New Delhi: Rob Norman, chief digital officer at the world’s largest media agency GroupM, believes that India is a unique market where opportunities trump challenges. With Jio sparking the data war, the growing clout of online video and rising popularity of over-the-top (OTT) streaming and e-commerce platforms, he feels India offers great opportunity for advertisers to connect with consumers at various digital touch points.
Globally, digital contributes one-third of GroupM’s total billings and a third of the agency’s resources are dedicated to the digital medium.
In an interview with Mint during his recent visit to India, Norman said that WPP is investing in creating a digital-first world. He spoke about the disruptive Reliance Jio launch, burgeoning video advertising, digital measurement and why India will remain an analogue market for a while. Edited excerpts:
Traditional media continues to dominate Indian advertising, how will the 4G roll-out change digital advertising?
A third of the world’s advertising is digital and in some markets like Northern Europe, it is up to 40-50%, in the US, it is 40%, and in some markets in east Asia, it is 30%. Our estimates in India are around 15%. The ingredients for a big digital advertising market are bandwidth, good devices and e-commerce. A good device running on a strong bandwidth which can help consumers in practical purposes like e-commerce are the tipping point for a digital ad market to grow. In India, I believe Jio is disrupting the infrastructure and providing free data for a year. It would be interesting to see if it can find out an economic model which allows the data to be free. What Jio has done is pushed the rest of the telecom players to bring their data cost down which will bring more and more people online. Therefore, as the customer base which is economically more advantaged will increase spending online, it will open up advertising opportunities for brands.
How can advertisers prepare themselves for leveraging this opportunity?
Bandwidth is only the pipe, the real data is the one that unlocks marketing truths about the consumer and his/her consumption habits. For advertisers to leverage the explosion of the availability of bandwidth is to know more about their customers and match it with the suppliers of the bandwidth (telecoms) and services that sit on top of that bandwidth (Google or Facebook and Flipkart). As a media agency, while we want to have all the data and inventory, our focus is to use the right data to apply to the right inventory.
What are the key growth drivers that will drive digital advertising in India?
There are 1.5 billion 4G users globally. Digital advertising will not work without bandwidth, good devices and online commerce. India has been an interesting market as it is perceived as a mobile-first country. There are a bunch of things people do online such as communicate with each other therefore communication platforms like Facebook and Twitter offer the best opportunity for advertisers. Advertisers need to look at what kind of content people are consuming online, and we know they love video content. For instance, in India people love sports and movies. Therefore, the advertising money will move where consumer eyeballs are moving.
There is a whole world of services like e-commerce platforms. If Amazon and Flipkart are successful enough, then brands will feel the need to be present on these platforms, further driving the share of online advertising. Brands will have to compete at every consumer touch point online which is not possible because one needs unlimited resources. The challenge thus is to figure out the best allocation. Technology is also changing the way advertising agencies function. For example, artificial intelligence is changing the way people buy things. Consumers are ordering products through virtual assistants like Amazon Echo. When a consumer directly asks, “Alexa, order me a Nescafe", the role of the advertising agency is to make sure that the consumer thinks of Nescafe whenever he/she orders coffee. Agencies now have to work on maintaining brand relevance and awareness like never before.
Video content is exploding in India with a number of OTT platforms leveraging the opportunity. But ad rates are still low on these platforms. Is it because of lack of transparency and measurement?
We have discovered that if we take the same content on a different device, the viewing behaviour is broadly the same. Therefore, the behaviour is driven by content not the platform. We are witnessing a convergence in the ad rates of what we used to think of television advertising and television content delivered on devices. We see ad skipping online particularly with short duration video content which is an issue. Therefore, there is a major focus by players like Google and Facebook to work with content creators to bring longer form of video content because video advertising sits better with longer form of content. In a very short form, ad avoidance, skipping, viewability and measurement are big issues for advertisers.
What are the key challenges that Indian digital advertising industry faces today?
When I was here last time before the Jio launch, there were handsets in distribution, decent 3G services in mostly major cities but 4G was in tiny pockets mostly Mumbai and Delhi. The big fiber project was taking far too long to deliver. Jio has disrupted that but the continuing issues are where is media consumption of broadcast taking place. I believe a lot of consumption is happening on devices on Wi-Fi at home. India is going to be one of the fastest growing digital advertising markets globally in the next 3-4 years. The financial health of the e-commerce sector in India along with logistics and banking as well as payment system will also decide how quickly the digital ad industry grows.
One of the criticisms against digital advertising is that it is not scalable like TV or print. Do you agree?
I wouldn’t completely agree with that. I think the world wants internet, bandwidth, good devices, content and services. As soon as these will become economically viable for any population they will want to use it.
When will digital media surpass traditional advertising in India considering TV is still very strong?
I do not have an answer for when will it happen for India because of the state structure, the power of media investment in print and television and relatively higher barriers to intrude when it comes to digital medium. India will remain a strong analogue market for a while. It will depend on the extent to which print and television will be willing to make their content available online in an attempt to stop controlling market share in the way they have done before. It will be their strategy that will determine at what point India becomes a digital-first ad market. Globally, digital has surpassed traditional media in Scandinavia and UK markets.