New Delhi: Internet giants Google and Facebook account for more than half of the advertising revenue spent online in Asia, a study by Economist said.
Economist Intelligence Unit's (EIU) report on environment for Asia's Internet businesses revealed that the market is challenging as its size in Asia is still small and there are many players competing in the online advertising space.
Monetisation through online advertising is not easy, as even big names in the global publishing industry have seen that there are simply too many players competing for same advertising dollars, the report said.
"In Asia this is compounded by the small size of individual markets. In Malaysia and Thailand, for example, just 1 percent of advertising revenue is spent online. In India, this is slightly higher at 7 percent. But of the USD 410 million being spent online, 60 percent goes to Google and Facebook, with only the remaining 40 percent going to other online players," it added.
Experts said Google and Facebook have clout in the online ad space on account of their massive user base.
On the reasons behind dominance of Google and Facebook in the online advertising space, online video advertising network Vdopia said the internet giants have the highest number of users on the internet, being the top two sites in the world.
"Asian market is witnessing a massive increase in online spending. However, mobile, being a more targeted and personal device is growing at a much larger rate and more brands are including mobile in their core marketing strategies," Vdopia, VP (APAC) Preetesh Chouhan said.
Entrepreneurs in many parts of Asia face a challenging commercial environment, it said.
"Online advertising budgets, while growing, remain small and skewed towards the larger players. While e-commerce is growing rapidly, finding the winning business model remains difficult in many markets," the EIU report said.
Outside of North Asia, entrepreneurs report that Internet users are reluctant to pay for intangible items such as content. This is particularly so when there is pirated content easily available, it added.
However, EIU said mobile advertising is slowly gaining traction and Asia will be one of the biggest markets.
While online advertising in Asia is forecast to grow at a modest pace (from 24 percent of worldwide online advertising in 2010 to 26 percent by 2015), the mobile advertising market is really taking off.
By 2015, Asia is expected to account for one-third of the mobile advertising market globally, it said.
Online advertising spend in India was about Rs 2,260 crore as of March 2013 and is estimated to grow to Rs 2,938 crore by 2014, while, mobile advertising is estimated to reach Rs 250 crore in 2013, a growth of 40 percent year-on-year.
Globally, online advertising revenue stood at USD 99 billion in 2012, which is estimated to grow at 15 percent to USD 113.5 billion in 2013. In the case of mobile advertising, the revenues were USD 6.4 billion in 2012 and is expected to touch USD 9.7 billion in 2013.