The year 2011 was a landmark year for the digital industry. The year started with the launch of the third generation spectrum (3G) in India and many other countries, launch of Google’s social networking site, Google+, Mark Zukerberg’s announcement of $10 billion IPO for Facebook. The year, 2011, was also a year full of stories of digital giants like Apple’s Steve Jobs and Yahoo!’s Carol Bartz.
Here is a snippet of the important events that shaped the digital industry in 2011 in India and globally.
• Internet users in India crossed the 100-million mark
• Saudi Arabian Prince Alwaleed buys stake in Twitter
• Mark Zuckerberg announced IPO for Facebook to raise $10 billion
• Google launched Google+; registers 40 million users globally
• Carol Bartz, CEO of Yahoo! fired over the phone by the board
• E-commerce in India registered an unprecedented 18 per cent growth
• India becomes world’s second-largest user of mobile phones and fourth-largest user of Internet
• Ministry of Telecommunication auctions the zenith of technology- Third generation (3G) spectrum
• ICC Cricket World Cup, fourth season of the Indian Premier League (IPL), online gaming and music take video consumption to a new height
• Facebook declares India to have its largest user base by 2015
Surge in digital spends, but medium still under-monetised
Last year, Facebook became the first social networking site in the world to call for an Initial Public Offering (IPO) to raise a whopping $10 billion by 2015 to expand its space in the digital media business. This move disillusioned those who denied proliferation of virtual world into the real world.
Overall, last year was a mix of opportunities and challenges for the medium. The constant hype about the growth of the digital medium attracted numerous players to grab a large share of the pie from the digital chunk. However, the medium remains competitive, yet under monetised. This trend was observed more in the e-commerce segment, which extended from the online travel industry to the retailing products industry globally. The segment witnessed a robust 18 per cent growth, but remained hyper-competitive and challenging. “One of the bigger challenges being faced by the online shopping industry is a fragmented back-end. Greater attention from government and private entities, more investment and the entry of serious players would be needed to create a better structure with respect to payments and logistical infrastructure,” believes Sachin Bansal, Co-founder and CEO of Flipkart. The other major expenditure channel on digital media is online advertising spends which has grown in one year only. However, the trends have majorly been the same. Globally, display advertisements have not shown promising growth and hence continue to remain a cause of concern.
Search engines & social media-driven ad spends
Search engines and social media-driven ads have attracted maximum attention from marketers. It reflects the fact that brands don’t want banners online, they want deep engagements with potential consumers which comes from creative advertisements and use of social media. Global trends have shown that digital ad spends have gone up over the years, but the challenge of investing in the right online channel is the most crucial part of the game. “In last two years, two key marketers have increased digital spends substantially. Search related advertisements have particularly witnessed growth. While the Internet as a market is definitely going to grow, marketers have huge challenges on hands. They will have to figure our how effectively can the medium be used in the overall media mix,” says Neville Taraporewalla, Country Director, Advertising and Online, Microsoft India.
Social Media – a key driver of digital media
Like rest of the world, Indian online users too became more social, especially with the use of Facebook and Twitter. They continue to dominate online habits of users. Facebook’s user count in India soared by 85 per cent to 34 million as of June 2011 as against 18 million users in 2010. One of the largest marketers in telecom sector, Vodafone launched a Facebook phone. “Many marketers are now using Facebook to have conversations with consumers as a community leveraging the power of word of mouth,” believes Gulshan Verma, Vice President and Country Head, Ad Network, Komli Media for India and Middle East. Likewise, Twitter has also become an online customer service platform, due its nature of broadcast messaging, for the telecom network provider to ecommerce players. Indian social networking sites showed a remarkable growth of 43 per cent in the number of total unique visitors.
Mobile medium took shape with apt handsets; tablets added to mobile
Modern mobile handsets and smart phones encouraged data usage on mobile phones, but only at a sluggish rate of five per cent against the previous year. However, experts are hopeful about both usage and ad spends in years to come. “With close to INR 70,000 crore been paid by the telecom companies to the government for the 3G licenses, we should see a surge in number of users connecting to the Internet through their mobile phone,” believes Anurag Gupta, MD, DGM India Internet Marketing. While less than 35 per cent handsets are data-enabled and most users are awaiting cent percent efficiency of 3G connections, mobile usage remained far from its desired goals. But reverse trends should not surprise the industry in coming years as many claim that the number of mobile Internet users will surpass the users on PC devices. “I would hope to see greater entrepreneurship in the mobile product development domain. With greater smart phones volumes and rampant increase in mobile internet usage, I would hope to see significant increase and availability of local language internet content as that can really make this medium much larger,” says Anuj Kumar, CEO, Affle. The year also saw many players enter the tablet market and create one more platform that advertisers could look at in days to come.