India’s digital advertising market has grown in double digits for the past five years, yet it remains small both relative to the total advertising spend in India (Figure 1) as well as in absolute terms. India ranks 12th among the top 22 digital ad spending countries in purchasing power (Figure 2). In fact, India lags behind other BRIC countries – Brazil, Russia, and China – on both counts.
The findings of the report were surprising because India is home to the third largest connected population — after China and the US. Besides India is the second biggest market for Facebook after US in terms of growth. And for many global publishers, such as the BBC, NY Times, and The Economist, India ranks second or third in traffic source. India’s online audience is not only large; 75% of users are under 35 – a demographic especially sought after by advertisers.
The paper found out that the gap between online audience growth and digital advertising spends has been because of low penetration of devices, slow broadband connections, and lower discretionary spending. However the gap is being bridged and Scroll has offered three strategies which will help brands best use the Indian digital economy.
Listed below are the major findings of the report – with additional inputs from Lighthouse Insights – to give a better understanding of the Indian digital market as the WhitePaper is based upon 2014 data findings:
1. Radically relocating ad spends toward social media and video
Digital media in India now rivals ‘mass media’ in reach. For example, Facebook’s 112 million users spend more time per month on the platform than the 613 million monthly viewers of the most popular Indian TV channel. Online video is not far behind.
Moreover, the slow growth in digital ads means that digital media often command lower CPMs than they should. The cost of reaching 5 million viewers is roughly 20% of traditional media. Print and TV command the maximum cost to drive the reach in India.
There is also an opportunity to reassess the nature of digital spend. According to IMRB and Conmscore, in India, only 15% of digital ad spend is on social media, whereas 25% of online time is spent on social. Only 7% of spend is in video, whereas 32% of online time is spent on video. And only 3% of spend is on e-mail, when it takes up 8% of online time.
On the other hand, search commands 42% of digital ad rupees, yet Internet users spend just 3.2% of their online time searching. The belief that search relevance leads to higher clickthrough is no longer valid in a world where social media platforms are as, if not more, effective as search engines at targeting ads.
The recently published Indian Retail e-Marketing study informed, 77% retailers voted social media as the most prevalent channel for customer engagement followed by Email Marketing and SMS. The data collected over a period of 30 days from 20th April to 19th May 2015 also stated, 74% Retailers want to increase their investment on social media followed by Email Marketing and 57% Retailers feel that Email Marketing is very important for engagement.
Therefore, three digital platforms on which advertisers should consider spending more are social media, online video, and e-mail.
Social media platforms today are unique places where people spend their time and share their data. These platforms like search offer programmatic advertising, which gives users the tools to easily create, scale, and iterate campaigns based on real-time results.
The latest State of Global Digital Market 2015 presented by We Are Social said, “Social media usage continues to grow around the world, with global penetration rates now in excess of 30%. Facebook continues to dominate the global landscape, accounting for almost 1.5 billion users. The world’s favourite social platform shows little sign of losing its grip either, with 180 million new users joining the community over the past 12 months, up 13.7% year-on-year. To put that in perspective, Facebook is still adding around half a million new users every day, or almost 6 new users every second.”
Indians are among the world’s top online video consumers. Video consumption has doubled from 2011 to 2013, with the average viewer watching 18% more videos and spending 28% more time viewing. As of July 2014, 15-24-year-olds watched 67 online videos on average per month with average minutes per viewer well over 400 minutes per month.
Online video has advantages over broadcast TV. While TV viewers are increasingly multitasking as they watch, most online video watchers are solely watching video.
When it entered India, Twitter quickly made itself as the second screen for most of the TV programs. Walking on the same path now Facebook is working with TV channels like Colors and Bindass for integrating with the shows and connecting with fans.
Additionally, marketers should also focus on local language content. Last year a joint study by Internet and Mobile Association of India (IAMAI) and IMRB International predicted that regional language content availability can boost the growth of Internet in India by 24 percent.
These findings got further crystalized when the IAMAI recently revealed that increase in online local language content will lead to an increase of 39 percent in the number of internet users. Titled ‘Internet in Local Language’, executed in collaboration with IMRB International, the report highlights that rural India will be the primary driver of this growth (75 percent), while in urban India, the growth will be 16 percent.
The report finds that the local language user base is growing at 47 percent, YOY, and reached 127 million in June 2015.
2. Digital first campaigns
In addition to quantitatively increasing spend, advertisers have a big opportunity to qualitatively improve digital campaigns by engaging audiences in ways that traditional advertising cannot. Digital campaigns must be designed bearing in mind multiple screen sizes, shorter attention spans, and social sharing.
The WhitePaper talks about the Durex 2014 digital first campaign with Bollywood star Ranveer Singh. GE’s “Sharing Healthy Ideas” campaign has been discussed to talk about the importance of digital first campaign.
Digital first campaigns have now evolved to Digital only campaigns in 2015. Lenovo’s digital only campaign For K3 Note is a torch-bearer for this trend. Lenovo later declared that the sale that received more than half a million registrations, sold more than 47K handsets on the first day in just a matter of 5 seconds.
Not just digital first campaigns, brands have focused on trends such as digital campaigns crafted for millennials, influencer marketing campaigns, and video over visual content among other trends. Lighthouse Insights has listed out 9 trends that defined digital marketing in India in H1 2015.
3. Focus on ad formats for driving greater engagement from mobile-centric world
A majority of India’s online traffic is projected to be from mobile devices. India’s mobile subscribers are expected to nearly double over the next five years. Smartphone penetration (as a percentage of mobile subscribers) is expected to grow from 10% or 90 million subscribers in 2013 to 45% or 520 million subscribers.
India’s digital audience is thus poised to become even more mobile-focused.
Advertisers and publishers have responded with ads that look and behave like usual publisher content. These ‘native’ ads come in various forms: some appear in feeds; others look like articles. These new ad formats have proven to be far more effective at generating responses.
Facebook has seen the success of NewsFeed ads and so has the other networks such as Twitter, Instagram and others.
Native ads has also found acceptance with the global publishers such as New York Times, The Atlantic, Buzzfeed, Wired, among others. Buzzfeed, which features only native ads, increased revenues by 67% from $60 million in 2013 to $100 million in 2014.
In India, native ads are new – few publishers, such as ScoopWhoop and BuzzFeed India are leading the trend. With banner ads fading and publishers struggling to make revenues from mobile, native is the only way forward for digital publishers in India.
The WhitePaper ends with this message for brands:
Have a digital-first approach for more campaigns. It also means radical growth in ad spend on social media, online video, e-mail, and new ad formats that work in India’s mobile-centric digital universe.