Excerpts from Experts: A Look Back at India Online in 2008

by Satrajit Sen

As we bode adieu to the year 2008 and welcomed the new year, it seemed like a good time to reflect on the year gone by and find out how the Indian online industry had fared in the last one year. And so, AlooTechie caught up with some of the industry leaders and experts who listed out the good and bad things that have happened to the online industry in India in 2008.

by Satrajit Sen

As we bode adieu to the year 2008 and welcomed the new year, it seemed like a good time to reflect on the year gone by and find out how the Indian online industry had fared in the last one year. And so, AlooTechie caught up with some of the industry leaders and experts who listed out the good and bad things that have happened to the online industry in India in 2008.

The industry leaders pointed out that though internet usage has been increasing through the mobile platform, the overall growth rate of internet users in the country has been relatively slow. True, the country as a whole had to face the unfortunate Mumbai terrorist attacks but the incident also showed the power and popularity of the new age communication tool like Twitter. The global economic slowdown, no doubt, has had its own negative impact on the overall economy but in some way it might have also inspired advertisers to consider internet as a cost effective, and perhaps more accountable, medium of advertising. Over to the experts…

Sanjeev Bikhchandani, founder and CEO, Info Edge India (

# Economic Meltdown: The global economic slowdown has affected the industry in both good and bad ways. Good because many advertisers are looking at online advertising as advertising on other traditional media are costlier. However, the meltdown also had an adverse effect as many new ideas and concepts did not get funded.

# Internet Usage: Internet penetration is increasing at a fast rate but it could have been faster. Besides, internet today is largely a big city affair and has failed to penetrate the remotest parts of the country.

# Local Language Content: It’s good that the industry is talking and is concerned about the local language content but there has been a lack of movement and initiative being undertaken by companies and enterprises to popularise local language content on internet.

# Mobile Internet: The usage of mobile as an internet surfing device is increasing but no company or enterprise has yet been successful to devise a killer application that could popularise mobile internet at a mass scale.

Murugavel Janakiraman, founder and CEO, Consim Info (BharatMatrimony group)

Being a first generation internet entrepreneur and having built one of India’s largest internet businesses, Janakiraman believes that the positive trends guiding the digital industry far outweigh the negatives and thus prefers to highlight the positive developments and not the negative ones.

# Internet is becoming more open and social: As Google, Yahoo, Microsoft and Facebook become more open, the internet is now benefiting more people than ever. Social services like micro-blogging have redefined the way in which news is delivered. This was evident during the 26/11 Mumbai attacks when Twitter became the primary source of information to millions of anxious citizens.

# Emergence of technologies like DTH and Mobile: DTH services like TataSky and TataSky Plus have opened up newer digital delivery platforms. BharatMatrimony’s alliance with TataSky has allowed us to make our matrimony services to millions of users via TV. Similarly, our alliance with Airtel has made our services accessible via cell phone.

# Greater Internet and PC penetration: The number of internet users in India has grown tremendously over the last one year. This augurs really well for the digital industry in its quest to become a mass media.

# Rise of entrepreneurs in the digital media: A significant proposition of the startups being showcased at events such as and Tata-NEN hottest startups are from the digital industry. More entrepreneurs indicate more innovation, which in turn indicates a healthy industry.

# Recession: The economic recession has prompted companies to look at more cost effective methods of reaching their consumers. What that means is companies are now allocating greater percentage of their marketing budgets to the online medium. For instance, the movie industry is now giving more importance to online advertising for promoting new films.

Deep Kalra, founder and CEO,


# Internet on Mobile: The number of mobile broadband connections globally has risen ten-fold in the past year. The mobile user base in India has grown to over 250 million and this segment is bound to give an impetus to m-commerce.

# Hi-speed Internet Access: About 74 per cent of all internet connections in India have speeds of over 256 kbps. The number of connections with speeds of 2 mbps and above is also growing fast — it is now over five per cent of all connections. In the quarter ending October 2008, 2.6 million new IP (internet protocol) addresses connected to the global network. This is a growth of 23 per cent in IP addresses.

# E-commerce: E-shopping in India was expected to grow by 180 per cent during the last festive season (October-November 2008) and touch Rs 15,000 crore.

