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Rajiv DingraCEO and FounderWATConsult
Rajiv Dingra, CEO and founder of WATConsult—a Mumbai-based hybrid consultancy that splits its business between media planning and digital branding—spoke with eMarketer’s David Green about why spending by marketers in India lags, and why digital video is growing.
eMarketer: What role does digital play in relation to total media ad spending in India?
Rajiv Dingra: The entire advertising market in India is not more than $10 billion to $11 billion, which is quite small when compared with China, where digital alone will account for that. Internet penetration in India is about 25% to 30% [of the population], or 300 million-plus users, and digital spend is pegged at about 12% to 15% of overall spend—anywhere between $1.1 billion and $1.2 billion. So it’s a small market, but it’s probably the fastest-growing market in Asia-Pacific at 30% to 35% [per year], and by 2020 it is pegged to be close to a $3.5 billion to $4 billion digital advertising market.
eMarketer: Print is still India’s second-largest medium by spend, at an expected INR215 billion ($3.20 billion) out of a total INR597.3 billion ($8.89 billion) this year, according to a KPMG and Federation of Indian Chambers of Commerce (FICCI) report. What keeps print so healthy?
Dingra: India has 26 states and some union territories, and each of these has a different language. With only 300 million people on the internet, what are the other 800 million people doing? They’re consuming content in their local language on paper. Print grows in higher single digits every year, and in television’s case it’s double digits—about 12% to 13%. So neither is dying. In fact, all media are growing in India because consumption is growing.
eMarketer: What effect does the fragmented nature of the market have on cost per reach (CPR)?
Dingra: In relative terms the CPR in India will be peanuts—a rupee or two, maybe 5 rupees, though higher on digital because you are hitting premium audiences. In India, the 300 million people on the internet are largely English-speaking. Vernacular sites do not command huge traffic, except for two or three sites down South that are in the Malayalam language.
Digging deeper into demographics, about 20% to 25% [of internet users] are rural users. There are people in rural India who are well-to-do: They can afford a Mercedes because they have land. A large [portion], 45% to 50%, will be under 30—maybe even more than half. It’s a young audience, as 70% of the country is under 30. And about 70% [of internet users] are male.
eMarketer: Do the myriad geographies and languages make it cost-prohibitive to run national campaigns?
Dingra: Most brands don’t compete nationally—brands have their strong markets around the country, though not everybody has a strong presence in the East, because a lot of brick-and-mortar companies have distribution issues there. So, yes, for advertisers it is expensive from an Indian perspective to have a national campaign—only telecom players really undertake large national campaigns. But if you look at the financials of Indian companies compared with their global counterparts, the percentage they spend on advertising is much lower.
eMarketer: Why is the spend so much lower? How do clients typically allocate that spend, and could you give an example of a typical client’s media buy?
Dingra: There are two reasons. One is the CPR is so low. The other is clients are used to being judicious with their ad spend. They look at a combination of all media. The most expensive medium is television, because you have to buy some 50 to 100 spots, and that bulk amount runs into [the] millions of dollars.
Clients do a bit of television, a bit of radio, they do some amount of print and they spread their budget to drive 360-degree effectiveness. So an FMCG player, a private company that is about $400 million in company turnover, doesn’t spend more than $20 million a year on advertising and marketing. So that’s 5%.
eMarketer: How is that spend typically allocated across digital, and what trends are you seeing in terms of growth in spending on digital ad formats?
Dingra: Video is growing exponentially—so is social, and all mobile formats. Search would still be about 25% to 30% of the market. It would be a lion’s share, followed by social. When I’m saying social, I’m including YouTube as well, which will be close to 15% to 20% [of digital ad spending].
So between search, social and video you would probably get about 60% to 70% of the overall market. Specialized mobile ads are not that big, about 10% to 11%. Then email marketing would be smaller—about 4% to 5%. And programmatic display will be about 4% to 5%, while pure display will take 10% to 15% [of the digital spending share].
eMarketer: What form does video advertising take?
Dingra: Brand awareness would be probably 80% to 85% of all the video content that’s created. India is a TV market, so digital video commercials have taken off. People are serving 3-minute films, long-form content on digital, and also getting into advertising on [over-the-top] OTT platforms—which are basically Netflix and its close competitors from India.
YouTube is huge in India for display buys, whether it’s a masthead or TrueView or other YouTube formats. Beyond this, there are mobile innovation video banners that are available. All these ad formats are scaling exponentially, and brands are creating both webisodic series [and] one-off commercial campaigns for attracting brand awareness.
eMarketer: How tolerant are Indian consumers of video and other forms of advertising?
Dingra: Oh, Indians are very tolerant. If you look at newspapers, especially in the metro cities, you will probably find 30% of the newspaper is filled with ads on a holiday. There’ll be two cover jackets, three internal cover jackets, and then a whole complementary supplement, which is also sponsored.
[Mumbai] is covered with billboards. So the tolerance is very high. There is also ad blindness to some extent on TV and other spaces, as a lot of the youth are now consuming content largely through digital. So TV production houses have started to create their own digital app-based platforms as well.
eMarketer: How are brands leveraging their social presences to drive ecommerce spending?
Dingra: Some brands are purely driving their ecommerce strategy through Facebook. Myntra used to be a big spender on Facebook, and even now there are a lot of mid-sized brands, purely ecommerce and new brands that drive a lot of spend through Facebook. Traditional brands won’t have their own ecommerce store and app stores—they prefer to spend via their third-party ecommerce channels. So they will advertise on Amazon or Flipkart, or do a joint campaign across traditional platforms like Yahoo or Google Display. Smaller-sized brands believe in the power of social much more.
eMarketer: You mentioned India has a lot of the same major publishers as the West, where some have run into ad verification problems. How concerned are your clients about similar issues?
Dingra: Ad fraud is not a big issue in India. It’s not yet reached the point where marketers are really even talking about it. They are excited about trying to do something strategically more intelligent in digital. The negative concerns of digital have not yet reached the extent where they start questioning the medium itself. So this whole click fraud, ad fraud, ad transparency [issue]—all of that is something that is not a serious part of boardroom discussions or a part of pitch ratings, in part because the budgets are relatively so much smaller.
eMarketer: Where does the biggest opportunity lie for brands in India?
Dingra: There is a huge opportunity in branded apps and mobile web platforms—where you become a publisher and really grow content—because we’ve not even scratched the surface of content consumption in India as yet. Between paid, earned and owned, we look at owned in a big way because the audience and consumption is growing day by day, and there is a huge opportunity for brands to create niche communities and monetize them over a five- to six-year time period. Hindustan Unilever Limited (HUL) has done it by creating a big community called Be Beautiful, which is a content community and network for its face and skincare brands.
eMarketer estimates that US adults will average 12 hours 7 minutes of media usage per day this year, up 3 minutes from 2016. Time spent with mobile will account for nearly all of the increase.
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