There has been a steady rise in the level of engagement of brands in the digital space, but why is the percentage of a marketer’s total budget going to digital still in single digits?
Digital is becoming part of the marketing blueprint of many companies, but numbers somehow belie this trend. The percentage of a marketer’s total budget going to digital is still in single digits. Twishy, Abid Hasan and Arshiya Khullar try to find out why
Digital ad spends may still show stark single digit figures - albeit slightly improving with each passing year - but the mood among marketers is upbeat, as they eye the flourishing internet industry as an effective communication channel, both for its wide reach and the heightened level of engagement it helps build for brands.
The galloping growth of technology and the meteoric rise in the number of internet users are reshaping the marketing landscape of the country, with digital gaining a foothold where broadcast and the traditional media mix used by marketers and media planners ruled so far. Along with the obvious proponents of the digital platform – i.e., the e-commerce players - most other industry verticals are also jumping on to the digital bandwagon and experimenting with what clicks for their brands.
High end departmental store Shoppers Stop took a plunge into digital around two and- a-half years back as a natural response to changing consumer habits. While the first phase was essentially a monologue phase, it gradually transitioned to one with greater interactivity, engagement and dialogue with the online audience. According to Vinay Bhatia, Customer Care Associate and VP - Marketing and Loyalty, Shoppers Stop, for a category like fashion, creation of video content on digital has helped a brick and mortar brand like Shoppers Stop to become a successful online brand.
Another seemingly complex sector, BFSI, is also seeing a surge of activity on digital and from merely being an accompaniment, the online medium is gradually becoming its core business. “Initially, we were using digital as a marketing medium for lead based campaigns. Then we moved to display and since last year, we have been selling insurance online,” explains Sanjay Tripathy, EVP - Marketing, Products and Direct Channels, HDFC Life.
Currently, 2-3% of the brand’s annual turnover comes from digital and for the protection segment - the only segment that is on digital at present- it is 90%.
Easy measurability and the ability to get real time data are often cited as key advantages that draw marketers to digital. There is, however, a differing opinion on this.
While Shoppers Stop’s Bhatia feels that it is tough to measure online considering the engagement scores and numerous other metrics that one needs to look at, Manu Kumar Jain, Co-founder & Managing Director, Jabong feels that digital allows you to do specific targeting and customization and provides consumers with choices commensurate to each individual’s preference.
BUT WHERE’S THE MONEY?
People are consuming content across platforms and are spending considerable time online. Digital is also becoming part of the marketing blueprint of many companies. But underneath this optimism lies a contradiction. Numbers somehow belie this trend, as the percentage of a marketer’s total budget going to digital is still in single digits.
“Total spending on search, video, social and other ways to build brand connections with consumers on digital media may already be in the 7-8% zone, but when will we hit 10-15%?” asks veteran brand manager and IMPACT columnist LK Gupta in a recent column. So are marketers still wary of putting in money in this medium?
Aditya Save, Head-Media & Digital Marketing, Marico says that marketing spends on digital are growing multifold, but are growing from a small base. Lalitesh Katragadda, Country Head- India Products, Google echoed a similar sentiment. “Ad spends are not low. They are accelerating. It’s the fastest growing ad horizontal in the country and will continue to be so for the next decade,” he said. He also added that once India reaches a tipping point and reaches 300 million consumers online, both ad spends and per page price will increase.
According to Neville Taraporewalla, Sr.Director -Emerging Markets - India, Thailand, Malaysia & Korea, Advertising and Online, Microsoft Corporation, marketers are spending much more than they were earlier. “Around 10% of the advertising budget of Airtel is on digital, which is huge and I have seen a shift from 2 to 5 to 10% in terms of spends. I believe as more and more people spend time on the Internet the proportional spends will definitely increase,” he says.
Digital spending is more complicated and there is more uncertainty. Traditional mediums are expensive, but there is knowledge of the kind of returns. “Digital is more of a high risk and high return or may be no return proposition,” observes Satyan Gajwani, CEO, Times Internet.
Joining the conversation, Mukund Mohan, CEO in Residence, Microsoft Startup Accelerator, feels it’s a problem around the world. “There are three main reasons why marketers complain about it. Firstly, they say the reach doesn’t exist yet. Secondly, the digital expenditure that they have seen in terms on investment online is a lot less than what they see offline. Lastly, most marketers are still a bit older and most of the people who control digital budgets are in their 40s and 50s. As the guys get younger, we will start to see it change and a lot more coming on digital.”
Digital marketing is also often looked at as a standalone marketing tool rather than as part of the overall media mix. And this isolation, according to many marketers, is another reason for the low spends. “Most people think digital as an extension tool. When you have an e-commerce module, then it makes it much easier to think digital and play on digital. It becomes a key focus rather than just being part of a 360- degree communication,” says Tripathy. “Those who are still more into the offline environment don’t understand the potential online offers. From a spend allocation, for online players 70% of spends go online since that’s where the consumers are. Once online marketers start establishing this orrelation, spends on digital will grow,”says Dhruv Shringi, Vice Chairman, Internet and Mobile Association of India (IAMAI) and Co-Founder & Chief Executive Officer, Yatra.com.