# Business on Social Media: This was the year that businesses saw the value that social networking websites could bring to the table. Innovators across the globe — from Google and Salesforce to Facebook — entered into strategic partnerships to offer applications on the web in order to meet the business needs of users.

# Cloud Computing: Besides all the business sense it makes, the current downturn has led many CTOs (chief technology officers) to look at cloud computing to serve their IT requirements. This is a trend that I feel will take greater hold in the Indian market in 2009.


# 3G: We have been hearing of it forever now — but ‘red-tapism’ through the ‘corridors’ has left Indians waiting far too long to benefit from the wider spectrum and enhanced services.

# Reactive User Behaviour: There are almost 76 million wireless internet users in India who are capable of accessing data services including internet through mobile handset (GSM/CDMA). But in practice there are only about 10 to 15 million users who actually access the internet through their hand phones.

# Growth versus Penetration: With 81 million internet users, India was recently ranked fourth among the top 10 nations in the world in terms of internet users. However, we rank a low 153 in terms of number of IP addresses per capita, with 2.3 unique IPs per thousand people.

Dinesh Agarwal, founder and CEO,


# Acceptance of internet is increasing with broadband (though not in mbps) and hence penetration is on the rise. Dial-up is almost forgotten, at least in Tier I and II cities.

# Successful emergence and mass acceptance of Indian online companies such as, and is a testimony, given that these domains were dominated by print and other traditional media so far.

# Video on internet is among the hottest trends. Led by the success of YouTube, videos on net have become a reality in India too.

# Internet browsing on mobile is catching up — started by better software and handsets and larger screen sizes, though 3G is still awaited.

# Good availability of VC (venture capital) money in the first half of the last year continued from 2007.

# Rapid salary rise and talent churn contained a little bit in the second half of 2008 will lead to stable growth and consolidation in online companies.

# After a long gap, since Indiatimes from BCCL (Bennett Coleman and Company Limited), traditional media companies — such as NDTV, HT, Zee — have again started looking at internet seriously, led by Web18.

# Emergence of community based user generated content portals such as LinkedIn, YouTube, Orkut and Facebook in India. Platforms such as LinkedIn can pose serious threat to business models of job sites like

# Emergence of global sourcing platforms such as IndiaMart and


# Google monopoly is getting stronger. Diminishing online value addition from Yahoo and Microsoft may lead to lesser innovation in future since there seem to be no serious competition emerging against Google.

# Internet undersea cables cut twice in the year 2008 has affected businesses and consumers.

# Lots of “me too” in classifieds, ad networks, social networking etc could led to another bubble and burst; though it was avoided and contained for time being because of sub-prime burst.

# No great online invention happened in 2008 — like MySpace, Facebook, YouTube or Wikipedia.

# Sub-prime crisis leading to large economy depression would keep investment in internet and online at bay for two-three years.

# Internet usage by businesses is yet to pick up and mature as against what we have seen in China where more than seven million businesses are registered with alone.

Mahesh Murthy, founder and CEO, Pinstorm


# Economic crash and recession: It has led to clients moving away from unaccountable media like TV and print to the more accountable digital media.

# Reaction to Mumbai attacks: For the first time digital media like email, Facebook, Orkut and Twitter were used as mass mobilisation tools and it worked. From now on politics will not be the same again in India as everyone has started taking the digital media seriously.

# Reduction in the cost of digital advertisements: Search, Display, CPC (cost per click), CPM (cost per thousand impressions) rates are down thus making the online media more attractive to advertisers.

# Rise of the cost-per-impact display buying model: The beginning of the end of CPM, the second-worst metric in digital media buying — after daily slotting fees.

# The Pinstorm – Lintas Media Group alliance: It has played a major role in changing the nature of advertising from commissions and fees based advertising to pay-for-performance model. This has helped in unlocking greater ad budgets.


# Impending demise of Rediff and Yahoo: Rediff’s reluctance to embrace performance-based advertising and Yahoo’s lack of leadership may lead these companies to fade away and make Google even stronger than it is. Who will counter Google’s monopoly now?

# Insufficient spread of internet access: When will we see internet users go beyond the 100 million mark, like it’s been expected for many years?

