In India, you still have a market where 45 per cent of the revenue is in newspapers. And you still have a mark where television delivers massive simultaneous reach in some of the higher spending internet markets. So, the big pillars of brand communication actually remain more intact in India than in other parts of the world and distribution infrastructure, specifically organised retail, exists to a much larger degree in India than in other parts of the world.
As Chief Digital Officer of GroupM Global, Rob Norman oversees the activities of the world’s largest buyer of online media with more than $5 billion in billings. In this role, he develops the digital capabilities within GroupM while establishing thought leadership positioning in the digital space and contributing to each agency’s business development. Prior to taking this role in 2012, Norman had served as CEO of GroupM North America, where he was responsible for the general management as well as strategic and administrative activities at each of GroupM’s four media agencies – Maxus, MEC, MediaCom and Mindshare. He assumed that role in March 2010 after serving since 2007 as Head of GroupM Interaction, which included the digital offerings of each GroupM agency as well as the integrated global search organisation that combines GroupM affiliates Outrider, Catalyst, and 24/7 Real Media, a position he retained while serving as GroupM North American CEO.
In conversation with Surender Dhaleta, Norman has a lot to share about the e-commerce ecosystem around the world and its growth in India, besides the trend in digital ad spends, and more...
Q. GroupM projects that global digital ad spend will exceed $113 billion by year-end. At about $600 million-$650 million, India’s digital spends is not even 1 per cent of global digital spends. And if we compare it on two parameters – firstly, India’s contribution to global GDP in terms of purchasing power parity (PPP) is about 5-6 per cent, and secondly, India’s active internet users are about 120 million, which is about 5 per cent of the roughly 2.5 billion internet users globally – why aren’t the digital ad spends up to the mark? Why this disparity and what’s stopping India from contributing more to digital spends?
It is probably true to say that when travel stops being the biggest category in online advertising, then you will see a rapid exhilaration of growth, because e-commerce advertisers are the biggest rivers of digital spending. The other factor that is extremely important is that in many parts of the world, online advertising is driven by search. By census, the small businesses searching small communities in India are themselves online and dealing with an online population that relatively small when compared to other parts of the world, particularly the US.
Marketers put their money into digital when one of two things happen – it is driving sales directly to a particular channel, or when other forms of advertising become inefficient. Other forms become inefficient when the reach they offer declines. But in India, you still have a market where 45 per cent of the revenue is in newspapers, which is increasingly unusual around the globe. And you still have a mark where television delivers massive simultaneous reach in some of the higher spending internet markets. Television fragmentation has received audience acceptance enormously, which requires more online advertising to serve the gap. So, the big pillars of brand communication actually remain more intact in India than in other parts of the world and distribution infrastructure, specifically organised retail, exists to a much larger degree in India than in other parts of the world.
Q. You had said that in e-commerce most of the revenues are coming from the travel sector. In future, do you see digital spends from other sectors also going up?
Services such as travel and banking and insurance and some other drivers of online advertising are in a market where there is highest penetration of bank accounts and credit cards. E-commerce also requires high penetration of credit cards and debit cards; e-commerce is not a cash economy by any stretch of the imagination. Even in the most developed parts of the world it took quite a long time for packaged goods, as we understand them, to become a significant part of e-commerce. But now you have conglomerates like P&G that have stuff like diapers or nappies becoming very significant components of the total e-commerce spends in that category. Then there are certain staples in the category such as durable goods or fresh goods becoming logistically possible to deliver in e-commerce. You get very rapid growth in these structures.
E-commerce in India will grow at different speeds, for instance, growth is faster in metro cities such as Mumbai, Chennai, and Hyderabad, but much slower outside these cities, infrastructure and logistical facilities are yet to develop fully.
Q. Of late, we have seen a trend where operating system companies are embedding site-specific search into their desktop search. For example, Canonical embedded Amazon related stuff into their Ubuntu desktop search. Can we see the trend being replicated on to more proprietary operating systems like Windows or Mac, or even on the mobile and tablet platform with Android?
I think that everything in the world is search, which will be about delivering the most relevant vertical knowledge or just information vertically and horizontally. I think that it will not be possible in the long term to prevent the user from choosing the search mechanism regardless of the operating system they are using, whether it is mobile or desktop, provided it can be democratised by time.
Q. Why is the marketer scared about using the digital space? Is he scared about the jargons?
It will be not be right to say that advertisers are scared of using the digital space. Some advertisers are mature and excited. Some are inquisitive to know how their allocation of resources will turn into effective results. While many others are trying to use digital in their communication plans to increase curiosity by integrating it to their overall campaigns. It is interesting to see how many brands across the world are positive about the digital space.
Q. When it comes to educating the marketer about the benefits about digital, who has a bigger responsibility – internet giants like Google, Yahoo, Amazon and other internet ad networks like Zedo, etc., or is it the responsibility of media agencies, considering they work closely with the marketer?
According to me, everyone is equally responsible. When you take into consideration the internet giants, they don’t work in isolation. They are equally eager to know about consumers all the time. On the other hand, media agencies act like a bridge between consumers and advertisers. Media agencies also know what best channel they can tap on for a brand’s communication. It is important to understand that media agencies have to be learners as well as educators. Magic happens when brands get insights from these partners of theirs and at the end incorporate them in the communication plans.
With inputs from Saloni Surti and Priyanka Nair