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Adidas to go fully digital; will Indian brands follow suit ?

04-April-2017
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Adidas to go fully digital; will Indian brands follow suit ?

Adidas ads will no longer be seen on television screens. Kasper Rorsted, CEO, Adidas recently said that the brand’s entire marketing initiatives will now move to digital channels. He reasoned that all of the company’s engagement with the consumer is through digital media and in particular on mobile devices. He said that with a single pronged digital strategy he believes that in the next three years the online business could grow from approximately 1 billion to 4 billion.

The announcement from Rorsted serves a nudge in the right direction for advertisers who have been holding back when it comes to digital ad spends. According to the latest DANe4m Digital Report, digital advertising constitutes only 12 per cent of the total advertising pie. This is expected to reach 24 per cent by 2020. As per the Pitch Madison Advertising Report 2017 television and print  advertising continue to be the most preferred mediums for advertising with shares of 38 per cent and 36.7 per cent of the total ad pie respectively.

According to a study by the Internet and Mobile Association of India, the number of mobile internet users in India is expected to cross 500 million in 2017. Even with the telecom industry stepping up infrastructure to deliver high-speed internet to all the corners of the country, digital advertising is yet to become the primary let alone only advertising vehicle for leading brands in India.

Where is the audience?

At the core of Rorsted’s announcement is the insight that the target audience for Adidas is primarily consuming content on the digital medium. “The main take away from the emphatic statement made by Rorsted is not that television is dying but that he knows that the audience he wants to target lies completely and clearly on the digital platform,” said Archana Anand, Head Of Digital- India OTT Business, at the recently concluded FICCI-FRAMES.  

Choosing to go digital may not work for all brands, and Adidas’ decision to go digital has to be understood within the context of the target audience of the brand. “Despite that, Adidas sends out an important message to all brands and advertisers for sticking its neck out and saying that the brand will be spending most of its money on digital,” said Sanjay Mehta, Joint CEO, Mirum India.

Calling the move by Adidas ‘bold’, Partho Dasgupta, CEO, BARC India, said, “In India while digital advertising is fast growing with forecasts pegging it to grow at 30%+ to reach about Rs 9,500 crore in 2017, accounting for about 15% of total ad spend, there is still time for a brand to completely shift all its budgets to digital. While more and more people are moving to digital, TV with 64% penetration contributes to 45% of ad revenue. Not just this, print even today contributes to 30% of ad revenue and this happens only in India. With penetration of TV increasing in the next few years, its contribution to ad revenue will only go up and so while digital is a significant contributor, it is still a small base and thus would take a while for any such tectonic shift to happen in India.”

Rajiv Dingra, Founder and CEO, WAT Consult, pointed out that young growing brands like Let’s Shave, Happily Unmarried, and even Practo in its early days ran purely digital campaigns and benefitted massively from those campaigns. That said, he agreed that in India today the reach of digital is not to the level of television. The decision to go digital may not necessarily see a huge uptake but it cannot harm a brand in any way, as he added. “Even interesting TV ads are now viewed mostly on digital platforms. So the statement that Adidas is making is that if the ad is going to anyway be shared and viewed on digital, then why invest at all in television.”

 “The decision to go digital depends on what kind of brand is being promoted. If the audience is 15-35 age group, SEC A, SEC A+, SEC B+ at max, then digital should be 50-60 per cent of the ad spend. I believe that marketing should not be about just one channel, having complementing channels has a 360-degree impact. That said in India, digital is completely under leveraged and with the current digital base in India digital advertising should be at least 20-25 per cent of the advertising pie,” Dingra said. 

Dasgupta doubted whether the complete digital revolution will occur in the near future, as he said, “Yes, there may be some experiments online, however for campaigns to be successful, it will need to be a combination of both traditional and new age media. In India, all media revenues will rise for some time.”

According to Mehta many brands and consumer segments in India also have a majority of their audience on the digital platform. “But unfortunately many marketers feel that TV or print are safer and are unable to shirk the baggage of the past in the face of dramatically changing reality,” Mehta said. He added that the media landscape is changing a lot faster than one could imagine.

“Now is the opportunity for a brand to not only be smart but spend just about Rs 100-150 crore and be a pure digital player and own the space if the brand’s audience is overlapping with the digital audience. Advertisers will lose out if they wake up four or five years later when the mass will be so large that it will hard to capture it,” Dingra noted.

Mehta said that he is noticing the change in the attitude of the clients with whom he has been working. “Some of our clients are even putting more than 50 per cent of their budgets into digital advertising. So, I wouldn’t be surprised if a bold marketer from India sticks his neck out in the same way as Adidas and spend money smartly.”

Measurement Matters

While myriad data points are available to measure the impact of a digital campaign, what the industry still lacks is a uniform metric. And that could be one of the factors holding advertisers back from adopting a fully digital campaign. “The biggest hurdle is viewability and lack of standardisation of measurement metric. Currently there is no benchmark that will convince advertisers that their message has been seen by a human and not served to a bot. Another hurdle is lack of comparability, which comes from the lack of common uniform metric to measure the success of a digital campaign,” Dasgupta noted.

Dasgupta hopes that once issues of comparability and viewability are addressed with BARC India’s digital measurement, the industry might see solutions to some of the problems marring the platform.

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