# Lack of agreement on metrics: IAMAI says 40 million internet users, JuxtConsult says 32 million, IMRB says 45 million, IGF says 81 million and Google says 97 million. Just how many people are online in India — and who and where are they?

# Mobile data and mobile VAS (value added services) are still locked up tight with the operators. Will the 300 million mobile users in the country become an addressable digital market?

Sunil Rajshekhar, president and COO, Times Internet Ltd (


# Consolidation and Integration: The year 2008 saw the beginning of category-wise consolidation of consumer driven verticals by ad networks. Advertisers can now aim at reaching all sport sites or all auto sites at one go as part of a package offered by ad networks.

# Growing Mobile Media: With 315 million mobile subscribers, mobile population far outstrips internet users (40 million), Pay TV subscribers (72 million), DTH subscribers (3.5 million), Broadband subscribers (4.9 million), Print reach (222 million) and Radio reach (119 million). The mobile market offers a significant platform for additional features — videos, cameras and music. Growth of wireless gaming market is expected to add opportunities for alternate revenue streams.

# Video Advertising and Mobile Advertising: With content sites moving increasingly to a multi-media platform, the year 2008 witnessed the beginning of video advertising. Pre-rolls, mid-rolls and post-rolls are now the new buzz words in online advertising terminology. Similarly, digital advertising found a new frontier on the ubiquitous mobile platform and with the impending 3G platform one expects video advertising to catch up on this platform too.

# Trends in Advertising Monetisation

Integrated media solutions combining print, TV, radio and internet continue to bolster internet advertising spends in India:

* Advertisers demand ‘individual specific’ and involvement based measurement, putting pressure on the mass-market-low-RoI (return on investment) model.

* New web entrants are making ad space that was once proprietary available through open and efficient exchanges.

* Increased audience control has meant impatience with irrelevant advertising content.

* Audiences embracing tools and services — like ad blockers and P2P networks — that allow them to consume content with fewer irrelevant commercial messages.

# Social Networking Communities bring down ‘Walled Garden’: The current ‘walled garden’ approach will erode due to initiatives like Open Social which fuse with open source identity management tools, resulting in a single interface, regardless of the specific social network site. The year 2008 also witnessed the commoditization of social interaction toolsets. In 2008, social networking’s focus began to shift from the technology platform to brand messaging.


# Downturn Haunts Internet Again: The last quarter of 2008 saw internet companies revisiting their strategies like they did in 2000. Downsizing and resizing reared their heads once again. For survival the focus has again turned to internet advertising.

# Performance Based Pricing: The focus moved from CPM to CTR (click through rate) to CPL (cost per lead) and to CPA (cost per action). Online ad agencies, ad networks and advertisers aimed at outsmarting each other and web publishers by insisting on performance led pricing for even awareness and brand building campaigns. With less than two per cent spend on internet advertising, the industry fails to take off as an important advertising channel in India.

# Social Networks Impact Email Viability: With users’ communication tool increasingly moving from the ‘free’ email platform to the social networking platform, accountability of email as a ‘free’ offering on horizontal portals is beginning to be questioned. Ad yields on email lowered even further as time spent on email reduced at the cost of increasing time spent on social networks. Ad yields on free email were affected further as web publishers used email inventory for low yielding performance-led CPL/CPA advertising.

# Content IPR – Piracy on UGC/P2P Networks: The growth of UGC (user generated content) sites and P2P (peer-to-peer) networks has resulted in copyright infringement of traditional media and music companies. Content publishers have begun to worry on the exclusivity of their content.

# Bad News is Bad for News sites: Traffic on news sites and portals hit the roof, like it did for other media during the terrorist attack on Mumbai. Bad news though can never be monetized. While most media can put a cap on circulation or airtime, internet can afford no such controls. Bandwidth consumption bills can be draining.

Harminder Kaur, chief strategy officer, Ignitee India


# Micro-blogging is new communication mantra: After social networking websites, blogs and forums, now it is micro-blogging service like Twitter which is catching up in India. Micro-blogging started as a tool for enhancing communication among the tech-savvy netizens but has now expanded to being used as a tool that supports e-commerce, brand exposure, business information exchange and so on.

# Politics is now on the digital space: For the first time in the history of Indian digital space a political party stepped its foot. For instance, Ignitee recently did some digital campaigns for Congress in Rajasthan. We also saw Tata Tea launching a ‘Jaago Re Campaign’ to motivate and enable Indian youth to vote and actively participate in the electoral process.

