The vital region for the global market was US online advertising market that dropped 7 percent during Q2 year over year. The US online ad market is now worth $6.2 billion in Q2 of 2009, while it was $6.6 billion in the corresponding period last year. The only region that remained positive globally was Asia/Pacific and Japan with slight gains.

The effect of economic crisis on various online advertising like social media, mobile ads and display ads are as follows:
•    Advertisers are shifting their ad budgets from digital media to most proven traditional Medias such as television ads, newspaper ads.
•    The search advertising became a dominant player in the entire Internet advertising. It captured one-third of all annual online ad spending worldwide despite global economic downturn.
•    Display ads will be the next largest tool in online advertising. It is expected to capture 20 percent of all annual ads spending worldwide by 2011, followed by Classified ads with 19 percent.

The factors that support online ad spending:
•    Improved ad budgets
•    High cost for advertising in other medias
•    More companies are including Internet advertising as a part of their total advertising campaign
•    Ad budgets tilt from other medias to Internet

Mobile Internet ad spending will increase $2 billion by 2014 from $500 million in 2009, according to Juniper Research. The main reason behind this is, the growth driven by new markets such as China and India where fixed line Internet access is less. The growing mobile Internet access across the globe irrespective of the economies is likely to fuel the further growth of online ad spending.

However, Internet advertising received only a small portion of marketing budgets in the current season, it is expected to improve in the coming years. In a similar report, GroupM predicts that if the worldwide ad spending reaches to $58.17 billion by the end of 2009, online advertising will be 13.2 percent of total ad spending and it will further increase up to 14.6 percent in 2010.

Because of the global economic crisis, marketers decreased ad budgets to advertise on new social networking. The impact of economic crisis on online advertising industry specifically and the advertising industry overall is expected to continue in 2010 as well. In this period, the traditional media advertising is most likely to be affected than online advertising.

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In a step to counter click fraud, Business.com, Google, Yahoo and Microsoft are approved by IAB in search audits for the first time. It is a significant development, as the three major search engines have more than 95% of the search market.

IAB also released Click Measurement Guidelines that explain how to define and evaluate suitable clicks from fraudulent clicks and how to remove fraudulent clicks. These guidelines also provide parameters to the companies for truthful business through Cost-Per-Click advertising.

With the increase of vigilance on click fraud, Q2 fraud rates dropped by 3.5% compared to previous year, according to Click Fraud Index provided by Click Forensics. Q4 of 2008 recorded the highest rate of global click fraud with 17.1%. However, the two quarters of 2009 i.e. Q1 and Q2 have seen a reduction consecutively. Q1 and Q2 of 2009 recorded 13.8% and 12.7% of click fraud respectively.

According to the report, during Q2 2009, Click fraud traffic from sophisticated sources and scripted programs increased. This included growth in publisher collusion fraud on ad networks. In Q1, fraud from malicious scripted programs increased. Unlike botnets or malware, these simple JavaScript programs execute on a page view or site visit. Ad networks were especially vulnerable to these attacks during the quarter.

In Q1 2009, Canada, United Kingdom and Germany are the originating countries for major share of click fraud other than U.S.

However, according to Anchor Intelligence, a similar source reported contradicting numbers that depict an increase in click fraud. The report expects 2009 to see more click fraud despite best efforts.

Click fraud is becoming the bane of Internet advertising. The fact that, click fraud may have been as high as $4.35 billion in 2008 if none of the fraud is detected, signifies the urgent need to address the menace. Though some may think that acting against click fraud is against the benefits of search engines, every party involved in the Internet Marketing Industry should do their part to eradicate click fraud.

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Currently, even mediocre talent can easily get into professional colleges
Earlier, many talented people could not join professional courses, now even mediocre talent can easily get admission in AP. The number of engineering seats in Andhra Pradesh increased from about 4000 in 1989 to about 1.5 lakh by 2009. Even the number of MBA seats grew to about 20,000 from 2000 in just 10 years. However, the number of regular graduate students has remained about the same. This rapid growth in number of seats created a dearth of competition among students. It declined the caliber of students joining these courses.

