Online advertising fast catching on at the expense of traditional media

With companies waking up to the potential of the digital medium, online advertising in India is on an upswing and growing at the cost of other media such as print, radio and cinema. The trend that began before the current economic downturn has only strengthened in recent times.

Hindustan Unilever Ltd (HUL), India's largest consumer goods company, believes strongly in the power of well-crafted advertising campaigns . Not surprisingly, the company is among those which have swiftly discovered the virtues of digital advertising and made it a cornerstone of their marketing initiatives.

"The digital medium offers us an opportunity to reach a section of our audience in an innovative and engaging manner. It is a key pillar in our media planning," says Abhiroop C., Head, Media Services, HUL. Multinational cola companies, PepsiCo and Coca Cola, too are betting on digital for effective communication with part of their target audience in India - mainly the youth. However, television and print have not lost their effectiveness .

"While television continues to be the bedrock of our marketing investments, non-television investments have witnessed a significant shift in the mix," says Deepika Warrier, Executive Director - Marketing, PepsiCo Beverages, India. "For example, we wanted city specific campaign for our Pepsi T20 Football tournament. We relied mainly on radio and digital to drive participation while television was dedicated to the thematic campaign."

With companies waking up to the potential of the digital medium, online advertising in India is on an upswing and growing at the cost of other media such as print, radio and cinema. The trend that began before the current economic downturn has only strengthened in recent times despite the economic slowdown.

A report by Madison-Pitch estimates that digital advertising spends grew at an average of 45 per cent annually over the past three years and predicts the trend will continue. A second report by the Internet and Mobile Association of India (IAMAI) and research firm IMRB says digital spend is likely to grow 54 per cent in the next 12 months. The industry generated revenues of Rs 2,851 crore in 2011/12, which will grow to Rs 4,391 crore in 2012/13, says IAMAI. The growth is attributed primarily to the sustained rise in mobile and Internet user penetration in India.

It is much the same across the world. A PricewaterhouseCoopers report estimates that Internet advertising, including mobile, rose 15 per cent internationally in 2011 against a projection of 8.8 per cent. "A lot of ideas are now conceived specifically and first for the digital platform," says Anil Dua, Senior Vice President (Marketing & Sales), Hero MotoCorp Ltd.

Advertisers say that digital advertising and marketing offer compelling benefits, especially for cost-conscious companies. Compared with most traditional mediums, it allows marketers to readily measure the results through number of clicks and consumer engagement. "This produces more efficient advertising and higher return on investment. It is a big impact spend and secondly very targeted," says Meghna Godkhindi, Business Director, Digital, DDB-Mudra Max Media.

This does not mean that digital is making inroads into the advertising share of all traditional mediums. Television still leads the way. But print is wilting and digital seems to be growing primarily at its expense. "For advertisers, digital is no longer a question of 'should we'. It forms an integral part of the marketing mix, and extends to functions such as customer relationship management as well. One has witnessed a sampling of digital advertising across product categories," says Krishna Kumar, CEO, Media2Win, a Mumbai-based digital agency which works for several corporates.

Travel, e-commerce, telecom, technology and banking, financial services and insurance companies are regular advertisers on the Internet. Increasingly, consumer goods companies are also opting for this medium. "It gives us an opportunity to listen to consumers in real time and engage with them on a one-to-one basis and create content integration that drives engagement and sharing.

The new generation is far more digitally savvy and it is imperative for us to recognize that and evolve to stay relevant," says HUL's Abhiroop. Pepsico plans to significantly raise its digital investments to cater to very specific consumer groups. It is an intrinsic part of its strategy to enhance consumer involvement with its onground events such as Pepsi T20 Football, Dew Xtreme Tours and 7Up Dance Patallam.

The same goes for Pepsi's arch rival Coca Cola. "We also have many on-ground events in 400 small towns for the Thums Up brand that are attended by up to 10,000 people. We work on the 70:20:10 principle. Typically 70 per cent is on media that continues to work, 20 per cent spend is on new mediums and 10 per cent on incubating new ideas," says Wasim Basir, Director - Integrated Marketing Communications at Coca-Cola India.

Digital advertising growth has also proved to be a boon for home grown advertising networks such as Tyroo, Komli Media and Tribal Fusion among others, which buy and sell online space for a host of websites. Media buyers representing advertisers are increasingly approaching them in search of the best deals for their clients, and most are not disappointed. "We work with 75 of the top 100 traditional advertisers in India. This shows our penetration in the market," says Prashant Mehta, CEO of Komli Media.

But the digital medium still has a long way to go. According to Santosh Padhi, co-founder of Taproot advertising, most advertisers are currently doing only basic communication through this medium.

"There is no big innovation that is taking place. There are not too many players doing cutting edge work in this space," he says, adding that digital could emerge as the most dependable channel for advertisers in the next three to five years.

The medium is also highly fragmented. With multiple avenues, including social media, to reach out to consumers there are a number of specialists in the market offering digital services. This often makes it difficult for marketers to decide on the right platform and the communication strategy.

Then, according to analysts a dearth of talent in the digital industry is also a big hurdle which needs to be tackled for the medium to sustain its rapid growth in the future.

Additional reporting by Shamni Pande