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India will be an ‘online and mobile first’ ad market

India will be an ‘online and mobile first’ ad market
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First Published: Fri, Apr 15 2011. 01 11 AM IST
Updated: Mon, Apr 18 2011. 06 39 PM IST
New Delhi: Google India’s current and former chiefs-Rajan Anandan and Shailesh Rao—spoke in a rare joint interview about growth plans and prospects for the search giant. Anandan is managing director and vice-president, sales and operations, India, having recently moved from Microsoft India. Rao is now managing director, media and platforms, Asia-Pacific. Edited excerpts:
Why did you join Google?
Rajan Anandan: I left Microsoft to do something very entrepreneurial, and I wanted to spend all my professional life on the Internet. Shailesh and I had known each other for quite some time and he was moving into his new role, and they were looking for somebody to take over. Shailesh told me ‘Google is actually a start-up’ and that I should join because it’s fast, it’s entrepreneurial, etc., etc. So I spent a lot of time in Mountain View (California) talking to a lot of people there, and I was deeply impressed by the company. The focus on the user and changing the world is very much intact. And I was also very intrigued by the work culture at the company. Those were some of the things that attracted me.
It’s very rare in an organization to have the former and current heads working together at the same time. How are you managing?
RA: It’s quite funny. I grew up at McKinsey (and Co.), which is a partnership. There are a couple of hundred partners which run the world’s largest consulting firm. When I joined Dell (Inc.), it was the first time that I got into any kind of a reporting structure or business units. So I am actually used to a world of equals. I moved from Dell, where I was running the whole of India to actually reporting to Ravi Venkatesan, who was the head of Microsoft India. A lot of people asked me why I was doing this, but I said that it doesn't matter to me. What matters is that we are going to take a company and take it to a whole new level. I didn’t leave Microsoft thinking that I have to figure out a way to work for Google. I thought of building the next Google.
Shailesh Rao: Something that we always say in Google is that growth is always your friend. The honest truth is that it’s not messy at all. We are comfortable because we both have so much to do. We can’t be bothered about other stuff. When you have so much opportunity, everyone is fully occupied. And I have always believed in the power of teams. You always want to hire someone better than yourself. And we found somebody who can take Google India to the next level. I think India is still caught up in this ‘emperor is still the king of the company’ model. That’s not the case. Companies are made up of lots and lots of people doing lots and lots of good work.
There are 30-40 Android phones available in India. What’s the outlook?
RA: It’s very early days for smartphones in India. With the advent of 3G (third-generation spectrum), cheap data plans and low-cost mobiles, when we start seeing the Rs 5,000 barrier break, then we will start seeing the volumes move. I think a year from now we will start seeing significant numbers, both as a category level as well as Android. But we are very pleased with the adoption of Android among the global OEMs (original equipment manufacturers) as well as the local OEMs.
Are you going to miss out on a large chuck of Indian users after the Nokia-Microsoft global alliance?
RA: We wish both of them the very best. Clearly, Nokia (Corp.) needed a partnership, and they decided to partner with Microsoft. We believe that great products that are open win in technology. So, we have to see how this plays out in India and time will tell. Nokia is a great company and so is Microsoft, so I am sure there will be a lot of interesting things that they will do and we will do.
Globally the Bing-Yahoo market share is increasing and is close to 30%. What are trends in the Indian market?
RA: In India, we have (an) over 80% share in search, and we maintain the lead. I don’t think there has been much impact here. They are also focusing on the US market right now.
All the new personal computers (PCs) are going to be shipped with Bing. Will it have an impact?
RA: In technology, the best technology wins. You can ship whatever browser you want on a PC, but the fastest browser wins. Chrome just crossed around 25% market share, and it doesn’t ship on any new PC. It shows the savviness of the Indian consumer. I have learnt over the years that just because something is shipped with the PC doesn’t mean that product wins.
For the first time, Google launched an ad campaign for display advertising-‘Watch this space’. Why?
SR: In the display business, we are fairly new entrants, and there was a need to let the community-agencies, advertisers, etc.-know what our capabilities are. We thought it was important to be clear and communicate what Google’s display product is all about, what it can do. So, we thought the best way to do it will be come out with a strong message.
What does the Indian market mean for Google?
