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Digital Marketing in India - On Explosive Growth Trajectory

Vishwadeep Bajaj
Vishwadeep Bajaj
Chairman & Managing Director, ValueFirst
Bajaj founded one of the mobile technology major, ValueFirst. Before heading to ValueFirst, he ha... more>>
Incepted in 2003, ValueFirst, is a digital media company in India. In addition, ValueFirst has built and acquired several digital properties recently like Way2sms, 160by2, mGinger through which it owns an ever growing profiled opt-in subscriber base of 54 million registered users. The company with over 500 employees across India is targeting revenue of over INR 250 Cr in FY 12-13 and looking to IPO in the next 18- 24 months. The last funding of $12.9 million was raised in the year 2011 from Headland Capital Partners and NEA.

Digital Marketing in India is all set to take off on an explosive growth trajectory. Several industry reports have forecast it to grow to the region of 4000 crores by 2016 without considering the classified revenue as part of the digital marketing revenue. I am aggressively bullish on the sector and willing to bet top dollar that the forecasts will be well beaten. My confidence comes from the fact that the industry is at an inflexion point because all the key fundamentals are just right – all pieces of the jigsaw are coming together - for the industry to experience the clichéd tipping point. I would like to highlight some of the key ecosystem elements, which are all pointing to the industry explosion in the next 2 years.

Reach
The most important criterion for the brand manager to adopt any medium at a fundamental level is the reach it can offer. Internet users in the country are now well over 150m and indeed the Mobile users we have lets say at a realistic level are 750m strong. Of these Mobile users, a well over 25m is smart phone users, growing at a fast pace of an additional 15m in calendar year 2012 alone. Couple this large base with the high growth rate of net additions and we get a very large addressable reach. Further this base now can be targeted using profiling methods, which several digital publishers have adopted on their own opt-in subscribers. Key changes that are contributing to this growth in reach are cheaper access devices (aka netbooks, laptops, tablets, smart phones etc.) and lowering access costs (falling mobile data and broadband tariffs). The predictability around the growth in reach as well as ability to target this reach is very comforting for the brand manager.

Consumer behavioural changes
The growing reach is only useful if it translates into meaningful inventory that is amenable for running advertising (meaning that the advertising performs). This is definitely the case as the digital consumer is now an evolved consumer who is no longer merely surfing but is consuming the medium in meaningful ways including conducting real transactions as is evident from the growth in e-commerce story of India in the last 18 months plus the way it is continuing to scale. Indian digital consumer is spending more time on the medium driven through need for social media, entertainment, communication, search and e-commerce. On the mobile side, consumers have downloaded mobile application instances that support in-app advertising and are creating billions of advertising impressions per month as and when the consumers use such applications.

Infrastructure
Whether we talk of broadband or the mobile infrastructure, both are witnessing positive changes. There is enough governmental push for the broadband rollout as it is a key agenda item on growth drivers for India. On the mobile infrastructure front, India is going to leapfrog certain technologies, which augurs well as one must understand that a substantial part of Internet access in India will be through a mobile device over a mobile data network.

Professionals
Industry is maturing in terms of trained professionals. This is a result of people getting trained hands-on through job rotation into the digital domain. In addition a lot of people are getting educated through private short term courses as well as formal degrees and diplomas tailored for the digital media industry.

Investments
The sector has seen a significant level of investment in the last 12 months and continues to be a hot sector for the investors. In the last few months, venture capital money has gone into Ad Networks, Publishers and several technology platforms. If we include the money that has gone into e-commerce ventures (as in a way it is creating and maturing the digital eco-system), then we are talking a seriously large number. Several start ups from boutique agencies through niche publishers have come up in the last 12 months and the trend continues. In addition the sector has seen a reasonable number of mergers and acquisitions, which is also a sign of growing maturity of the industry.

Greater adoption
Brand managers and agencies have done enough experimentation and their understanding of the medium has never been better. Right from producing the engaging creative, planning the media through to dynamic changes in a live campaign for ROI optimisation, there is a far greater understanding and experience than ever before. Further social media and its adoption at the consumer level have encouraged brand managers to create innovative digital campaigns. There are several success stories of digital campaigns in India that are creating motivation within the industry and are working like benchmarks/role models for brand managers and agencies to emulate. I have heard of several digital only campaigns demonstrating the brand manager’s faith in the media. In several verticals digital spends are now in the region of 15-20 percent consistently and several verticals are evolving into 10 percent plus digital advertising budget allocations. There is still a lot to be done here. Industry leaders need to still evangelise for the laggards and the non-believers. The good part is that there are industry organisations like IAMAI (Internet and Mobile Association of India) who are doing a fantastic job. IAMAI is not only creating enough events and conferences but also creating educational and research content in addition to appropriate lobbying for industry growth.

Already ahead of radio, in the year 2012 digital marketing will outpace outdoor advertising also. In the west, digital marketing currently constitutes 25-35 percent of total advertising, India although is lagging behind at five percent levels today, I remain confident that by 2016 it will be well above the 15 percent mark. Digital advertising will explode. There is no reason for it not to.

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