Why online spends won’t grow fast enough & how to make them grow
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BY L K G UPTA
Last heard, the online medium in India had crossed Radio in terms of ad spends, but still remained barely 5% of marketers’ ad budgets. There are a lot of voices clamouring for this ratio to improve, citing the growth in Internet penetration and wide options available to advertisers. Much as I’m rooting for digital advertising to grow faster, I don’t see how this number is going to breach a 10% figure in a hurry.
Let’s examine the facts:
1. In 2011, of the Rs 33,000 crore ad spending in India, TV consumed 42%, Print 40%, OOH 6%, Cinema 1%, Radio 4% and online 5%. According to estimates,
online was to grow to a 6% contribution in 2012.
2. As of 2012, around 120 million Indians are internet users vs 550 million for TV and 180 million for Print & Radio alike, and it is projected that there will
be 300 million Indians on the Internet by 2015 due to growth of broadband and internet-enabled mobile devices. With 80% internet penetration, USA will
generate $27 billion display ad revenues online, an 18% contribution to ad spends in that country.
3. There are already more than 50 million smartphone users in India, spending an average of one hour daily on internet services. We must also remember that unlike conventional media, where ad spending is measured as ads bought, digital media has many more facets besides display advertising. There’s search, video, social and so much more to build brand connections and messaging with consumers. If you aggregated spending on all those areas, we may already be in the 7-8% spending zone. But that still begs the answer – when will we hit the 10-15% mark?
But to begin with, we need to look beyond the numbers. The reason that Print and TV became the media with largest ad spends is not only due to their high reach, but also because marketers inherently believe these media help build brands. The 70’s and 80’s nurtured a whole generation of the biggest advertisers indoctrinated into watering the tree of brand equity as the sustainable way to grow business. For this, TV and Print media presented viable
options. It certainly helped that TV grew to reach masses and classes alike, and that Print grew with growing literacy, and the power to localize content.
With a 10% penetration (much of which is infrequent usage) and an urban skew, it may be yet premature to consider the Internet as a big brand-building
weapon at least for the largest advertisers of the country who are mass-marketers by design and habit. For these companies, the Internet is at best a peripheral medium, a supporting cast member with which some dalliance can be had to create future preparedness. What adds to this approach
is the fact that the Internet promises to open up a completely new paradigm of marketing, but no one knows for sure what shape it’ll take and how to play with the mix of the myriad options presented by search, display, social, direct marketing, augmented reality, QR codes, e-commerce, and so on.
Look at yourself as a consumer. Now think back to the last 12 months and try identifying highly visible and sustained online brand activities. Now, think about major TV and Print campaigns that stick out in your memory as highly impactful pieces of marketing. Fact is, while the 200-odd professionals one follows on Twitter, and flashes of brilliance that juries encounter as entries for awards may lead one to believe that the Internet has finally arrived, the vast majority of consumers wouldn’t be able to recall any major initiative specifically from their Internet journey.
Is that a problem? Not at all. Who says the Internet has to work in the same way as conventional media? However, if you do believe this tenet, then you also have to admit that till the Internet demonstrates one or more marketing models that can sustainably build brands, it will continue to remain a support medium. Marketers ill continue to think in terms of the brand funnel, and rightly so because the Awareness ? Familiarity ? Consideration ? Purchase ? Loyalty model represents the fundamental journey consumers go through, and that’s not changing soon. In order to grow faster, the online medium needs to be demonstrated as a tool to directly affect one or more stages of the funnel. It is being done, but I’m afraid it’s still in bits and pieces and kowtows
too often to buzzwords like engagement, interaction rates, viral and suchlike. This is compounded by the focus on measuring interim metrics like CTR, CPM,
Likes, Follows, Impressions and hardly any other research as the currency to talk about the effectiveness of the activity. The internet medium has always been touted at the most measurable of them all, but these attempts are at best measures of efficiency, or, at worst creators of confusion and incredulity.
The growth of affordable smartphones and tablets promises to be a game-changer. Undoubtedly, there is going to be a huge amount of supply from the publishers’ side, but will there be enough takers on the demand side to create a billion dollar industry in the next couple of years? Under what conditions can this happen? As we stand at the cusp of a potential change of guard, here are some points for the advertising fraternity to help push the
curve northwards.
