Digital Spending Lags Consumers Online in India

By Biprorshee Das and Prajjal Saha, afaqs!, Mumbai, February 28, 2012 

On the sidelines of ad:tech New Delhi 2012, afaqs! caught up with Microsoft Advertising's Richard Dunmall and Neville Taraporewalla, who shared their thoughts on the opportunities for digital marketing in India.

At almost every digital conference, experts talk about the growing giant that is digital, and the promising opportunities it offers. ad:tech New Delhi 2012 was no different. While at the event, afaqs! struck a conversation with Richard Dunmall, vice-president, global accounts and agencies, Microsoft Advertising and Neville Taraporewalla, country director, advertising and online, Microsoft India.

While both Dunmall and Taraporewalla mentioned the massive opportunities offered by digital marketing for brands in India, they did not hesitate to admit that there are barriers to cross, and quite a bit of catching up to do.

Excerpts from the interview:

afaqs!: Could you throw some more light on Microsoft's 'Storytelling' theme?

Dunmall: Every consumer is a storyteller now. The consumer is in control. The proliferation of social, tools and environments - platforms where people could share their experiences - has given rise to micro-casting, where everybody is carrying a smartphone or a camera, with which they can capture very personal experiences and are very happy to share them with each other. So, they are already telling stories to each other.

This has massive implications for brands. In a much more fragmented content world, the brand narrative is ever more important. Also, there are new technologies that allow one to tell stories in much more rich, interactive and engaging ways. This ranges from going deep into content and learning about products or services, to being able to share opinions with each other about brands on a social network, messenger, or even on a portal like MSN. We think it is really a very important stage in the marketplace, particularly given the amount of money being spent on brand advertising.

afaqs!: When it comes to digital, things are still in an experimentation mode.

Dunmall: A lot of top brands we talk to or even on the agency side, 25-30 per cent of the worldwide media spend now goes to digital. For WPP, Publicis or the big holding companies, 30 per cent of the revenues come from digital now. So, it is mainstream. It is a huge opportunity to grow a new relationship with consumers.

I think that is where India has some growth opportunities viz a viz the other markets. In the UK, USA or China, double digit percentage investments are going into digital media, unlike India, where it is 3-5 per cent. So, there is a lot of potential for growth.

With the Indian internet audience growing so fast, along with the economy, there is a huge disconnect between the number of people spending time on the internet and where the media dollars are being spent. The internet audience in India over the next three years will be bigger than that in the United States.

afaqs!: People are doing a lot of innovations but there are no set rules for the same. When do you think the Indian digital advertising market could become more mature?

Dunmall: There are a few barriers to growth in India. There is a bandwidth speed issue, although I think it is a short-term one. Over time, that will surely change.

I think there is a level of conservatism about digital in the agency and marketing communities in the country, along with a bit of a fear factor. I am respectful of that. For companies, getting a level of confidence about the environment one is investing in (as compared to television and print) will only come with time.

Brands in India have to feel confident and move beyond click-based buying, very basic forms of metric that other markets have moved beyond now.

Taraporewalla: From the local market perspective, very clearly, different brands are at different stages of evolution in the adoption of the digital medium. However, there are a few brands in the market, which have started early and are at a different stage of evolution.

For example, there is a huge maturity in the way the automobile sector is going digital. In fact, one of the leading brands from India, Maruti, is a substantial digital advertiser, as are Volkswagen and Hyundai.

We cannot generalise completely. It depends on the category and the company.

Dunmall: I think there are a few barriers that need to be addressed. Measurement is one of them. I have always been intrigued by measurement in traditional media; for example, panel-based data in television is not that great a methodology. However, it is accepted, even if it is a panel of a thousand people in a country of a billion.

As an industry, we should have a common format or methodology for consistency. Once we have done that, we can talk the language of the market. And then, a CMO can compare television activity to digital more comfortably.

afaqs!: How do you think tablets are going to change the reading behaviour in markets like India?

Taraporewalla: I think it is a function of the individual. The newspaper gives what it wants you to read. The current generation has grown up on digital news. When they have a tablet, they will decide where they want to go. That is a fundamental shift from where it is now.

Dunmall: The amplification of the web and the web experiences mean that content experiences are much more personalised. The things that matter most to the youth are in that tablet environment.

We are releasing Windows 8 as a software platform. It is the single biggest shift in our operating system strategy that will come out later this year. That entire environment will be an app-based one. There will be a Windows marketplace, where one can buy or download for free the things that matter most to him/her. That will bring the richness of experience across devices, including tablets.

