Understanding Internet Industry in India

New Media(Digital) New media continued its growth trajectory in 2012, albeit slightly slower than the previous years, with estimated growth in advertising revenues of close to 40 per cent over last year. Coming in at approximately Rs 22 bn in revenue in 2012, digital ad spend reached approximately 6.7 per cent of the total M&E sectors advertising revenue, the report said. Monetization in the new media space in India continues to remain dependent on revenues from advertising. Growing at close to 40 percent, the online Ad market (excluding mobile) in India touched INR 20 billion in 2012, and is expected to grow at a 32 percent CAGR to reach INR 74 billion in 2017. Mobile advertising currently accounts for a small share of the market, estimated at INR 1.7 billion India Digital Advertising Market Desktop Internet Advertising 100 90 14 80 70 9 60 50 6 40 74 4 30 3 20 2 26 1020 43 33 56 0 2012 Source: KPMG India analysis and industry discussions 2013P 2014P 2015P 2016P 2017P

India Digital Reach Significant share of the Global & Indian population had adopted Internet & Digital Media Digital goes Online World India Internet Users 2.4 Billion 137 Million Mobile Internet Users 2.1 Billion 79 Million 1 Billion 44 Million Smartphone Users Sources: Internet World Stats, Mobithinking, Medianama, Trak, Digital Insights, Business Today India has 554.8 million mobile users and 137 million Internet users India already has more mobile users in its villages as compared to its cities and towns. India has 23.8 million individuals who access Internet from their mobile phones using a data connection such as GPRS or 3G. Rural India will have 68 million claimed internet users and 46 million active users by the end of October 2013. Social Media Users World India Facebook 1.15 Billion 78 Million Twitter 500 Million 33 Million LinkedIn 238 Million 20 Million Instagram 130 Million 4 Million Pinterest 70 Million 5.5 Million About 7.1 million users who access Internet exclusively through mobile data connections are in rural areas. Predicted number of Social Media users by Dec,2013 : 80 million Social media users, residents of towns with population of under 5,00,000 : 33% Social media users residents of smaller towns with population smaller than 2,00,000 : 25%

Digital Marketing an Opportunity? Indian Digital Media Spending (INR Crores) 30% 2,938 29% 2,260 54% 1,750 1,140 FY 2010-11 FY 2011-12 FY 2012-13 FY 2013-14 (Est.) Spending by Top Digital Marketing Categories (INR Crores) Category Search Display Social Mobile Video Email FY 2010-11 493 557 90 NA - FY 2011-12 718 595 175 123 88 53 FY 2012-13 850 662 300 230 150 68 The Indian online landscape is very different. There are 137 million internet users in India now that makes it the 3rd biggest internet market. Moreover, India is one of the top market for mobile phones in the world. With millions of mobile subscribers and rapidly increasing mobile internet, India provides a great opportunity for marketers. The size of digital advertising in the overall advertising pie increased from Rs.1,750 crore in 2011-12 to Rs.2,260 crore in 2012-13. Market size in India: Mobile Ads Spend 2012-13: INR 230 Crores Search Ads Spend 2012-13: INR 850 Crores Social Media Ads Spend 2012-13: INR 300 Crores Source for Digital Marketing Spending: : IMRB International and IAMAI Display Ads Spend 2012-13: INR 662 Crores Email Ads Spend 2012-13: INR 68 Crores

India: Internet and TV Landscape India Internet connections, 2012-2017 P Million Connections 450 India Internet VS. TV Penetration, 2012 -2017 1000 400 55 350 762 791 600 40 250 200 34 29 150 50 731 848 873 47 300 100 800 820 25 99 139 232 174 286 331 200 0 2012 2013P 400 2014P Wireless connections 2015P 2016P 2017P Wireline Connections As expected, mobile and wireless connections continued to drive the growth of internet penetration in India. By the end of 2012 there were 124 million internet connections in India, a rise of 41 percent over last year. Over last year fixed line connections grew by 11 percent. Over the same period, wireless connections have grown by almost 50 percent, outlining the importance of mobile data access in the overall digital economy . Going forward, the total number of connections is expected to surpass 380 mn by 2017, with wireless connections comprising nearly 90 percent of all connections added over 2012-2017. The projected growth is slightly lower than last year primarily due to continued uncertainty over 4G roll-out and continued uncertainty in the telecom environment Source: KPMG India analysis and industry discussions 174 226 276 351 426 496 0 2012 2013P 2014P 2015P 2016P 2017P Internet Users Taking into account multiple users for a single wire line connection, the number of internet users reached 174 million in 2012, about 25 percent of the size of the total TV viewers in the country and is expected to reach over 60 percent of total TV viewers by 2017

Share Of Internet Enabled Devices Shared of Internet enabled devices 2017 Shared of Internet enabled devices 2012 5% 46% 2% 62% 30% Feature phone Feature phone 16% 17% 22% Smart phones Tablets Smart phones Tablets Pcs & NoteBooks Pcs & NoteBooks The devices are getting smarter, the users more engaged: In 2012, almost half of wireless access was via feature phones, but a rapid change in the device ecosystem on the ground, means that 2013 will be the first year when feature phones will cease to be the main use of internet access in the country. This shift is already having far reaching consequences for content providers, media platform owners (both on deck and off-deck) and telecom companies. Smart phones and tablets have an installed base of approximately 44 million and 2.5 million units respectively, comprising a third of internet enabled devices in India. Driven by several cheaper smart phone options and more low cost tablets coming into the market, the share of these devices is expected to increase to 67 percent of all devices, by 2017. Source: KPMG India analysis and industry discussions

Industry wise Digital Marketing Ad Spend in India Auto BFSI Consumer Durables E-Commerce Players Education Electronic Midea FMCG IT Online Publishers Others Print Media Telecom Travel Total Ad Spend 2010-2011 2011-2012 2012-2013 114 297.5 293.8 205.2 192.5 271.2 68.4 122.5 158.2 0 105 113 68.4 105 158.2 45.6 35 45.2 68.4 122.5 203.4 102.6 140 180.8 114 157.5 203.4 34.2 17.5 22.6 11.4 17.5 22.6 125.4 227.5 316.4 182.4 210 271.2 1140 1750 In the financial year 2013-14, online advertising market on an average is expected to grow by 40 percent (last four years average). In 2012-13, the industry verticals which has performed well include: Auto (13%), BFSI (12%), Travel (12%) and Telecom (14%). In 2012-13, one of the verticals which has seen decline in spend is Ecommerce, which constitutes to about 5% of the total market spend which was 7% in FY 2011-12. 2260 INDUSTRY WISE DIGITAL MARKETING AD SPEND IN INDIA 2012-2013 BFSI CONSUMER DURABLES E-COMMERCE PLAYERS EDUCATION ELECTRONIC MIDEA FMCG ONLINE PUBLISHERS OTHERS 210 22.6 17.5 11.4 22.6 17.5 34.2 IT 182.4 227.5 125.4 203.4 114 157.5 180.8 140 102.6 203.4 45.2 45.6 35 68.4 122.5 158.2 105 68.4 113 0 68.4 105 158.2 122.5 192.5 205.2 114 AUTO 271.2 316.4 2011-2012 271.2 293.8 297.5 2010-2011 PRINT MEDIA TELECOM TRAVEL

Understanding Digital Market Landscape Email Marketing SMS Marketing Social Search and Creative Digital ad-network Mobile VAS Marketing

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