Online ad giants spin their web over India

Call it the digital invasion. Global online advertising giants are making a beeline for the computer savvy sub-continent, planning to take over independent agencies and launch their own brands. Indian agencies that have been ruling the roost till now are feeling the heat as salaries touch the sky and strategies to acquire funds are quickly chalked out. Some are even bullish about their own acquisitions within the country and outside. But will they last the onslaught?
Globally the digital advertising market is worth $30 billion, and in India the Rs 500 crore market is growing rapidly at 50% annually. So the blitz is not surprising. Traditional advertising giants such as, Publicis Groupe, WPP, OMD Digital, Aegis Communication Group and Euro RSCG are planning to launch their global brands in India and have aggressive acquisition strategies. But at the same time, top Indian independent agencies such as, id8 Labs, Quasar Media, Pinstorm and Web Chutney are also gearing up to the face the challenge.
"We already declined five acquisiton offers," says Mahesh Murthy, founder and CEO of Pinstorm, one of Asia’s largest search engine marketing firms. "All these big players want to acquire Indian firms because though their media departments are formidable their digital arms are weak.

And they don’t want to lose the Indian market. At the same time we are fighting back by declining acquisition offers, growing our own offices and hiring good people. We are planning our own acquisitions abroad and will expand to eight from six offices internationally."

Others are also getting active. Take for instance id8Labs one of the country’s largest online and digital media agencies. It has acquired the business franchise of eDesign Tree Inc here, which specializes in providing interactive and digital marketing services to the IT industry. Meanwhile, Indian advertising agencies have also launched their digital arms. For instance, Percept Holdings launched Percept Knowrigin and Arms launched Arms Digital recently.

Amit Tripathi, MD of id8Labs explains the reason for the frenzy. "Worldwide interactive ads account for 8% of media spend and is slated to grow to 15-16% shortly. In India it only accounts for 1.5%. So the opportunity is huge", says Mr Tripathi.

The Indian agencies are also keen on raising funds to expand. For instance, Pinstorm is looking to raise money to fund global acquisitions and Interactive Avenues received VC funding from Sequoia Capital.

Mr Tripathi of id8Labs adds; "We are also planning for private equity funding of $7-10 million." And the word is out that salaries have also touched the sky in this sector. Manish Vij, co-founder of Quasar Media, points out, "There are limited professionals in the country to understand online well. This is a case with most of the other high growth industries. There are other strategies to counter this and one of them is developing people from other industries, which we have successfully achieved."

Agrees Murthy of Pinstorm, "Salaries have gone up tremendously. We have also opened a Digital Marketing Institute with IAMAI (Internet and Mobile Association of India). This industry will soon require around 30,000 professionals." Even id8Labs is hiring 150 people during the year to scale up operations.

It’s a big story waiting to unfold. In fact, IBM Global Business Services in its new report, forecasts greater disruption for the advertising industry in the next five years than what occurred in the previous 50 and all because of the Internet.

The report states that increasingly empowered consumers, more self-reliant advertisers and ever-evolving technologies are redefining how advertising is sold, fashioned, chomped through and tracked. And soon who knows, we might soon find premier management institutes in the country offering diplomas in digital marketing!