Local search to drive Internet advertising

Local advertising is likely to dominate the Internet advertising space in India, after a lot of web portals started focussing on local search engine market and started initiatives in monetising them.

The local advertising space is expected to constitute of more than 50 per cent of the Internet advertising market in India in the next two years, according to experts.

In the recent days many Indian start-ups including Asklaila.com. JustDial Services, Guruji.com, fuelled by venture funding have come out with local search engines, with an aim of opportunities in the local online advertising.

A few of them have just started monetising the initiatives. Guruji.com, an Indian search portal which has been funded by Sequoia Capital, has recently announced its advertising platform targetting the local market. Asklaila.com, a search engine developed by Bangalore-based Four Interactive, is also expecting to launch its advertising platform in the near future.

Said Kiran Konduri, one of the founders, Four Interactive, "The online advertisement market in India is very small at the moment since nobody has seriously tried to explore the huge opportunities in the local market. But it is expected to grow exponentially in the next years. Our aim is to connect businesses with end consumers directly and tap the local online advertisement market."

According to industry research, the Internet Advertisement market which was Rs 210 crore in 2006, is expected to reach Rs 2,250 crore in 2009.

Overall Internet advertising market in India is expected to reach Rs 450 crore this year. Of this, 55 per cent would be search. Globally Internet advertising market is about $28 billion, of which $14 billion will be search engine advertising.

Experts say that local advertising will lead the pack in India, with many banking and financial institutions, hospitality majors, travel portals and even the education institutions expecting to put lot of advertisement online to reach out their target audiences.

"Within search engines, local search engine market is expected to pick up in a big way in the next few years. I think that is the future of search. Because, a company who is opening offices in a particular city, might always like to take the help of local search engines. The future is for the Web companies who target the local advertising space," said Vivek Bhargava, Managing Director, Communicate 2, a search engine advertising consulting firm.

The reasons for the growth of local advertising, Bhargava says that would be driven by the SMEs who will start advertising in local search engines to the bigger players like Google, Yahoo! or MSN.

Realising the importance of local search engines, even global players like Google is also planning to launch something in the local search area also.

"But the reach the local guys have today will best fit the requirements of advertisers. They may not look for the same kind of services through Google or search engine," adds Bhargav.

The MNCs search engines and web portals are however more active in India than countries like China and Russia. Presently global players like Yahoo!, MSN and Google controls about 80 per cent of the Internet market space in India.

However, in countries like China, Korea and Japan, the best search engine and social networking sites are local sites. Experts opine that Web 2.0 companies are required to make their websites more transactional by giving multiple platforms to users, to reap the benefits out of the rapid growth of online advertising market.