# Find who is next door at the click of the mouse: With the significant increase in the number of internet users and penetration of internet to the towns, local search is also gaining importance. In fact, almost 90 per cent of the total search queries are local. This provides tremendous growth opportunity for this segment.


# Recession was a missed opportunity: In 2008 the world saw economic recession. With this recession came into effect the shrinking revenues of the organizations, both large and small, paving way to cost cutting strategies. However, digital marketers failed to leverage analytics and metrics and use the global economic recession to the advantage of the digital advertising industry. And so advertisers primarily focused on traditional media of advertising.

# When do we get our TAM/IRS/NRS: In spite of the fact that there are now a number of audience measurement tools like comScore, Google Ad Planner and Komli ViziSense no two tools provide the same statistics about the same website.

# Return on Investment overpowers Branding: Even after the conversations, debates and discussions over the potential of internet as advertising medium, even today, it is primarily used for driving sales. Experts have time and again discussed the potential that internet advertising has to execute branding activities, even in this year it was prominently looked upon as a medium that could generate leads or drive sales.

# Internet users grow but where to get the access: Though the number of internet users in the country has grown to over 60 million people, the country yet does not have adequate infrastructure to support the further growth in the number of internet users.

Mrutyunjay Mishra, director, JuxtConsult


# The increasing usage of properties like has been a great thing for internet in India. Properties like IRCTC have actually proved that transactions are possible through online in India and that internet is not only meant for emails and chats. One has to provide some valid reason to the consumer to spend money online. No doubt they are making transactions worth Rs 320 crore per month.

# The recessional panic has been making online companies follow a stable way in decision making. Moreover, offline companies are looking at internet as an alternative and relatively cheaper medium for communicating.

# 3G rollout is one of the early signs that the government is seriously thinking of increasing internet penetration in India. Now it is on the online entrepreneurs and companies to churn out consumer friendly India specific measures to involve the mass.

# Brands and organisations are taking social media seriously now. Enough consumer feedback is generated online and internet is actually helping consumers to comment with freedom. Thus, brands like Airtel and ICICI can’t just afford to overlook social media and online consumer feedback.

# Trends show that the industry is giving serious thoughts to mobile internet and mobile is seen as the next device that will enable the growth of internet penetration in India. I feel mobile internet will be bigger than internet in PC and laptop.


# Experts of the online industry are experts only in understanding the technology, but when it comes to understanding the consumers’ psyche, the industry lacks expertise as there are no real experts available for that. One should understand the Indian consumers’ needs and not just copy the Western online trends.

# Many entrepreneurs start an internet company only to make some money and then sell it to bigger companies. This very mindset hampers the internet business as no such businesses are meant for personal wealth.

# Another impediment is the limited usage of local language on internet. English is the third language in India and still the industry can’t find out ways to use local language keyboard. The industry should try and find out whether there is enough local language content available on the net and whether it is easy to find out that local language content.

# Internet is still looked at as a medium for direct marketing and lead generation, whereas the truth is that brand-building can happen on the net as well. Around 70 to 80 per cent of a brand’s audience can be reached on internet and hence it is on to advertisers, agencies and publishers to churn out innovative ways to address the users effectively. Only then we can hope that the medium can grow faster.

Alok Mittal, managing director, Canaan Partners


# One of the best things that has happened to internet in India is that various new companies and startups are coming up and are making their presence felt without spending heavily on marketing. For example, has registered around 5,000 users without investing much on marketing and promotion.

# The usage of mobile internet in India has really gone up and witnessed a fast growth in the year 2008. Another good thing that happened in the last year was that advertisers and brand marketers started looking at internet advertising as it is the cheapest medium for promotions and can really be helpful in the current period of global economic slowdown.


# The biggest impediment that has been hampering online industry’s growth in India is the lower growth rate of overall internet users in India. We are having a growth rate of around 20 per cent in the number of internet users and that is very low. A lot was expected in 2008, but very few things have turned out to be good.

# Due to lower internet user base, the advertising and marketing part is feeling the pinch as well. Campaigns are not generating enough visibility as they are supposed to be.

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