Google’s decision to stop giving commission to the agencies in the UK — 3-11 per cent of the digital campaign value — from January 1, 2009, may double the revenue of search engine marketing (SEM) companies in India, as agencies consider offshoring to maintain margins.
An IAMAI (Internet and Mobile Association of India) and IMRB (Indian Market Research Bureau) report pegs the total market revenue of the SEM industry in India at around Rs 500 crore in 2007-08. This is expected to increase to around Rs 1,000 crore by 2009-2010.
Viral Thakkar, director-sourcing advisory services, KPMG, says: “ Google’s move will push outsourcing and India will gain, as it has the cost advantage and availability of required skills.”
SEM spends exceed that of the TV in the UK, and a similar pattern is expected to emerge in other parts of the world. One third of the SEM revenue in India is contributed by domestic clients, while the rest by international ones.
There has been a decrease in the management of in-house organic SEO (search engine optimisation). In 2006, 84 per cent of SEO was managed in-house, while in 2007 it dropped to 79 per cent. Advertisers are now hiring SEM agencies to optimise their website so that it comes up in the first few searches.
Rising cost per click is also leading to increased outsourcing. In the increasing cost environment, advertising agencies are supposed to move more work to India. Typically, 30-100 projects per year are undertaken by SEM outsourcing organisations.
According to a 2007 I-Cube report, of the 250 million urban populace, 77 million speak English. Around 20 per cent of the business of Communicate 2 comes from offshore activities.
Compared to the Philippines, South Africa and China major competitors to India in outsourcing, SEM business is higher for India. The Indian workforce’s endorsements from Google helps.
Indian SEM companies earn bigger revenues from outsourcing. Thakkar of KPMG says: “Profit earned on domestic billing is just one-fourth of global client billing.”
Attracting talent is a big challenge. Lack of awareness of the opportunities in the field is the biggest challenge facing the industry. Professionals could make great careers in SEM, but many are not aware of SEM as a career option. Vivek Bhargava, MD, Communicate 2, says: “I think the SEM salary would be 2-3 times higher.”