FOR A BETTER ENVIRONMENT
What can, therefore, be done to create a more conducive digital environment for marketers and keep money flowing in? “I would say marketers like us who have done good work in digital should talk about our success using various forums. There has been a generation of marketers who have grown up on Doordarshan or Star Plus. And I think that generation will move on and the next generation that comes in will make substantial changes,” says Shoppers Stop’s Bhatia.
Ajay Kakar, CMO - Financial Services, Aditya Birla Group, too feels that success stories will “encourage marketers to adopt the medium faster and in a sustained manner, rather than the current trend of a few occasional campaigns to create occasional excitement or to be a part of the fad-talk”.
“To tap the true ad spend potential of this medium, what will really help is a concerted effort to engage lead brands and marketers with real success stories, where the digital medium has played a key role in building brands and businesses,” Kakar adds. “To date, I regret that there is more hype and potential that is being shared and discussed, rather than real successes.”
Jonathan Bill, Senior Vice President, Business Development and Innovation, Vodafone India was of the opinion that better sales quality and understanding the advertisers need will create a more conducive environment for marketers to spend on digital.
Taraporewala says brands have to move away from getting fixed on metrics. They are important, but the creativity that drives the metrics is much more important. “If you want great analytics, you have to fix the foundation which is based on the idea, creativity and innovation,” he explains.
OFFLINE VERSUS ONLINE
What then is the ideal media mix? Should television and other mass media give way to greater stress on digital or is there a healthy balance required for both to attract and retain customers?
According to Manish Kalra, Chief Marketing Officer, Makemytrip. com, acquiring customers is a media agnostic exercise. “If your consumer spends greater time online, then online is the place to be. In that case, you can track his behaviour and give targeted, sharply defined and customized offers through online advertising and email marketing. If a brand’s goal is to get new customers, then television is the right place,” he says.
Television is also a ‘trusted’ medium for consumers and digital is yet to build on this perception. Most marketers feel this to be the reason why customers still prefer cash on delivery over online payments while shopping online.
And for an e-commerce player, according to Jabong’s Jain, television helps to build trust and recall among customers.
According to Kakar, the true question every marketer needs to ask himself or herself before taking an investment decision is what percentage of their audiences can they access through the digital medium. For many categories and brands, traditional media remain the best vehicle to catch mass audiences.
MOBILE, THE GAME-CHANGER
Digital as a medium is not restricted to just the traditional desktop or laptop. With every passing day, more and more people are accessing this medium through mobile devices, while on the move. Therefore, for most marketers, mobile presents the biggest opportunity that needs to be leveraged for business. It is the primary screen for many people and with greater internet penetration and technology, mobile marketing is gaining critical mass. “Mobile offers great opportunity in terms of first time users searching on their devices. In developed countries, 30-40% of the transactions on travel happen on mobile. In India, that figure is only 3-4%, highlighting the huge potential that exists,” says Makemytrip’s CEO, Deep Kalra.
The penetration of mobile into a marketer’s media mix will also depend on the category and brand. HDFC Life’s Tripathy explains that for a category like insurance, there is need to give a lot of information, which isn’t possible on mobile. In such a scenario, apps will play an important role in increasing traction on mobile.
Google’s Katragadda seems to provide an apt explanation to the pessimism surrounding low spends on mobile and the reluctance of advertisers to invest heavily in it. “Keep the advertisers relevant. Mobile screen space is so precious that you cannot spam them. As long as you keep it relevant, you just have to wait for the S curve. Exponential curves are flat when they begin. And then they take off. What we are seeing in terms of RPMs and CPMs on the mobile space are where we saw the desktop space five years ago. But you won’t have to wait that long. You’ll get there in three years with mobile.”
CREATIVITY IN DIGITAL
It is often said, “Choice of a right direction leads to a romantic ending”. But has the digital Cupid struck the marketers to lead to that romantic ending? The medium is buzzing, but have the marketers dared to take the road less travelled? It’s a relatively new platform and gives scope to experiment with a substantial reach. More than mere reach, the medium’s nature of two-way communication presents a great opportunity to enter into a dialogue with consumers, instead of a one-way broadcast.
It is often believed that there are blurring boundaries between traditional and digital media, but one cannot ignore the fact that advertisers still create a storyboard for a larger audience and communication is designed for the large format screens.
Technology has become a very integral part of every business and lot of creative work comes out of technology. VikasTandon, Managing Director at Indigo Consulting, says, “Digital as a medium has to put creativity in the hands of a consumer. We will see a lot more openness in the near future. Marketers were held back due to the slowdown in the economy. However, the FMCG brands have shown positive interest in the medium. Brands that are suitable to use this medium have started spending on digital.” According to him, reach still remains a challenge as compared to TV and print. With digital, he feels, a lot of times clients find it difficult to visualize the idea as compared to television. From automotives to luxury brands to the FMCG industry, every sector has started integrating digital into its marketing strategies. Particularly, the FMCG category has started understanding the potential of this medium very well.
