5/12/12

The great Indian online bazaar - Ernst & Young - India

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The great Indian online bazaar

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From desktops to laptops and from there, to the Smartphone revolution, w e 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 w ay. Brands are no longer about products or prices they constitute an entire consumer experience. The digital medium has not only empow ered consumers but has also provided them w ith an interactive platform on w hich to voice their opinions on, and experiences w ith, these brands.

With the advent of 3G in India, the increased speed of downloads, mobile TV , enhanced browsing and highresolution 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 grow th, 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, w hich collectively comprise 37 million users, dominate the internet. Over the years, gender profiles have changed, as w omen 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 grow ing more than those of most metros. This can be attributed to the increased market reach of broadband in nonmetros in the past few years. The youth has been a major driving force in the grow th of the internet, w ith college students constituting 30% of the population's 52 million. The majority of online users fall under the 2435 age group. Web interactions In the past tw o years, the online medium has undergone a paradigm shift in user preference, w ith horizontals and social netw orking w ebsites taking the lead from email and chat messengers. In 2010, social netw orking 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 netw orking sites. The idea today for brands is to gauge consumer sentiments and converse w ith 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 m edia In 2010, industry verticals such as banking, financial services and insurance (BFSI), automotives and telecom w ere 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.
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5/12/12

The great Indian online bazaar - Ernst & Young - India

How ever, 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 northw ard 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 follow ed by consumer durables. Retail in the online space generated approximately 23 million unique users. Indians sw iped their cards most for movie tickets and air tickets. Portals such as BookMyShow .com in the entertainment space and ClearTrip.com, MakeMyTrip.com in the travel category have been high spenders in the medium. Airlines such as Jet Airw ays have successfully used social netw orking platforms to leverage their brand value and connect w ith 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 w ho ow n consumer durables products use the internet for at least one hour on w eekdays. 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 w eb becom es intricate When it boils dow n to the consumer's intent of buying consumer goods, the online medium serves as a gatekeeper. With a plethora of information, company w ebsites, and product-review and social netw orking 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, w ho constitute the traditional medium of communication, now share their space w ith the online medium. Evidently, the internet is an emerging medium that not only encourages participation but also allow s consumers to express their opinions and share their experiences. As such, brand managers have become acutely conscious of closely monitoring consumers' view s of brands and the overall brand experiences. Brands such as Dell, Samsung and Sony have streamlined their online marketing activities in conjunction w ith consumer needs instead of follow ing 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, follow ed 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 railw ay-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 empow er consumers and strengthen their trust in online purchasing. This can be done only w hen brands strengthen their online presence by sharing information w ith customers and by achieving impeccable productdelivery standards. While online shopping continues to evolve, mobile advertising is the next big thing to w atch 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 w ill be one. With the advent of 3G, mobile TV is expected to surpass VAS as the biggest source of revenue. Thanks to 3G, mobile dow nloads and video streaming w ill 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 w ere a novelty in 2010. As the youth constitutes one of the largest groups of internet consumers, it is no surprise that most brands w ill try to become the "coolest" brand on the youth radar. As such, globally, telecom companies, the mobile industry, and the iPods of the w orld should be exploring this as a major marketing and grow th avenue. Going forw ard, the FMCG segment could venture into the mobile advertising space to tap potential grow th opportunities. 2011: w hat w e can expect One can expect that 2011 w ill serve as a show case year for many brands across categories, especially retail and consumer durables, w hich have just tested the w aters and are ready to take the plunge. A brand differentiating factor is limited to either product innovation or styling or for the clich pricing. How ever, the real distinguishing brand experience is built in the mind, or rather in the heart, of the consumer w hen it comes to the Indian bazaar. Tactful engagement by brands empow ers consumers w ith more value and choice w ithin their comfort zone. A consumer w ho talks about a brand experience on a social netw orking 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 w ill likely take a backseat and pow er w ill 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.
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The great Indian online bazaar - Ernst & Young - India

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 review s and brand experiences of real people in the virtual w orld. Contributor:

Bharat Rajam ani, Senior Manager Bharat has more than 14 years experience at Ernst & Young and is the solution champion for Marketing & Advertising, Risk Services (MARS). Bharat has been specializing in MARS review s for more than 12 years. He has conducted marketing spend, media planning agency compensation and Performance review s for leading advertisers in India cutting across all various industries FMCG, oil and gas, telecom, consumer durables and services.

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