The mobile ecosystem has been the fastest growing advertising and marketing medium in India and around the world. A survey carried out by exchange4media last year revealed that mobile ad spends would grow by 43 per cent in 2014 to reach around Rs 450-475 crore with a projected growth rate of 52 per cent for 2015.
Similarly, an eMarketer report released earlier this year said that mobile internet ad spending (not including SMS, MMS and P2P messaging) is projected to grow at 120 per cent in 2015 and 100 per cent in 2016. Another IAMAI report released back in September 2014 also put the annual growth rate of mobile advertising as 43 per cent.
Growth projection for mobile ad spends in India
On the occasion of exchange4media’s inaugural Mobile Advertising Awards or The Maddies 2015, we spoke with industry experts, which included marketers, head of ad tech companies, mobile professionals and media planners, to get their thoughts on mobile ad spends in India.
Mobile ad spends are expected to grow at 60 per cent in 2015. This would mean that, taking the mobile ad spends as Rs 450 crore in 2014, ad spends should be around Rs 720 crore in 2015. Mobile ad spends are expected to continue growing at the rate of 50-60 per cent in 2016
However, there were also those who thought that ad spends would double YoY in India. “Most of the consumption of video gets clubbed under digital whereas at least 90 per cent of the video content, at least the short form video content, is on mobile; so this number (mobile ad spend projections) needs to be finetuned,” explained Pancham Endlaw, Head (Advertising) for Opera Mediaworks South Asia, when asked about his views.
Similarly, Dippak Khurana, Co-founder and CEO of Vserv opined that 2016 would be a tipping point for mobile advertising. “The mobile advertising industry has grown at 52% CAGR over the last couple of years. In 2016, we expect to see phenomenal growth in this industry with a 90% increase in mobile ad spends. This growth will be fuelled by the fact that India is one of the world’s fastest growing smartphone markets with a growth rate of over 50%. The year 2016 will be the first year of market maturity for mobile advertising and this industry will see accelerated participation from all segments.”
Charulata Ravi Kumar, CEO of Razorfish India, was also of the opinion that in 2016 brands will take a mobile first approach. “We expect to see nearly 30-35 per cent of the marketing budget allocated to digital spends with about 50 per cent on mobile,” she said.
Drivers of mobile spends
The increasing penetration of smartphones in the country is one of the chief drivers of mobile ad spends in the country, opined industry experts we spoke with. This is also impacted due to decreasing smartphone and data prices, which is further leading to increase in content consumption.
“Generally, we have seen in Western countries that when 30 per cent of phones become smartphones then you reach that inflection point. I think this will happen in India in the next 12-18 months. With 4G coming in and data prices falling, video content will be consumed more and more and data usage will increase. Generally, mobile is going to become a key part of communications for brands. The medium will also become more localized and customized. Both agencies and clients have just scratched the tip of the iceberg,” Ashish Bhasin, Chairman & CEO (South Asia) Dentsu Aegis Network and Chairman of Posterscope and psLive (Asia Pacific).
With audiences nearly inseparable from their smartphones and feature phones, the marketer, for perhaps the first time ever, has a device that allows it to be part of their consumer’s life 24*7.
Explaining how the mobile has become such an important tool for marketers, Ketan Head (Marketing, Corporate Communications and Sustainability) of Blue Dart Express said, “There is a new mass of a attention deficient audience, but, to our delight, glued to their mobile phones, and these ‘mobile first’ are a growing mass. This is a medium of advertising by which you can get closest to them. With growth in interactive , rich media and native apps and more and more advertisers learning to use the media it will be a important one going ahead attracting a lot of advertising monies, it is alive and well but also fast becoming a key component to a growing amount of successful digital media plans.”
E-commerce continues to lead the way
E-commerce continues to remain the major sector driving ad spends on the mobile in 2015. Media planners we spoke with said that this would continue to remain the case for the next couple of years.
For example, according to Opera Mediawork’s Endlaw, categories like e-commerce, support and affiliate services (Housing.com, etc.) and classifieds (OLX, Quikr, etc.) represent more than 50 per cent of mobile ad spends in India (not including search).