RA: The year 2010 marked an inflection point for the Internet in India as it crossed 100 million users. The amount of time people are spending on the Internet is 16 hours a week, and the average TV viewer spends 14 hour a week. That’s one very important attribute. So, it’s a very different market and important as most people think of the Internet as a small medium. In fact, a couple of months ago I myself didn't realize the magnitude of what was going on. The second point is that online advertising crossed Rs1,000 crore. The advertising industry in India is Rs 25,000 crore—that’s around 4-5%, and looking at the growth rates, we should pass TV as a medium. E-commerce in India is a multi-billion industry, and we are seeing a lot of traction in commerce.
The third area where we are reaching an inflection point is the mobile Internet space. There are 40 million users in India that are accessing the Internet in India through mobile phones. So, India is a very interesting place to be.
What are your immediate focus areas as head of Google India?
RA: Across a number of our products like search, Gmail, video, Maps, etc., we are No. 1. And there are four or five big bets we are going to make over the next several years in India.
The first is the display business-we have got very unique positions across our display products in India. We have 50,000 websites; we reach 80% of the Internet population in India. Though we are very early in this game, we already have 22 of the 25 largest advertisers in India who advertise on Google today. YouTube has crossed 20 million unique users in India today, and it has huge potential.
And there is AdMob, which is the doing very well. We have 40 million mobile Internet users, and that number is rapidly increasing and creates a very interesting mobile platform.
The second big bet we are making (is) around the enterprise. There was recent research, which said enterprise services, which is the cloud-based services market, will be $500 million (Rs 2,225 crore today) by 2015. We have just started building this business. The inherent nature of this business in India is that there are very little legacy IT (information technology) systems used by the small and medium segment. This is very encouraging for us as the adoption rate would be higher. And we have big plans in terms of how we are going to grow that business.
The third big bet is mobile. Android has been very successful around the world-300,000 new users a day, 95 compatible devices. So, we are going to see a host of interesting devices from Samsung (Electronics Co. Ltd), HTC (Corp.), etc. In India, the combination of affordable data plans with 3G now and lower cost devices like a Micromax or something which comes at Rs 7,000 or something will drive mobile penetration. One of the strategic questions for us is: how do we get from 100 million to 300 million Internet users, and we believe that this growth will be mobile led.
The fourth big area that we are focusing on is SMB (small and medium businesses). India is an interesting market where the entire advertising industry is only $5 billion. Compare that to Brazil, which has some 200 million people; the advertising industry there is $20 billion. One of the reasons for this difference is that less than 100,000 businesses in India actually advertise. The reason is that India entrepreneurs are very, very focused on return on investment. They also want it to be very affordable. This creates a great opportunity for Google, as we believe that India will be an ‘online and mobile first’ ad market. So, you will see a lot of focus from us in terms of how to reach those small businesses and have products that make sense for them. As we go from 100,000 to 300,000 to 500,000 businesses that start advertising, a lot of them will go online and mobile first, and that is an extraordinary phenomenon.
What will be your role as managing director, media and platforms, Asia-Pacific?
SR:Beginning of this year, I took over a role to run the display business for Google across Asia that includes YouTube, Google display network, mobile display AdMob, and advertising technology solutions which we acquired through the acquisition of DoubleClick. The combination of these businesses represents Google’s display portfolio, and it’s my responsibility to grow the business out of the region. Whether you are doing display advertising for the purpose of building a brand on YouTube or for generating traffic and interest through the Google display network, it will all be part of the focus areas. Separately, we view DoubleClick products as the infrastructure agencies, publishers and advertisers utilize to deliver these products effectively and efficiently.
But Yahoo still leads in display...
SR: Google’s display network is quite large. Tens of thousands of websites that have signed up in India alone benefit from Google’s contextual targeting technology. The business we have on the YouTube network or display ad business is quite healthy. We don’t spilt the revenue, but we are very happy on where we are in terms of the business today and the growth trajectory.
In Q4, we announced publicly that the display business was 2.5 billion run rate. People were surprised because we don’t usually break out businesses at the granular level. We chose to do so because we believed the business had reached a critical level of mass, that it’s important to share with the broader community. So that’s one business which is very big for us and has a lot of growth potential.
surabhi.a@livemint.com
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First Published: Fri, Apr 15 2011. 01 11 AM IST