertisers like travel and hospitality and banking/financial services companies are not placing too many bets on social media in India yet. It’s just retail and consumer product firms like gaming companies, dating sites which are beginning to advertise on social media.
Clarification
The article says Microsoft owns Facebook. Microsoft has confirmed that it only has a minority stake in, and is not the owner of, Facebook. The error is regretted.