Apart from e-commerce, mass consumer categories like FMCG, BFSI, telecom, etc. have also been steadily increasing mobile ad spends though it is much more strategic. “Most ‘brick and mortar’ businesses are now looking at the digital medium. With smartphone penetration set to increase due to 4G, all kinds of businesses will be looking to explore at how they can use the mobile to interact with audiences. The categories driving mobile advertising are mass consumer categories like consumer durables, e-commerce, education, BFSI, etc.; so it is quite a varied list of companies. Cross device targeting has also become something of an option. They have all started experimenting for sure but the options are still not evolved,” opined PM Balakrishna, CEO of Allied Media Network and EVP of Percept Media.
“We see mobile ad spends aligned to the overall digital ad spends in which e-commerce, FMCG, telecom and auto would constitute the segments which serve as growth drivers. At Vuclip, companies in the FMCG, consumer durable goods and auto sectors have been contributing significantly to our growing ad revenues,” informed Meera Chopra, VP & Global Head of Advertising Sales at Vuclip.
However, as the medium matures and both brands and agencies develop a better understanding of how to best use the inherent qualities of the mobile phone, we would see more ‘non-traditional’ sectors getting on to the mobile.
“Mobile will continue to grow but the best way to grow advertising budget from marketers today is if this could be integrated in the overall marketing mix. It’s all about having mobile integrated as part of the marketing mix rather than having a standalone mobile advertising campaign,” opined Vinod Thadani, Chief Digital Officer of Mindshare (South Asia).
Opportunities And Challenges
The potential and, in many ways, the challenge ahead for the mobile medium lies in the twin issues of connectivity and speed. As Charulata Ravi Kumar, CEO of Razorfish India, puts it, “Connectivity and speed are the biggest concerns in India. We are one generation behind other countries. The moment service providers are put under pressure to improve the connectivity, we will see this change taking place.”
The advent of 4G and reduction of access costs (data costs) will definitely play a big role in how the medium shapes up in coming years. With video content slated to be the most consumed form of content on digital, a strong network could be the difference between success and failure.
Another major change would be in how brands and agencies design their communications. Though display advertising currently accounts for nearly 60 per cent of ad spends, there is a growing feeling that the industry needs a more engaging and non-intrusive mode of advertising. With rich media and better targeted ads, some headway has been made in this field. Native advertising is another option that is increasingly finding favour in India and the world over. In a 2015 study, the IAB estimated that native ads made up nearly 21 per cent of total digital ad spends in the first half of 2014.
“We foresee native ads that are contextual and in line with the genre of the video being selected to play would become the norm rather than the exception for mobile advertising in 2016,” said Chopra.
Programmatic advertising is another development that endeavours to make mobile advertising more contextual and efficient. However, for adoption to increase, there still remains a lot of evangelism to be done. “We’re going through the chicken and egg conundrum here. Publishers are not selling programmatically. Advertisers are not buying it because there is no one selling programmatically. Who should start first? The problem is further amplified by lack of data, lack of trained experts, and fear of the unknown. Programmatic hasn’t made an impact yet, and it will take another 2 years till it becomes a preferred buying model,” stated Lavin Punjabi, President at Affinity.
The opportunities for improving engagement also lie in other avenues like gamification; something else that has yet to see widespread adoption in India. “I see big opportunities in native In-game-advertising where the brand can offer a relevant “reward” for their consumers to advance in the game they are playing. Most of the games are “free-to-play with in app purchases” and this has created opportunities advertisers to be as “sponsors” within the game for their consumers,” said Antti Öhrling, COO at Jolla.
Another avenue said experts is mobile payment. “Most companies are not even looking at the scope of business transactions. Two areas that are going to be key are social commerce and m-commerce but we have not even taken off when it comes to social commerce. There are a few companies doing it but the opportunity will come when more companies get into this space,” opined Ravi Kumar.
Encapsulating the opportunities lying ahead, Amar Thomas, Head (Marketing) of Blackberry India was of the opinion that with most brands still in the “discovery phase”, the growth of the medium would depend a lot on the approach of individual brands. “While some brands will fearlessly explore, others will want to follow existing rules and conventions. However with India seeing a startup boom the young and restless will push the boundaries of mobile marketing and newer and interesting case studies will emerge. Notable also will be how brands reach the 800 million customers who still don’t have smartphones. Brands that get that formula right will find they can successfully reach a wider audience than those that stick only to smartphone customers. HUL and Godrej, for instance, have demonstrated a particularly innovative approach in reaching out to a non-smartphone audience successfully,” he said.