Decoding Digital with Rajan Anandan

30 Apr,2013

 

It’s not always that industry folk get an opportunity to be upclose digital luminarie and get them to answer all their queries and address all their doubts. Well, almost. The only limiting factor is the time.

 

The platform provided by the International Association of Advertisers (India Chapter) facilitates that with the ‘World Goes Digital’ webinar series.

 

The inaugural webinar got off to a stimulating start last week (April 26). The platform chosen was Google Hangout which allows for simulatenous ‘meeting’ of 10 people in a ‘virtual’ room. With Rajan Anandan, Managing Director, Google India, as the first guest, the series struck a discerning chord as a cross-section of the fraternity congregated online and many more watching him live on the Youtube. They heard Mr Anandan share his version and vision of the growth of online space and also posed a few questions on the scope and challenges facing the medium in India.

 

Srinivasan K Swamy, President, IAA India Chapter, began with an introductory note on the role of IAA in steering such initiatives and promised more such debates in time to come. Abhishek Karnani, co-chair and Director, Free Press Journal group also spoke on the webinar initiative.

 

Other than Messrs Swamy and Karnani, other panelists included: Manish Advani, head – marketing and public relations, Mahindra Special Services Group (also co-chair of the the IAA webinar series), Vishaka Singh, Executive Director, Aurora Comms, Nishad Ramachandran, Vice President, Hansa Cequity, Mudit Singhal, Founder and Business Head, Storycentre, Gaurav Mendiratta, CEO, SocioSquare and Jay Sampat, M&E practice at Accenture. Mr Advani proposed the vote of thanks and the panel was moderated by Pradyuman Maheshwari, Editor-in-Chief, MxMIndia.

 

Execerpts from the conversation:

Q: Several companies in India are reluctant to start their own digital enterprise as they feel that if something nasty is posted about them, their business will get affected. What is your advice to these companies?

Rajan Anandan: I’d like to say that there are 150 million users on the internet and about 95 per cent of the SEC A, B 15-44 yr-olds are on the internet and are spending more time on the internet than any other medium. If you happen to sell products or services that cater to these audience group then if you are not on the internet you won’t be able to reach them. More importantly, if you do not engage with them and other companies engage with them who turn out to be competitors then the users may migrate to those other brands.  We have seen this happen in other countries as well and what’s interesting about India is that despite being at 12 per cent penetration, it already has a 150 million users. For many of us, the industries where we mainly focus on SEC A, B 15-44 this has become a must-have medium. The important thing to realize about the medium is that in the digital arena consumers are the ones that propagate brands. It used to be brands talk to consumers in a one-way dialogue but that has completely changed with the advent of the internet.

 

I see two kinds of companies from the umpteen that are present on the medium.  One that says that now I can get instantaneous feedback when something is not going well or when there are opportunities for improvement and those companies are able to leverage this medium in incredibly powerful ways not just for building awareness or driving transaction but also for getting feedback from consumers. Then there is another group of consumers who say that if something goes wrong then consumers will talk about it and the whole world will find out about it. But the reality today is that with the advent of the internet, social networks and online video users are able to stay connected. There are 2.4 billion consumers on the internet today and by 2020 that number will become 6 billion. So everyone will be connected to internet by that year and unless you are selling to people outside of planet earth, it’s important to be on the internet and leverage the medium well.

 

Q: A large number of SEC A, B audiences are online and in the Indian context what matters is the language.  Is all of that coming online now for brands to engage more deeply with the consumers?

Rajan Anandan: The simplistic way to look at this is there are 150 million users in the country who speak, read and write English today. So every new user who comes to the internet today is outside of that bastion. Local language content is important today.  Some of the fastest growing websites on the internet are local-language driven. If you look at videos, especially YouTube which has 50 million unique users per month, more than 80 per cent of the views are actually non-English. We are seeing a large amount of user-generated content in local languages that are being uploaded. Also there are many web-only content creators that are emerging… but the point is that it is still very early days but the content ecosystem  will develop very rapidly. There will be three things that will be witnessed: the first is the underlined infrastructure that will enable local language content at scale. One of the important things is standardized open source fonts. Today, there are not so many open source fonts in our country but that problem will get solved over within the next one year. There are several industries that are working together…the other thing is that there is a lot of content that exists in Indian languages which is not on the web. That content we are seeing it come on to the web.  We think the news print industry has led that wave and we are seeing a lot of publishers etc come online. The third thing that will be a breakthrough in 5-10 years is web-only content creators. Today we have about 40,000 Indian content partners on YouTube and almost all of them are non-English. We are now seeing an interesting trend where content creators are focusing on creating content only for the web. As the ad ecosystem grows such models will get more interesting. Over the next 3-4 years we will see a tsunami of non-English content come to the web.

 

Q: How can content creators and creative people use the online video medium effectively in terms of ROI? Also, can you reveal details on the captivity of audiences watching non-English videos on YouTube?

