In India, Internet is fast becoming the popular channel for business. The year on year growth rate of the Internet is higher than other diverse media 
like TV, print media and others. The Indian Revenue Service states that in 2010, the Compound Annual Growth Rate (CAGR growth rate) for Internet was 37.3% whereas for TV and print media it was 7.1% and 3.7% respectively.
Due to the increase of Internet penetration in India, future of online advertising is promising. A 2010 report on online advertising in India given by the Internet and Mobile Association of India (IAMAI) stated that some of the key drivers that will enable growth of this medium are:
- Rising broadband penetration
- Emergence of social media
- Increased investments by various companies
a) Rising broadband penetration
Rising broadband connectivity is a major driver which plays a major role in online advertisement growth in future. The rise in broadband penetration helps the advertisers to target the end users through video ads that are similar to the television ads. These can be used in place of the traditional online display and online text ads. In addition, the lesser cost of hosting a video advertisement on the Internet than that of TV ads, increases the rate of online advertising. Today, the cost of the broadband connectivity is becoming cheaper and is becoming affordable for an increasing Internet penetration that thereby promotes the growth of online advertising.
b) Emergence of social media
These days, social media has captured the imagination of over 500 million people in the world. It was found that most of the people spend more time on social media to interact with their friends, colleagues and relatives. As per the IMRB International’s web audience measurement product WAM, after the email, it was only social media that many people were spending most of the time.
It has therefore become advantageous for companies to promote their products and services through social media sites. Ads on such social media raise the interest of people to but those products or services. People have chances to get quick answers for their questions in real time, either through brand owners or end users who have already experienced with the product. However, many organizations are in need of the effective engagement with customers. This is enabled by the Internet at significantly lower costs.
c) Increased investments by various companies
Increased investments from the various companies will be important driver for increased online advertising expenditure. Companies of various sectors like Banking, Financial Services, and Insurance (BFSI), Fast Moving Consumer Goods (FMCG), auto, travel and many others are spending on online ads. The IAMAI report states that currently, Indian FMCG companies spend a majority of their advertising budgets on traditional advertising media i.e. television and print advertisements. The emergence of social media is likely to make the advertisers use the Internet as a medium for marketing. After trying various models of advertising like pay per click, pay per page view and so on, companies belonging to BFSI, auto and travel industries are now keen on performance based advertisements, where they would pay publishers for the sales generated or at least for sales inquiries for a given product or service.
According to the IAMAI report, there had been a growth in online text ad market size from 2010. The market size of online display ads also had increased from 2008 (Rs. 235 crores) to 2010 (Rs. 417 crores). It is further estimated to increase its size in 2011 with the help of the above key drivers.