I think that is the Holy Grail for consumers and for marketers as well. We have only just started to see that opportunity.

afaqs!: In India, everything is very mass-based, be it television or newspapers. Do you see the publications' interest growing in this tablet revolution?

Taraporewalla: A lot of Indian magazines are now developing applications to be embedded in devices. That is the next phase for them, obviously. As that happens, more and more people will use those applications, increasing penetration. The next generation will have grown on devices, anyway.

Dunmall: There is a big implication for brands there. Brands will start targeting experiences that are more personalised for the youth and you will see that in software as well.

afaqs!: Do you think Microsoft has lost out on the social bus?

Dunmall: No! Not at all! It has been involved in social for a very long time. Messenger was way ahead of anything else over the last 10 years. Microsoft has no desire to be a social network and would rather partner with the world's largest social network. This is why the Bing result has the Facebook Social Graph embedded inside it. Through MSN, Facebook and Twitter feeds can be incorporated as well.

We are experimenting with what is arguably the world's largest video social communication, Skype. The integration of that into partners like Facebook is incredibly exciting for us. We have not missed it. In fact, I think we are a very good partner-led company, good at building platforms to work on and to feed into, and that is our strategy and we will continue to do so.

We also have the largest gaming network - the Xbox Live - with 40 million people. Increasingly, things like Skype will be integrated into that as well.

afaqs!: How does one change the perception of brand managers towards digital?

Dunmall: Clearly, things like engagement and being able to map that is very, very important. I think it is bigger than that. It is important to realise the full potential of building brand and content experiences on the web. If you look at India, that is really nascent at the moment. Digital gives brands the huge opportunity to build experiences, where brands can come to life.

afaqs!: What are your thoughts on mobile advertising, particularly in the Indian context?

Dunmall: The proliferation of smartphones allows for richer experiences. The model of standard display advertising on the mobile device is not respectful to the unique environment.
When it comes to mobile advertising, location-based services is the most important factor. So, a big part of our strategy revolves around how mobile search integrates with location-based services. Also, the app-based environment of mobile devices means that brands will have to build much more customised app-based environments, with focus on absolute content. That is the future of mobile advertising.

Tablets are still very new. We will release a whole new set of Windows-powered tablets that will come by the end of the year. The tablet market is still very nascent. That is exciting. The iPad is fantastic but there are loads of alternatives coming and I think it is great for not only consumers but advertisers as well.

Taraporewalla: From an Indian perspective, the numbers are large - no doubt about it. This year, there are a lot more smartphones in the market. However, how many people are actually using smartphones is an issue.

We have been talking about mobile for long now. There is some level of investment in terms of the product. For instance, our company does have a mobile product. At the end of the day though, the transactions are low.

As more people start accessing internet on their mobile devices, things will only get better. However, I am not very sure right now whether brands will get on there.

Dunmall: Our search is changing as well. In India, we have a phenomenal competitor in Google. When you launch against a company like Google in search, you have to out-innovate, do something very different from what Google has done. We think there is more innovation to come in search and Bing has represented that, which is about what you are trying to do as a consumer. Are you trying to find a restaurant in your location? Are you trying to print a boarding pass based on a cloud data that you know about?

All of these things are much more about the decision engine, about tasks you are trying to complete. And the web, really, was never built for task completion. That means you can see a whole slew of services, particularly on the mobile and it is important in markets like India, where a whole generation has skipped the PC and moved to the mobile phone.

afaqs!: Why is acceptability so low among mainline agencies, particularly in events such as these (ad:tech), where you do not really see the national creative directors of creative agencies or maybe even media agency heads?

Taraporewalla: I think this year ad:tech has seen a lot more relevant people than last year. Yes, the audience is less compared to last year but there are definitely more relevant people. There have been media agency heads and probably not so many creative directors from agencies. And, that is again building the ecosystem.

Dunmall: The truth is, if you are a creative director in a major agency, you have spent the last several years building television ads. That is an important part of what you do. And, the digital economy, the digital environment has not been very good at winning over those creative directors.

It is only now that we actually say that 'Ok, look at this rich creative canvas, where you can build a story and a connection with the consumer in a very emotive, brand-driven environment that you never could before'. Things like the tablet make it even richer. There are no more exciting times to be a creative. I do think the structure for creative agencies is changing. Today, you have a copywriter and an art director. In the future, you may have a coder sitting next to a creative head. That is the creative agency of the future.