Rajan Anandan: Let me share with you some statistics on that front with respect to YouTube. We have about 11,000 full-length movies, we have about 90 per cent of Bollywood music catalogue, about 80 per cent of all the regional music catalogue, TV shows of the Top 6 TV networks and live sports as well. Clearly, all this wouldn’t be there on YouTube if there wasn’t a way to monetize it. Now the monetization rates on online today are significantly lower than on TV. If you look at the TV rates, they are in the north of 3 billion dollars while digital advertising is about Rs 2500 crores till last year. So we are 1/6th the size of the ad industry in digital excluding classifieds compared to TV. But the only thing is that digital is growing at 50 per cent while television is at about 12-14 per cent I guess. So there is a way to monetize. The second part to it is that if you want to become a digital-only content creator can you make that viable and how does that compare with say being a content creator in the television space. The simple way to think about the internet is that if you are going to have the same cost structure that you do in the TV industry to make content in the internet industry your toast, because effectively the monetization rates are actually quite low and what we are seeing is that the successful content creators who are already building multi-million dollar business literally starting from scratch. They have a very different cost structure and therefore they are effectively able to make good returns. It’s very important to understand the economics of the medium and therefore build a content business that aligns with the economics of the business. The good news is that there are thousands of digital-only content creators today, which is an encouraging sign. But at the same time if you want to make say an 80-crore movie and say that you are not distribute anywhere else but only on the internet – can I breakeven on that, probably not yet. That’s going to take some time as the CPMs have to catch up and so on and so forth.

 

In terms of the users and quality of broadband, the thing is that there are 50 million users including mobile. There are about 10 million unique visitors who access YouTube on mobile while about 40 million view us directly on the web. The TG is 15-44 SEC A, B and this is an interesting audience set. For example, it’s been about two weeks for IPL so the time spent on YouTube on IPL has doubled year-on-year. But my view is that with not so great connectivity India is already at the state of connectivity that there is. As broadband begins to scale out the consumption of viewer-based online content will go through the roof. If there is one thing that is preventing the internet from realizing its potential, it is broadband.

 

Q: Google has been doing a lot of activities to bring new businesses online. Will you be able to share data on the kind of agencies that are coming and sticking on with the medium? If they are not hanging around then what are the reasons for the same?

Rajan Anandan:  To give you an insight, there are about 12 million businesses in India that have more than 5 employees. That is the third largest in the world next to China and the US. Despite that huge number only 1,50,000 businesses advertise in any media. So in print at least 1,50,000 people advertise at least once in a given year; about 10,000 businesses advertise on television and about 7000 businesses advertise on radio. If you look at digital advertising, it is orders of magnitude bigger than television but less than print in India. To grow the digital and mobile advertising market the first step is for businesses to have a mobile or online presence. Over two years ago, when we launched the ‘India get your businesses online’ initiative there were only about 400,000 businesses that were online but when we looked at the quality of those website only 100,000 of them were decent. When we did a little more research behind this, we found that what works in India is generally a free model.  So we built about half a million websites for businesses for free. This was supposed to be a three-year initiative and I am excited to state that we have crossed 300,000 websites which is a three-fold growth and we are confident of achieving half a million quality websites by 2014.

 

Also, businesses that are able to generate leads from the internet like travel agencies or doctors or lawyers, etc…if you see today there are half a million doctors in India but less than 50,000 of them have decent quality websites. But the ones that have a website are seeing a significant shift in the way their practice is being run. Basically, consumer-focused businesses that can be used to get leads will be the best way to move forward.  By 2015, there will be more advertisers that will advertise on digital than and by any other medium.

 

Q: You have been talking about internet penetration and I have been desperately waiting to hear some bit on mobile internet penetration. Today, mobile internet penetration has crossed pc internet. There are some wonderful examples of mobile projects like M-pesa in South Africa. We hardly hear any story on mobile internet in India. What initiatives should we be taking to drive consumption through mobile internet as compared to PC.?

Let me start by presenting some facts. There are 150 million users of which 50 million are desktop/notebook users, 50 million users access the internet through a mobile device and the other 50 million access the internet through both a desktop and a mobile device. If you look at the last 6-7 months most of the new users who are coming to the internet are mobile-first and mobile-only. We are essentially starting to see a mobile-only option taking off in India. As I said earlier, all the new users who will be added this year will be from mobile-only. They are doing pretty much the same thing as what one would do on desktops or notebooks. The only thing difficult as of now is video on mobile due to bandwidth issues but outside of that there is an explosive growth that is being witnessed in the mobile space. To quote an example, there are about 25 million smartphone users but the average user is spending about 120 minutes per day on the internet.

 

For businesses there are certain implications that come along. For example, today e-commerce is at an inflection point; most e-commerce sites in India are getting between 3-10 per cent of transactions from a mobile device. However the traffic to such sites has now crossed 25 per cent. That is a huge number. Going forward we expect to see a phenomenal jump coming from a mobile device to such websites. It means that if you are a mobile company you will need to have a mobile optimized site. I am surprised to see some companies that do not have this facility. The second thing is that it is important to have native apps. Also, mobile is a very important medium top leverage branding and the good thing today is that one can have very exciting mobile ads. Our view s that the time for mobile has arrived and there is no going back now.

 

The webinar can be accessed at https://www.youtube.com/iaaindiachapter

 

Post a Comment 

Comments are closed.

Today's Top Stories
Videos