New Delhi: Digital media in India is set to cross a key inflection point some time this year.
Digital’s share of advertising will rise to Rs1,969 crore in 2012, overtaking outdoor (Rs1,841 crore) and establishing a clear lead over radio (Rs1,618 crore), according to media buyer GroupM India. Last year, these numbers were Rs1,515 crore, Rs1,697 crore and Rs1,458 crore, respectively.
The digital domain is drawing an increasing share of advertising budgets, thanks to the traction of the social media, the ability to monitor online campaigns in real time, and the potential inherent in India’s move from 2G to 4G (fourth generation, high-speed Internet networks), skirting the damp squib that is 3G (third-generation, high-speed mobile services).
Already several large advertising networks have acquired stakes in smaller, independent digital media agencies in the country. Earlier in June, JWT, a WPP group agency in India, announced the acquisition of a majority stake in the online business of Hungama Digital Media Entertainment Pvt. Ltd founded by Neeraj Roy.
Max Hegerman, who has headed JWT’s digital media initiative for the past four years, will announce the appointment of a national creative director for the new business soon.
“There is a need for partnerships to build a core digital capability as the perception of the medium is changing from being a repository of information towards creating engagement with consumers,” Hegerman said.
The key focus is on social media. The medium has matured over the last two years, with content generators geared towards creating better digital platforms—besides websites and videos—such as mobile applications and platforms such as Pinterest, Hegerman said.
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India’s infrastructure growth and transition from 2G to 4G will help digital agencies upload more content that’s easily accessible, thanks to greater bandwidth. Better infrastructure will also increase penetration of the medium beyond the 100 million existing Internet users, said Praseed Prasad, national director (digital trading), GroupM, who deals with 300 clients including Pepsi, Vodafone and Ford, among others.
Companies such as Google Inc., Hungama Digital and Yahoo Inc. are among online media companies benefiting from the increase in digital advertising, with the medium growing 30% annually.
Digital marketing could be poised to grow exponentially in India, but some experts say even bigger growth will require greater imagination.
India currently has about 15-20 medium to large digital agencies employing more than 30 people, said Anuj Kumar, co-founder and chief executive at Affle, a Singapore-based mobile advertising firm. However, the start-ups in this sector could easily be more than 100, Kumar said.
“The social nature of this medium is what distinguishes it from traditional forms of mass media like television or print,” said Kedar Gavane, a director at comScore Inc., a digital marketing research firm. “This fosters engagement with customers and brands, making it a two-way exchange rather than a passive intake of information possible through print and television.”
“The absolute measurability of online campaigns in real time is also driving more and more brands to go digital,” he added.
According to Kanika Mathur, president, Digitas India, a digital marketing agency, “Unlike traditional media like print, television, outdoor and radio, the online medium allows you to measure the complete customer journey from awareness to consideration/preference to purchase using various tools such as Google Analytics, BuzzMetrics, Omniture, etc.”
“In print and TV, one cannot measure how many people actually saw the ad,” Gavane said. “It’s only a measure of the readership of that magazine/newspaper or television rating point for a certain channel respectively.”
Spends within the digital space have been on the rise across categories, said Hegerman. Early movers such as telcos, automobile makers, and banking and financial services spend about 12% of their marketing budgets on digital while apparel brands spend anywhere between 15% and 20%, and consumer good firms have increased their spending from 1-2% a few years back to about 5%, Hegerman said.
Within the digital media space, consumption of online video content has been on the rise. “Today a lot of consumer goods players are increasing their digital ad spends because of online video and mobile Internet,” said Kumar of Affle, which has clients such as Unilever, Coca-Cola and Samsung, among others, in its portfolio.
“FMCG (fast-moving consumer goods)/consumer goods players are looking to move their money spent on television towards video online,” said Prasad of GroupM.
Besides consumer product companies, apparel brands are also advertising on digital media. Madura Fashion and Lifestyle, the lifestyle garments business of Aditya Birla Nuvo Ltd, is one of those. The company has brands such as Van Heusen, Louis Philippe and Peter England.
“Approximately 35% of our target audience comprises of urban Indians on the Internet, so it makes immense sense for us to use this platform to connect with our prospective consumers,” said a spokesperson for Van Heusen. “Digital media not only allows brands like us to engage with consumers, but also provides rich consumer insight.”
Peter England, another menswear brand in the company’s portfolio, is looking to double its digital spend over last year, albeit from a small base, said Kedar Apshankar, chief operating officer. The brand has more than 600,000 fans on Facebook while Van Huesen has 140,000 fans.
Global sportswear major Adidas AG echoed this view, given that the 14-19 age group is the core target audience. “In the last three years, our digital spends have increased significantly,” said Tushar Goculdas, director, marketing and sales, Adidas India.
The brand had a predominantly digital campaign around the UEFA Champions League final last month, Goculdas said. Adidas also has a cricket Facebook page with close to 1.6 million fans.
According to Kumar of Affle, “Big movers in the digital space would be making video content available online, which could be accessible through mobile phones, reaching out to a larger consumer base.” Kumar also said literacy barriers needed to be reduced for the content to be understood by the rural market.
Manish Vij, founder and chief executive at Tyroo Media, reinforced this, saying that data and video along with mobile Internet will be growth drivers for digital media.
Hegerman also said that digital agencies will need to push marketers towards mobile going forward.
Graphic by Prajakta Patil/Mint