SELLERS
• Position your offering as a clear solution for specific stages of consumer decision journey, i.e., the funnel. Try not to sell through what you think you
do (conversations, lead generation, impressions, etc.), but show the advertiser what fulfilment you bring to his marketing task
• Ask yourself why an advertiser should shift money from one of the conventional media to your online offering. As an advertiser, I would love to have a seller show me how I can communicate my brand messages to a specific target segment with the same (perceived) effectiveness as my current
media choice. Show them how you will measure it instead of obscure interim metrics. If you’re selling a video platform, show them whether their TG is watching it like TV and how they should use it as a TV channel. If you’re a portal with a million hits per day on your homepage, show them why it makes sense for them to position their impactful proposition here instead of a full-page newspaper ad. Then measure it
• Don’t undersell yourself. Really, I understand the pressure’s on you to show cash flow to your VCs, but ask for the right price for your offering by
demonstrating its value to the marketer. Then prove the value through execution and measurement. And if you’ve decided to enter into a glut area of the Internet, you’d better have a much differentiated product to sell. Else, they’ll whittle your rate to the bare bones.
AGENCIES
• Please understand this – your clients don’t understand it. Period. Or, they don’t have the time to understand it. But you and I both know you can
make a better commission from internet advertising than the commoditized TV and Print media. Do invest in training your people on how the medium works
on your client’s audiences, and how they can teach the client to do the same job better by investing in this medium. Many marketers, still being stuck in the 90’s and 2000’s, tend to see internet marketing as a toe-wetting exercise and ticking the boxes. And I’m not talking about the VPs and CMOs; your job of training the client needs to begin at assistant manager level upwards. Show them the new world!
• Be present at industry events. I’ve seen ad folks making a beeline for the Effies and GoaFest, but I hardly see hordes of ad agency honchos in the numerous gatherings of the digital marketing industry that I’ve been to. Good actually, for then I get to meet sellers without them looking anxiously over their shoulders for agencies watching them meet the client! But seriously, I learn more about where technologies and practices are headed by interacting with small and big vendors at these conferences than months of interactions and emails from all my agencies. It would be so much better for sparking innovation and improving trust if agencies were to regularly introduce new techniques, tools and vendors to their clients
• Don’t pick up stake in media sellers’ companies and then pitch to clients. It’s just bad practice. Yes, these are the times when new frontiers are being
explored and numerous start-ups are looking for support to market their media and advertising products. But advertisers do not expect their agencies to make products and sell them. Agencies are hired for their expertise in strategy, positioning and creative development, media planning and execution. Sellers are expected to develop innovations and products which clients will buy through the advice of agencies. And agencies becoming part of the sellers’ group
will inhibit choice for their clients, and that’s bad for trust. You do not want digital marketing to go the way of the out-of-home media sector
BRANDS
• Rule #1 is, do not expect the online medium to only work in the same way as TV and Print. I say ‘only’ because under some conditions you can make
the medium work in the same way, e.g., YouTube can be used as a TV channel, but with the added opportunity to spark conversations and buzz, not only to show your TV commercials. Banners can play the same role as outdoor hoardings as the consumer surfs the lanes and bylanes of websites, but with the opportunity to direct traffic to your own online assets. Figure out how consumers are using the medium and the various vehicles differently from conventional media and exploit those with new practices
• Determine the roles played by the different online offerings in your consumer’s decision journey and prioritize some over the others. Search or social?
Video or display? Desktop or mobile? Don’t do everything. For instance, in certain categories, consumers will seek out expert reviews or opinions of peers more than being swayed by brand messages online. Building relationships with online influencers and investing behind specialized websites and search marketing may give you a far better result than invasive banners and cute social banter.
Spend a lot there, and little elsewhere. The opposite may hold true for certain other products. Know your consumer decision journey and triggers in the context of their online behaviour
• Do go out and meet sellers on your own, whether by appointment or by attending digital industry conferences. Things have a way of crystallizing in your mind when you let a barrage of new ideas enter it, and you’ll soon see how and when the online medium could work better than TV, Print, Outdoor and Radio
• Try and measure impact along the brand funnel than just on efficiency and reach parameters. There is no single company or agency out there that will
do this for you, so you need to devise your own ways of measuring effectiveness of online advertising vis-à-vis your brand objectives
The future of online ad spends rests on new methods for brand-building to keep pace with changing consumer behaviour on the medium. While the very canvas of brand-building is undergoing a change in this century, the marketing fraternity would do well to get out of the 30-sec TVC and 100 cc insert era in their approach and figure out how to make a difference to the consumer as he surfs and chats.