DIGITAL AS GROWTH-DRIVER
Aditya Save, Head-Media & Digital Marketing, Marico, says, “Brands are evolving into the digital space and it is important to use creativity for the benefit of the consumers. Creativity allows us to communicate an emotion and that is essentially its role in my business. At Marico, we look at digital as a growth driver.” On the mobile platform, Save feels that as an FMCG company, one of the key things is to reach out to the masses. Mobile as a medium allows the ability to reach. But the brand has struggled a lot with mobile. According to him, mobile as a medium is very personal and consumers see it as a device that helps them do things that they otherwise could not.
Airtel is among one of the advertisers that spends aggressively on digital and has also used the digital platform to create high level of engagement among its target groups. The brands friendship band created by JWT on digital garnered maximum number of eyeballs.
Arun Sharma, VP Marketing-Head Media & Rural, Bharti Airtel, says, “Shift to digital is happening at a good pace. Reach is already there. What we require are creative ideas. Traditional creative agencies need to ramp up their digital departments. Technology is growing at a faster pace than creativity. It is expanding but traditional creative teams first want the money to come in, then they want to invest it. Whoever is ready to take the risk will do well.”
People are consuming more and more digital content on mobile phones, laptops, desktop computers and companies have adapted this medium in their marketing strategies. This rapidly growing force set to be the future of marketing, and marketers cannot ignore this medium.
According to Vineet Gupta, Managing Partner at 22feet, a lot is changing and there is a significant amount of money being spent on digital. Some of the brands like Fastrack break the campaigns only on digital. “There is a lot of time, effort and money that is spent on creating assets that are digital only,” says Gupta.
India and other emerging markets such as Brazil, Indonesia and South Africa are amongst the fastest growing mobile advertising markets globally. It is a lucrative destination for advertising, attracting several mobile ad networks. The youth, the target audience for mobile, are interested in downloading apps and mobile gaming. Hence, brands and advertisers have to rethink their strategies to integrate mobile in their business plans.
BRANDS FLOCK TO DIGITAL
Mohit Hira, SVP and Regional Business Director, JWT, feels that marketers are indeed spending on digital. Depending on the nature of the target audience, brands are investing on the digital front. On the usage of mobile as a platform, he believes that it is the first screen and a public medium, where people can share everything. Hence, mobile is certainly a game-changer.
Due to the significant reach and enormous amount of time spent by the user, mobile has evolved from being the third screen to the first screen. Dippak Khurana, CEO & Co-Founder, Vserv.mobi says, “Marketers are always keen to spend on digital. It becomes the onus of people like us to solve the need gap by looking at targeting the user accurately in this space.
On mobile advertising, we knew that there is a significant part of discovering the consumer and hence, we launched the AudiencePro, which is a platform that allows advertisers targeting based on demographics, spending power, network usage, location, content relevance and device specific data to reach the right audience.”
According to him, the medium is maturing and sophisticated technology and solutions introduced by companies on digital will accelerate the adoption of mobile advertising.
Investing in ideas, getting the technology and the platform right and focusing on branded content will be a growth driver for this medium. As Montek Singh Ahluwalia, Deputy Chairman of the Planning Commission, sums up, “Digital is the industry with the most phenomenal ease of access, this medium has a long way to go.”
Vice Chairman, IAMAI & Co-Founder & CEO, Yatra.com
Those who are still more into the offline environment don’t understand the potential online offers. From a spend allocation, for online players 70% of spends go online since that’s where the consumers are. Once online marketers start establishing this correlation, spends on digital will grow.”
Sr.Director - Emerging Markets - India, Thailand,
Malaysia & Korea, Advertising and Online, Microsoft Corporation
Around 10% of the advertising budget of Airtel is on digital, which is huge and I have seen a shift from 2 to 5 to 10% in terms of spends. I believe as more and more people spend time on the Internet the proportional spends will definitely increase.”
Mobile offers great opportunity in terms of first time users searching on their devices. In developed countries, 30-40% of the transactions on travel happen on mobile. In India, that figure is only 3-4%, highlighting the huge potential that exists.”
Head-Media & Digital Marketing, Marico
Brands are evolving into the digital space and it is important to use creativity for the benefit of the consumers. Creativity allows us to communicate an emotion and that is essentially its role in my business. At Marico, we look at digital as a growth driver.”
Managing Director at Indigo Consulting
Digital as a medium has to put creativity in the hands of a consumer. We will see a lot more openness in the near future.”
CMO - Financial Services, Aditya Birla Group
To tap the true ad spend potential of this medium, what will really help is a concerted effort to engage lead brands and marketers with real success stories, where the digital medium has played a key role in building brands and businesses.”
Feedback: Category: Impact Feature Volume No: 9 Issue No: 32
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