This situation has been worsened by the greed of both students and their parents. When a professional course is paying good salaries to fresh graduates, many have succumbed by opting for such courses despite their interests/ capabilities not matching with what is required to be successful in that field.  Earlier many of such students would not have got admission into professional colleges.  However, today because of the manifold increase in the educational institutions offering such courses they can easily get admission in professional courses. This awareness that they will anyway get into a professional college further removes incentives for students to compete and strive hard to get into a professional course.

Lack of quality teaching staff
In the late 90’s, while the number of educational institutions was increasing manifold, many of the competent junior faculty left for lucrative careers in corporate sector. Over the years, the senior faculty have retired, while the remaining junior faculty got promoted as principals / Head of Departments of the new colleges. The existing educational system at that time had a limit on the number of quality teaching faculty they could generate. This combination of factors, manifold increase in colleges, retiring of senior faculty, good mid-level faculty leaving education system for lucrative corporate careers and limit of the number of good new teaching faculty that could be generated, dramatically led to the lack of quality teaching staff in professional colleges, as we see today.  This lack of quality teaching staff seriously impairs a systematic and disciplined imparting of education. Thus, it has caused a dramatic fall in educational standards across the entire state.

Social welfare measures providing free education destroyed the value of education
As a social development initiative, the government has with good intentions provided free education to students from some backgrounds who joined professional courses. However, human nature typically tends to value that are expensive and difficult to get. When education was made free, this move possibly led to undervalue the education.  The commitment level to pursue education was lowered due to the low out-of-pocket expenses. There was little to lose by neglecting their studies. However, this remains only a secondary issue.

Shift in importance to style rather than substance
Since it is not possible to deliver on teaching / educational standards, the new colleges have conveniently shifted focus to style and drama.  Fancy things like great looking college buildings, appearance of college buses, student dress codes, college events, and size of the campuses were given more priority than the quality of education. Such fancy things have caused further damage to quality education since the students in their formative years have been exposed to fancy ideas. These fancy ideas have become deeply ingrained due to the mass hysteria created by so many colleges preaching the same message.

This document was drafted many months before the Yashpal Committee report was made public. Even this report says, “Mushrooming engineering and management colleges, with some notable exceptions, have largely become, mere business entities dispensing very poor quality education.”

The end result today is large number of students who have neither the knowledge, the stamina to do quality work, the skills or caliber that is required of employees today to be able to deliver in the competitive, dynamic and global market environment today. This was before the recession hit the world and made things even more difficult for businesses to be viable.

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Google continues as market leader with little drop in market share by 0.3%
Google once again topped in search engines market share. Google’s market share improved from 54% in September 2007 to 59.70% in September 2008 but decreased by 0.3% when compared to previous month. In the past 2 months there was slight decrease in market share, in July the share was 60.2% and in August it came down to 60.0%. Search queries in Google have significantly increased by 20.8% to 4.83 billion queries in September 2008 from 3.99 billion queries in September 2007.

Yahoo market share decreased by 1.40%
With 18.1% of total share of search engines, Yahoo is in second position. Market share of Yahoo registered a negative growth of 1.40% from September 2007 to September 2008. Yahoo has registered fluctuations in their market share with a high of 19.5% market in September 2007 and a low of 16.6% in June 2008. Yahoo search queries slightly increased by 1.5% from 1.44 billion queries in September 2007 to 1.46 billion queries in September 2008. Despite of best efforts, Yahoo is struggling to retain its market share.

MSN market share slightly went down to 11.8%
MSN is at third position with 11.8% of total share of search engines. MSN registered a positive growth by 1.1% when compared to previous month. It decreased by 1.40% when compared over year but consistent when compared to previous months. The search queries in MSN increased from 0.89 billion in 2007 to 0.95 billion in 2008, with an increase of 7.10%.

AOL market share decreased to 4.1%
AOL managed to be in forth position with 4.1% of total share, even though it is decreased by 1.90% from September 2007 to September 2008. The market share of AOL is fluctuating. In February it was 5.2% and since then the market share showed downward trend till July. The market share is decreased by 0.9% when compared to August. Search queries decreased by 24.60% as the number of search queries decreased to 0.33 billion from 0.44 billion from 2007 and 2008.

