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Dotcom
revival: Slow but steady is the mantra
If
international portals like Yahoo and Google are gung-ho about
online advertising, can Indian portals be far behind? Portals
like GaramChai.com, Sulekha.com, Rediff.com and Samachar.com
have all been experiencing a renewed surge of inquiries from
advertisers, says MOHAN BABU
It
is nearly four years since the big dotcom meltdown, and although
the prophets of doom had predicted that all online businesses
would crash and burn, that hasn’t happened. Same was the case
with the predictions on euphoria during the buildup to the
hype, which again didn’t live up to the promise. However,
during the ensuing few years since the dotcom burst, a few
business models have not only solidified but have been growing
by leaps and bounds. Case in point is eBay’s phenomenal success
that has endured not only the tech meltdown but has also thrived
and experienced steady growth in-spite of the slowdown in
the American economy. Internet applications like online trading,
bill payment and Internet banking have all acquired mainstream
status. Behind the scenes, another interesting relic of the
dotcom era, online advertising, has been showing signs of
steady growth.
During
the heady days of the Internet boom, websites were going overboard
advertising their wares by spending millions of dollars sponsoring
advertisement slots on TV during the American Superbowl, Macy’s
Thanksgiving parade, etc. At that time most advertisers were
clueless on the benefits of advertising on the Web and experimented
with different measures including the infamous ‘page hits’
‘eyeballs’, etc. Needless to say, that was an era when hardly
anyone asked about the RoI (Return on Investment) on Internet
sites or applications. Being there, being a first mover was
more important than ‘mundane’ aspects of making money. The
same advertisers almost stopped dead in the tracks the moment
slowdown hit home.
Recounting
her experiences selling online adverts after the Internet
bubble burst, Wenda Harris Millard, Yahoo’s advertising chief,
in a recent Fortune article (10 Tech Trends to Bet On, February
2004), was quoted saying that it was an experience she does
not wish to repeat: “Major advertisers that had spent billions
with Yahoo and other Internet sites when times were good almost
completely stopped writing cheques. The medium didn’t work,
they said. Banner ads had about the same response rate as
direct mail, but cost more. And all the promises about being
able to use the Internet ads to track what consumers buy and
why turned out to be just that—promises.” Giving a positive
twist to the current scene, the article went on to add: “Yet
today, Millard says she can barely keep up with the demand.
Advertising space on Yahoo’s auto and movie pages is sold
out for 2004, and Yahoo’s profits, which are still largely
advertising driven, have sextupled in the past year.”
Google’s
foray into the business of online advertising by providing
a small list of relevant advertisers with every search is
legendary, a move that raked in millions of dollars for the
company. Google also started ‘adsense’ sometime last year,
a programme that allows individual websites, blogs and portals
to display a small advertisement every time a Web page is
displayed. A Google algorithm automatically serves up relevant
advertising banners depending on the content of the page.
Google shares a part of profits of every click with the website.
If
international portals like Yahoo and Google are gung-ho about
online advertising, can Indian portals be far behind? Portals
catering to NRIs like GaramChai.com, Sulekha.com, Rediff.com,
Samachar.com have all been experiencing renewed surge in interest
among advertisers, though most are guarded about actual numbers.
(Side note: I have been associated with GaramChai.com as a
managing partner since its inception in 1999 and am privy
to the workings and business models of such niche portals.)
GaramChai’s
manager of operations, Raj Narayan concedes that they are
indeed receiving an increasing number of inquiries from advertisers
and prospective clients who are savvier about advertising
on the Web. Most clients have their internal checks and balances
and are more aware of the workings of Internet marketing.
On the flip side, many advertisers looking for instant gratification
by launching online advertising campaigns, find that the clicks
on their banner advertisement don’t always translate into
instant business. For instance, a bank advertising services
for NRIs may find that clicks from advertising on a niche
portal may not translate to a proportionate number of customers
signing up. However, the same advertiser may find an improvement
in brand recognition, what advertising guru’s call subliminal
brand recognition, which may be worth a lot over a long period
of time.
Does
all this renewed interest from online advertisers mean that
a dotcom revival is on the horizon? It is hard to say. However,
one thing is for certain, portals that were just limping along
without any thrust or resources will find that they are able
to generate much needed revenue to keep their operations buzzing.
The bottomline: while grandiose ideas like selling pet food
or groceries over the Web may find it hard to make it big,
portals catering to niche, targeted segments will find that
they can continue to build on their strengths as we emerge
from a tech slump.
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