New Delhi: Rajan Anandan, managing director and vice president (sales) of Google India, spoke in an interview about growth in digital advertising at the sidelines of the launch of Google’s channel strategy for small and medium enterprises (SMEs) in New Delhi on Wednesday. Edited excerpts:

How important is it for SMEs to advertise on digital media?

There are about 150,000 SMEs that advertise online. Of a total of about $1.2 billion spent by SMEs on overall advertising, $100 million is spent on digital advertising. Digital advertising this year will get to about $500 million (Rs2,500 crore approximately), so about 20% of all digital advertising is coming from SMBs (small and medium businesses) today.

Rajan Anandan, MD and vice president (sales) of Google India. Photo: Priyanka Parashar/Mint

Over the past 10 months, we have got 120,000 SMEs in India online. These were businesses that didn’t have a website. Now they have a website and lots of digital tools that help them improve their performance. They come from a range of industries from retail to travel, hospitality to technology and education. There are fashion designers, homemakers, cooking experts…

Is advertising money shifting from television to YouTube?

Last month YouTube’s India traffic crossed 33 million. What advertisers are finding is that it’s an extraordinarily impactful medium to target young urban youth. Thirty-three million users is by far the best reach that you can get cost effectively into young urban Indians. YouTube is growing in triple digits.

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What’s your view on alleged web censorship by the Indian government? Has it dented advertiser confidence?

Advertisers focus on mediums that can deliver the brand objective, whether its improving sales, adding power to new customer markets etc. Around the world, the digital medium has shown that it not only drives clicks, sales and revenue but it also builds brands online through display networks, and videos. There is an ever-increasing excitement about the medium among advertisers. However, there are some challenges that the industry has had and we are in constant dialogue with the government. We believe that India will always do the right thing.

Digital advertising expenditure may have surpassed traditional media such as radio and outdoor, but it is still merely 5% of a brand’s total marketing budget. When do you see this number going up?

We are not in the business of forecasting because at the end of the day markets evolve in line with market potential. But if you just think about it, all jobs advertising 10 years ago was in print. Today, none is. Think about travel. Significant part of travel advertising was across mediums like print, radio and little bit of television. Today, almost all of it is really online, 40% of all tickets sold are bought online, 10% of hotel bookings happen online. So our view is that industries will evolve at different rates but looking at some leading trends it is very interesting because it can give you a sense of what could happen. What excites us in India is that we are seeing several mainstream advertisers like consumer products, telecom, automotives begin to embrace the medium.

How much does India contribute to your overall revenue?

We don’t share revenue numbers, but we do have a large business here which we are excited about. Already, India has 120 million Internet users. It is the third-largest Internet user market in the world. By 2014, it will have 300 million users. So in the next two and a half years, India will have more Internet users than the US. It is an extraordinarily strategic market for us.