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The great Indian online bazaar - EY - India

The great Indian online bazaar

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From desktops to laptops and from there, to the Smartphone revolution, we have progressed from the technological stone age of Pentiums to a new generation that offers endless possibilities.

From the era of internet relay chat (IRC) from Yahoo! chats to Facebook messages, consumers and their purchasing strategies have come a long way. Brands are no longer about products or prices — they constitute an entire consumer experience. The digital medium has not only empowered consumers but has also provided them with an interactive platform on which to voice their opinions on, and experiences with, these brands.

With the advent of 3G in India, the increased speed of downloads, mobile TV , enhanced browsing and high-resolution video streaming, the digital space is an area to watch out for as brands slug it out not to just attract eyeballs but also convince people to be brand ambassadors to gain their "share of voice."

As the decade came to an end, the number of active users on the internet stood at close to 52 million. In the past five years, the online industry has seen phenomenal growth, and the medium is not only compelling but also among the most efficient mass media.

Audience profiles
In India, the SEC A and SEC B segments, which collectively comprise 37 million users, dominate the internet. Over the years, gender profiles have changed, as women users have increased from 20% to 30%.

Further, since 2004, the share of non-metro audiences has increased from 25% to 50%. It has been observed that non-metro audiences are growing more than those of most metros. This can be attributed to the increased market reach of broadband in non-metros in the past few years. The youth has been a major driving force in the growth of the internet, with college students constituting 30% of the population's 52 million. The majority of online users fall under the 24–35 age group.

Web interactions
In the past two years, the online medium has undergone a paradigm shift in user preference, with horizontals and social networking websites taking the lead from email and chat messengers. In 2010, social networking sites recorded approximately 35 million unique visitors and accounted for the highest time spent among internet users.

Online advertising has evolved considerably, from flash banner ads to innovative page takeovers and prolonged engagement properties on social networking sites. The idea today for brands is to gauge consumer sentiments and converse with the audience. As a result, marketers have started regarding the medium as more than just an advertising medium but a convergence of advertising, PR and sales.

Marketing adopts the infant media
In 2010, industry verticals such as banking, financial services and insurance (BFSI), automotives and telecom were the biggest spenders in the online space. FMCG and consumer durables, the biggest spenders on TV and print, have been relatively low spenders in the online segment.

However, this trend is expected to change, as more and more marketers are gauging the potential of this medium for effectively measuring media spend and returns on marketing investments (ROMIs). With the advent of 3G and high-speed connectivity in India, the ad spends of players in the retail, consumer durables and FMCG sectors is poised for a northward shift in future. The medium is set for a serious revamp as major players start shifting their focus to the youngest marketing medium on the block.

The retail industry in India is valued at US$350 billion and is projected to grow at 13% year-on-year. Of the entire retail segment, food constitutes 62% of the market, closely followed by consumer durables.

Retail in the online space generated approximately 23 million unique users. Indians swiped their cards most for movie tickets and air tickets. Portals such as in the entertainment space and, in the travel category have been high spenders in the medium. Airlines such as Jet Airways have successfully used social networking platforms to leverage their brand value and connect with their customers.

The other segment that has seen some action in the online space is consumer durables. A recent study by consultancy firm Juxt reveals that 73% of the people who own consumer durables products use the internet for at least one hour on weekdays. This is higher than any other medium in the segment, evidently so as the largest chunk of the online medium comprises consumers from metros and tier-II cities from the SEC A category.

The web becomes intricate
When it boils down to the consumer's intent of buying consumer goods, the online medium serves as a gatekeeper. With a plethora of information, company websites, and product-review and social networking sites, this medium is perceived as more effective in enabling a consumer's search for the most appropriate products.

Influencers such as friends, family and relatives, who constitute the traditional medium of communication, now share their space with the online medium. Evidently, the internet is an emerging medium that not only encourages participation but also allows consumers to express their opinions and share their experiences. As such, brand managers have become acutely conscious of closely monitoring consumers' views of brands and the overall brand experiences.

Brands such as Dell, Samsung and Sony have streamlined their online marketing activities in conjunction with consumer needs instead of following traditional routes. In 2010, 79% of consumers researched various products online and 21% purchased products online. Consumer electronics accounted for the majority of these researched and purchased products, followed closely by DVDs, camera and optics.

E-commerce has not gathered as much pace as expected in India. This can be largely attributed to the dichotomy in Indian consumers' online behavior. Daily travel portals record approximately INR300,000 million railway-ticket bookings, and 75% of air tickets are booked online. Although travel-ticket and movie-ticket purchases online have seen a rise in the past year, e-commerce is yet to become a trusted medium among consumers.

Brands need to build transparent communities that empower consumers and strengthen their trust in online purchasing. This can be done only when brands strengthen their online presence by sharing information with customers and by achieving impeccable product-delivery standards.

While online shopping continues to evolve, mobile advertising is the next big thing to watch out for. In India, the mobile as a medium has a much stronger market presence than the internet. According to a recent Internet & Mobile Association of India (IAMAI) report, India has more than 601 million mobile subscribers.

For telecom companies, value-added service (VAS) is a major source of revenue, and in future, video on demand will be one. With the advent of 3G, mobile TV is expected to surpass VAS as the biggest source of revenue.

Thanks to 3G, mobile downloads and video streaming will also become increasingly common and popular. Virals on the internet have been a big hit in recent years. From cartoon animations on Gabbar and Thakur from Sholay, these special ads pioneered by Virgin Mobile and intended for exclusive broadcasting on the YouTube platform were a novelty in 2010.

As the youth constitutes one of the largest groups of internet consumers, it is no surprise that most brands will try to become the "coolest" brand on the youth radar. As such, globally, telecom companies, the mobile industry, and the iPods of the world should be exploring this as a major marketing and growth avenue.

Going forward, the FMCG segment could venture into the mobile advertising space to tap potential growth opportunities.

2011: what we can expect
One can expect that 2011 will serve as a showcase year for many brands across categories, especially retail and consumer durables, which have just tested the waters and are ready to take the plunge. A brand differentiating factor is limited to either product innovation or styling or for the cliché pricing. However, the real distinguishing brand experience is built in the mind, or rather in the heart, of the consumer when it comes to the Indian bazaar.

Tactful engagement by brands empowers consumers with more value and choice within their comfort zone. A consumer who talks about a brand experience on a social networking platform tends to be far more reliable as an endorsement than any hoarding or brand ambassador.

A significant shift in trend is expected in the near future, as the marketing push medium will likely take a backseat and power will be in the hands of the consumer. More and more brands have started accepting this as a reality and have started targeting consumer sentiments across the online domain.

As many as 20 million Orkut users and 27 million Facebook users are evidence enough that today's consumers seek information experiences. Consequently, in a cluttered market, purchase decisions are not based on TV and print ads but reviews and brand experiences of real people in the virtual world.


Bharat Rajamani, Senior Manager

Bharat has more than 14 years experience at EY and is the solution champion for Marketing & Advertising, Risk Services (MARS).

Bharat has been specializing in MARS reviews for more than 12 years. He has conducted marketing spend, media planning agency compensation and Performance reviews for leading advertisers in India cutting across all various industries – FMCG, oil and gas, telecom, consumer durables and services.

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