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Mining For Gold In The Digital Domain

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Marketers in India are convinced there is a treasure trove in the digital field. And yet, digital spends are just 4-5 per cent of total outlay. Why are marketers not mining this medium more? What are the tools needed? Rama Bijapurkar, market strategy consultant; Deep Kalra, founder and CEO, MakeMyTrip; Kiran Karnik, former president of Nasscom; Amrita Gangotra, former director, IT, Bharti Airtel (shortly after the discussion, she joined Vodafone); and Shantanu Narayen, president & CEO, Adobe Systems, tried to find answers during a discussion organised by Businessworld-Adobe, and moderated by BW’s Chitra Narayanan. Edited excerpts.

On why marketers are sitting on the fence 
Kalra: Digital is a powerful medium. But there is a lack of understanding of the medium. Most offline companies still look at offline advertising as the default go-to place. There is a fundamental divide between people whose first go-to place was offline marketing and whose first job was in online. It takes a long time to unlearn that. So, the human angle is the first reason.

The other reason is that it is a small medium. Only 10 per cent of the 120 million Internet users in India are buyers. So, there are probably only 10-12 million online buyers in India today. This is linked to broadband connectivity, which is going to be a tipping point. Unfortunately, everything takes a lot of time in India.

Narayen: There is a generational shift in terms of customers who expect to get all their information digitally versus customers who expect to get this through traditional means. But if you look at the growth rate — digital spends are probably growing 200 to 400 per cent. So you just have to give it a little time. Some people also view digital as a panacea and say, hey I have moved to digital, and now the revenue should just start rolling in. But you have to be practitioners, and learn to execute it first.

Karnik: About 10-15 years ago, IT was going through similar soul searching. There was much debate and scholarly research about whether there is a RoI made on IT, or it’s just a sexy thing to do. I think we are somewhere at that stage now in digital marketing. But we go through an S-curve with everything we do. For a long time things are flat, but suddenly there’s a take-off. Yes, there are some barriers. The traditional marketers are stuck in the old world and don’t understand this is the future. Also, even those who move online are doing the same sort of the thing they are doing offline. It’s like the early days of TV advertising when just the radio jingles were moved to television with some images. But digital is a different medium and requires a new approach.

The most exciting part which is going to make digital take off is SOLOMO: social, local and mobility taken together. Add to this personalisation and location-specific messaging and digital marketers have got something unique and special. I am convinced this is the future.
Gangotra: Well, being a telecom company, we definitely have belief in digital marketing. In India, if you look at the youth population, things are really positive for us — more than 50 per cent of our population is younger than 25. And all of them are moving to mobile. The social, the cloud, the location, and the fact that mobile Internet is increasing is very positive. But the CIO and the CMO really need to understand this space well and then take it forward. Over the past year and a half, we at Airtel have culled out a separate department which focuses on the online properties, the websites and portals that we have. It’s about looking at earning more from channels which are there. So paid, earned, owned — all the three. But we have seen for ourselves the returns have been multi-fold. Not only have we shifted 30-40 per cent of our marketing spends to the digital media, our returns have been over 100 per cent.

I also believe that it has to start from the top. Unless the CEO actually believes that this is really going to work for the organisation, it will always remain on the side.

Bijapurkar: I think in digital we have got one more distribution channel and it can do discontinuous, never-before amazing things, open up unlimited new ways of talking to consumers, creating preferences and selling to them. So why aren’t we seeing much more action?

First, I think, the utility part, the workhorse part of it has moved quite significantly… banking transactions and so on. Eighty-three per cent of train tickets are sold online, 58 per cent air tickets. But the next generation of storytelling in order to create consumer preferences — that hasn’t moved much. The reason I think is because marketers go where consumers are and not where they aren’t. We used to do that with television as well in the early days, look at the number of active users.  Now, the numbers from Juxt Consulting show that there are only 29 million households which actually have Internet, but you have got about 65 million active users, and 61 million regular users, and 50 million who shop online. So this is a great Indian inverted pyramid. But God is in the details; 5.4 per cent of all Indians have Internet access.

Now, from the other side, look at the growth marketers have to deliver — the expectation is 30-40 per cent growth on, say, a Rs 20,000 crore business. You know that rural markets are really going to take off. Plus your CEO says make sure you have market share everywhere across the board — rural, urban. So there is a certain sort of reality check that we have to take.

Then, we have got a terrible networking environment. Also, we are discovering consumption for the first time. So people don’t want to sit at home and shop, not in a hot country where malls have better airconditioning. So like a good consultant, I will say yes and no — yes to digital, but the bigger context has to be kept in mind.

On choosing reach over RoI
Bijapurkar: It’s ‘and’ not ‘or’. You can’t make your bonus numbers unless you do both reach and RoI. You need to grow as much as the next guy who is spending more online and more offline rural. In India, there are too many consumption islands, so you have to fish in every pond. Unless you have a model like Deep has.

