Digital to influence Rs. 4500 cr. FMCG consumption by 2020: Google, BCG Report
Google India and BCG released the “Decoding Digital Impact: A $45B Opportunity in FMCG 2020” report on Wednesday. The report projects that 40 per cent of FMCG consumption in India will be driven digitally.
Google India and BCG released the “Decoding Digital Impact: A $45B Opportunity in FMCG 2020” report on Wednesday. The report projects that 40 per cent of FMCG consumption in India will be driven digitally, translating to a value of Rs. 4500 crore by 2020. The report further finds that while time spent on digital is the same as TV in urban India, share of digital advertising spends by FMCG companies was only 10 per cent in 2016. This, however, is expected to grow substantially to reach 25 -30 per cent by 2020.
Highlights of the report
The report expects 650 million internet users by 2020. The growth is projected due to increasing mobile penetration with the highest growth coming from non-metros. This will in turn shape digitisation in India and masses could be reached digitally. Categories such as Baby Care and Beauty will be disproportionately influenced due to the mass reach for FMCG companies. India’s 28 million affluent and elite households will contribute to ~40 per cent of overall online FMCG consumption by 2020, of which 60-65 per cent will be digitally influenced.
Advising marketers on their online digital advertising strategy for the FMCG space, Vikas Agnihotri, Industry Director, Google India, said, “FMCG was considered the last bastion for digital adoption but not anymore. It’s growing rapidly and much faster than the industry imagined. Mass brands need mass reach and online video today has the critical mass required for brands to drive business impact. Digital today is mainstream and we are seeing successful CPG companies investing behind not just media, but insights and analytics to decode changing user journeys across categories.”
Assortment, convenience, availability and discounts could help the e-commerce segment within FMCG to become a Rs. 600 crore market in 2020. Sharing insights on customer preferences across metro and non-metro cities, the report predicts that while availability of options is critical for users in large cities, consumers from tier 2 and 3 markets care more about factors such as express delivery and easy returns.
Hurdles in digital spending
Even though the digital media has gained ground over the last two years, the spends on digital are still not in line with the time spent by consumers on digital portals. The lag in spends can be allocated to multiple reasons such as lack of clarity on measuring the returns on digital, lack of expertise in the space or even inertia with traditional media. If these barriers are addressed, the share of digital in advertising in FMCG could potentially grow from ~10 per cent to 25-30 per cent by 2020.
Outlining opportunities for brands to tap into online consumers, the report states that users today seek the three Vs – video, vernacular content and views. In the last two years, the number of online video users has grown three times and digital video reach is already 2/3rd of TV reach in urban areas. Similarly, with the next wave of users coming in from non-metro cities, local language content is increasingly becoming important. There has been a 10X growth in vernacular 'searches,' over 2X growth in watch time of vernacular YouTube content and 5X faster growth of Hindi versus English content consumption on websites in the last one year. With digital platforms becoming a major source of information for the masses, advocated views are also playing a big role in influencing the decision of shoppers.
Speaking about the challenges that marketers face today, Abheek Singhi, Senior Partner and Asia Pacific Head of Consumer Practice, BCG, said, “Digital influence is no longer something in distant future, it is here and now. Like other markets, the urban Indian consumer already spends more time online than on print and TV.”
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