Total number of search queries increased by 9.4%
The number of search queries during last year is considerably increased by 9.4%. The top three search engines Google, Yahoo and MSN holds 89.6% of US search engine market share for the month of the September, 2008. Total number of search queries in September 2007 is about 7.39 billion and there is an increase of 0.7 billion of total estimated number of search queries up to September 2008 to reach 8.09 billion.

Google continued its leadership in search engine market shares. Yahoo stands at second but the difference between the first two ranks is huge and there is a clear decline in Yahoo search engine market share but queries are slightly increased. MSN is struggling to maintain the third position with its inconsistent market share. Top three search engine queries are increased at the cost of small search engines like AOL and other search engines. Top three search engine accounts 89.6% of market share.

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Internet subscribers stood at 12.85 million by the quarter ending 31st December 2008 as compared to 12.24 million during the preceding quarter registering an increase of just 0.31% approx, according to TRAI. Broadband penetration is estimated to be at 0.5% in India, and the country added only 52,000 broadband connections between September 2008 and December 2008. By December 2008, India has only 5.52 million broadband subscribers, far short of the target of 9 million by 2010 set by the broadband policy in 2007.

Besides this, several neighboring countries including China, South Korea and Malaysia are far ahead of India in the broadband penetration. India has 0.2 broadband connections per 100 persons, while South Korea and even China have much better penetration numbers with 27.4 and 3.7 respectively.

Causes for These Discouraging Figures:
Despite the 19% jump in urban domestic Internet usage, home access is still a novelty in India. This is true especially in the case of broadband. The two biggest barriers for the growth of the broadband in India are affordability and the quality. Broadband in India is very expensive when compared to Western Europe and USA.

A 3 MBPS speed unlimited download broadband connection in US is available from a premier ISP like Verizon at $29.99 or Rs.1200 per month. A 512 KBPS speed, unlimited download Internet connection from VSNL or Airtel or Reliance is available from Rs. 1499 or $37.5 to Rs.1799 or $45 per month. This is 6 times slower and 25 to 50 percent costlier than in US. In India, the monthly charge for a broadband connection accounts to 47 to 56 percent of the per capita income*, while it is less than 1 percent in the USA.

There should be no reason for such overpricing in India. Especially, where the costs are a fraction of wages in the US – the minimum wage in US is approximately Rs.327 per hour, where as in India, it is only around Rs.10. Most Internet service providers in the USA built their infrastructure when the telecom equipment prices were at their peak several years back. Right now, Indian ISPs are able to purchase equipment at far lesser prices. Unlike earlier,  the last few years saw an abundance of capital for Indian companies with booming equity markets and hundreds of  FII’s and Private Equity companies actively investing in India.  It is also unlikely that Indian ISPs are paying higher costs for high speed Internet links to connect to the Internet worldwide.

Essentially the ISPs have not passed the benefits of lower operating costs in India to the customers. Until such profiteering is indulged by ISPs, Internet prices will be beyond the reach of most Indian and Internet usage will not become common. You have to remember that mobile usage became viable for the common man only after both the mobile equipment prices and the mobile usage charges became one of the cheapest in the world.  That led to the rapid growth of mobile users.

The worrying aspect of the disappointing Internet growth in India is that it will result in lagging of eCommerce in India. This would also lead to loss of job opportunities in the new age industries in a country aggressively looking to create jobs. Further, it would make the Indian eCommerce market lag not only against developed countries but also against the Asian ones.

* Nominal per capita incomes of India and US are taken as $1,043 and $47,025 respectively, according to IMF – 2008.

Marvist Consulting Private Limited offers Internet marketing and Internet marketing research services to clients globally. Marvist Consulting is recognized as a premier offshore Internet marketing consultant that offers result-oriented services. As an Internet marketing India based provider, we have helped businesses in North America and Europe seeking expert SEO India based consultants.