Wednesday, June 13, 2007

Internet Advertising Economics

With web 2.0 startups popping up everywhere like mushrooms these is getting difficult to distinguish real diamonds from the fake ones. Everyone is offering a great free, consumer friendly, lightweight, AJAXified, ultra modern Web 2.0 service, and expecting to make it big with Advertising revenues.

Total indian Advertising industry would be a minuscle 100million$ as compared to app. 16 billion $ market of US. Find an interesting discussion here. Moreover, it's not only about advertising. Advertising is a mirror of industry depth. For example, a business model like RearDen, a company focusing on business travel, would be useless in a country like India as of now, as we are far from being habitual in using internet for day-to-day needs. Moreover, we can afford to hire a person as a secretary, which Rearden tries to get away with. So, the complexity and depth of industry, especially the industry that heavily relies on internet is nowhere near US.

Even among current internet userbase of 20 million, it would be very interesting to know what is the amount of money being spent per person on internet, on e-shopping, or ticket booking. Of course, the internet awareness will increase very fast. Today's college goers are very net savy, even in small towns. They are tomorrow's earners and comsumers. So, picture after 10 years might really be radically different.
Quite a few startups have come up in online ad networks space.
Tyroo sold their stake to Yahoo very recently. They also have an Ad agency, Quesar media, under the same umbrella (Smiler interactive group). So, it might be their key USP.
Komli, is another one, started by Amar Goel, an ex-microsoft. They, I believe, are focusing on optimization of delivery, using behavioral targeting as their key USP. But, statistical methods and optimizations would be helpful when one already has a big portfolio of media and advertisers available. Google can show extremely relevant ads, based on geography and content type, only because it has a huge footprint among advertisers, as they say, 'the long tail' or 'bottom of the pyramid'. By the way, does anyone know what this name, 'Komli' means? :)
There is one more, called Ozone media, but not sure what they are upto.

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