Kalra: Thanks Rama. But I will also go with ‘and’. The reach is not there today in India for digital, whichever way you look at it — 150 million on the Internet or 50 million buyers. Interestingly, in many countries around the world the tipping point has happened for Internet reach. Look at Newsweek, going completely online. What a bold and forward-looking decision. But who is really going to say, ‘listen, we have got to kill the goose that lays the golden eggs for us today, and think of the future and get into something new’. When you start thinking like that, that’s when you make bold moves.

And, incidentally, digital does not give you cent per cent return on advertising dollar. There is cent percent accountability, cent per cent measurability — but return? No way. However, web analytics takes away those fuzzy shades of grey. We can see what works and what does not. But it can’t give you the reach that TV can.

Karnik: I disagree with Deep. The one thing that more Indians have access to and actually  have more than any other device is the mobile. Mobile penetration is 900 million. Nothing else gives you that kind of reach, not a combination of TV and radio and newspapers. But how you use it is a challenge. Most mobiles today are  just basic feature phones.

Gangotra: I agree with Kiran. We have two large events that we sponsor — the Airtel Delhi Marathon and the F1 event and most of our spends this year on these have been on digital. On Friendship Day we saw 12.6 million friendship bands being exchanged online. Our marketers are convinced that digital shows results. We have targets for our online portal that add up to more than a million dollars in a year.

Narayen: What’s fascinating about this conversation is that nobody is saying that digital is not going to be the reality; they are all only talking about some of the obstacles that are there. It’s like it is an issue of access right now — which is sort of a means to an end.

Kalra: Yes, true. If access were to be fixed, it could become a gold mine. And this utopian concept is not so far away. You have a tablet coming for Rs 5,000. You are going to get 4G everywhere. It won’t be patchy 3G forever. Right now nobody is clicking ads on the mobile medium, but but if the form factor is slightly larger — 7 inches — and with the right speed, that will change everything.

Gangotra: The mobile app is picking up. In a month, we had 4 lakh people downloading our app. So, you have to fit the content to the device.

"The one thing that more Indians have access to and actually have more than any other device is the mobile... Nothing else gives you that kind of reach, not a combination of TV, radio and newspapers." KIRAN KARNIK Former Nasscom president
Kalra: I think with mobile apps, it will explode. We have invested in every OS possible, including Windows 8. We genuinely believe that our biggest competition is not going to come from other online travel agents — but from a mobile travel agent, who doesn’t even exist today. So until we don’t destroy our business, it won’t work. Mobile is a train that is unstoppable.

Bijapurkar: Yes, the speed with which people have moved to this medium is unbelievable. The cellphone is your constant companion — you take it to dinner, because nobody else is free to dine with you.  Consumers have moved. But supplier imagination has not.

On measurements and tools
Narayen: We process 6 trillion transactions a year that happen on digital because we bought this company called Omniture. So we are able to measure what’s actually happening.

I think marketers have to start by identifying their KPIs… key performance indicators —whether it is the number of unique visitors, transaction size per visitor, number of repeat visitors. And get into the discipline of measuring and not explaining when the numbers aren’t there. The second step is when actionable insights based on the data generated start getting automated rather than having individuals do it. We are not quite there yet but you will see more predictive algorithms being developed.

Kalra: We have built up a business on measurements. We look at the funnel. So when you come to our site there is a landing page and the next level would be a review page and then you get closure to the payment page, etc. You might get a million people coming to your site but just 10,000 customers. So where does the drop off happen? We can see the conversions from first to second level and second to third level. I guess CPA (cost per action) and CPI (cost per impression) is still very popular which is just in terms of number of visits you get. Click-through is important when you are doing emailers, etc. But I think the most important metric for any brand is to check your repeat rate… because if you are reacquiring customers then obviously you are doing a bad job. The person should come back as an organic loyal customer.

Karnik: Shantanu, fantastic that you can look at 6 trillion transactions. Of course, thanks to our CAG, we are used to such big numbers. But there is something else, a concern which we need to keep at the back of our minds when we have so much data. And that is privacy. How do we make sure we don’t infringe on customers’ right to privacy as opposed to our intention to analyse data and make our services better.

On privacy and personalisation
Gangotra: Privacy is a big focus area for the government and it has not been easy for us too. How do you use a lot of information that you are gathering about the customer in a responsible manner. How do you personalise it. The more clean data you are able to cull out within the databases, the more you will be able to personalise in an effective manner.

Bijapurkar: I think generally we do badly in  personalisation. There are people wanting to shake my hand electronically, but they get my gender wrong. I worry about the fact that we can try and track and personalise and end up missing the wood for the trees. You have to understand that there is a different me when I am doing this, and there is a different me when doing something else. If you can’t get it right don’t do it.

On social staying relevant
Narayen: We produced a report which showed that attribution to social is grossly understated. For instance, you are hunting for a camera, you talk to your friends first. Right in the end you do a search for the camera. But today, all of that attribution — and marketing spend — is going to search rather than where the activity began to happen — on social. The technology to find the attribution doesn’t exist today. It is one of the areas we are working on. I think social is clearly under-represented today in terms of its power.

(This story was published in Businessworld Issue Dated 31-12-2012)