‘No matter how much digital has grown the importance of TV has not reduced’
When one looks at the advertising landscape in the country, the one big change in the past few years has been the rapid emergence of digital. Its growth rate is the quickest among all mediums. Yet this medium is not without its challenges.
Essence India MD Anand Chakravarthy noted that today it is important to do video planning which means planning for TV and digital together.
At the same time, he notes that it is imperative for agencies and clients used to mainly dealing with traditional media in the past to embrace digital as that is where consumers are increasingly spending a lot of their time.
TelevisionPost.com’s Ashwin Pinto caught up with Chakravarthy to find out his views on the emerging digital landscape.
What growth in digital ad spends is expected this year?
Digital spends will grow by 30% in 2019 according to GroupM TYNY 2019. Digital share of media will grow to 20% in 2019. Over the last five years, the CAGR growth of digital has been about 36%.
What factors are driving this growth?
The first factor is obviously the proliferation of connected devices – smart mobile phone. This has come on the back of the drop in the prices of smartphones, the launch of 4G services and the data pricing disruption created by Jio. Post the launch of Jio, there has been a significant drop in the prices of 4G and this has in turn driven significant data consumption growth. Today as a result nearly 100% of newcomers to the Internet come through the mobile. India is fundamentally a 90% plus mobile internet market.
Have clients and agencies understood the power of digital?
I think so. Given the fact that digital share of media is going up to 20% in 2019, I believe that brands and agencies have understood the importance of this medium. There was a time a couple of years back when clients were skeptical and were not sure about using it. Some agencies also felt that digital was not here to stay. However, the reality is that the adoption by consumers of the Internet on mobile has grown at such a rapid pace that today if you want to reach consumers in any part of urban India, then digital needs to be a key part of your marketing arsenal.
While this realisation exists, different clients and agencies are at different levels of digital evolution – their level of sophistication in terms of planning, deploying digital media & measuring the impact of digital on their business. While this will change but different clients and agencies are at very different pace of change. Today, when you use digital to plan it does involve a significant investment in technology, data and certainly in the kind of talent that you have at your disposal. These are investments that everyone cannot make at the same pace.
For media planners and buyers who have been doing the job for a long time does digital require a complete change in mindset?
For a long time, traditional media dominated with television and print accounting for 70-75% of the media spends. Digital now has shown tremendous growth and I think that the smart planners and agencies have ensured that they adapt to this changing environment. For example, there was a time when TV planners only looked at the TV. Now they are video planners- planning for both TV and digital video. The truth is that watching video on digital is like watching a TV channel. It is just that the platform is different. The fundamental principles of planning do not change. You cannot afford to have two sets of planners and need to integrate this approach. Similarly, digital planners also look at the offline environment – for example, the role of TV in driving digital KPI’s and how they should be looking at budgeting between Brand and Performance. Planners need to be platform agnostic. We take a lot of effort to train our teams in this regard. However, that said, no matter how much digital has grown the importance of TV has not reduced. The TV continues to be very important and integral to a brand’s media strategy – especially for brands with Pan-India aspirations.
So is digital more effective when used with TV?
Yes, it is! If you are a very niche brand and are targeting a very specific segment in a few markets (E.g. top 6 metros) then digital as the lead medium makes sense. With TV you cannot isolate markets, aside from the south.
However, if you are a brand with mass aspirations, then only digital is never going to be enough. The role of television + digital is important for you and has proven efficacy across categories. Television helps not just with the top of the funnel metrics but also with the bottom of the funnel. So TV is not just to drive brand awareness but also drive brand conversions – even online for D2C businesses. We have seen the effect of television driving online action really effectively & at high efficiency. I would go as far as to say that TV is a powerful DR medium, even for D2C businesses.
The need to use TV + Digital has changed post the new tariff order (NTO). Post the implementation of NTO, some TV genres have stabilised, some have grown, and others have declined. Today, if I want to create a plan to isolate the top 6-10 Metros using TV, I cannot do that. There is a lot of spillover into markets beyond the Metros. But if I want to target a specific audience in the same Metros through digital, I can do it very effectively. The strategy would depend on the category, the audience segment and markets you are talking to.
In digital, the change is a constant, unlike older mediums. Rules get re-written. How is Essence coping with that?
We have an online learning system that operates and updates at a global level. The system includes self-learning modules that every associate has to go through. We encourage cross-practice training – offline practitioners learning online and vice versa. We also run certification programmes to ensure that our teams are certified across multiple platforms like Google, Facebook, tech platforms like Adobe, Amazon, etc. And this does not only apply to junior associates but to senior executives as well. Constant learning is a key mantra for our teams to keep educating ourselves or else we will all become dinosaurs!
Today what is the biggest challenge that digital faces due to which some advertisers might be holding back?
Marketers have over a period of time seen the very positive impact of television on their PAT and that situation continues even today. I think that some marketers believe that television is the way to go and one should use digital sporadically. If my business has grown on the back of television over the past ten years, then why should I switch to digital? There is the belief that the measurement metrics of television are far more robust than digital.
We must recognise that digital in the country has a 10-year history while television has a history that is 40+ years. Measuring digital through a single common platform is not realistic. There are millions of websites and apps, where one’s ad can be seen and expecting to have a single source of truth for digital measurement is not practical. However, to overcome this issue there are multiple ways to measure the efficacy of digital and optimise plans accordingly to maximise return on investment (ROI).
Another area of concern is that of Ad Fraud. Technology is being used to create ad fraud and without the correct measures in place, digital investments can be susceptible to fraud. However, here too there are well-established practices and tech available to protect one’s digital investments.
Metrics like Viewability – has my ad actually been seen, is another area of concern for some marketers. For example, if my ad is shown at the bottom of the website it is still counted as an impression, even though it is not within the viewing space of a consumer. So, marketers feel it is not worth the investment. Here the clear viewability standards are necessary to be part of your digital programme, which easily overcomes this issue.
As a marketer, you have to go where your consumers are as that is the way you will be able to engage them around your brand or service. Digital is here to stay and grow. The faster brands seize the opportunity the faster they will learn what works for their brand and consumers and hence get value from the medium.
How does Essence cope with the issues that you mentioned like ad fraud?
One of the fundamental principles at Essence is that if you are buying for digital then buy inventory of the highest quality. Highest quality means – Impressions that are brand-safe, not fraudulent and viewable. There are different ways to measure and deliver this.
One example we follow at Essence is vCPM which is the cost per million viewable impressions. Rather than look at just CPM’s, vCPM’s is the right way to look at your digital buys. To ensure viewability measurement, there are different platforms like MOAT or IAS available. These platforms ensure that you are able to measure the viewability of each impression and hence avoid low viewable inventory. For brand safety as well there are tech products available built platforms like into Google AdWords or DV 360. This ensures that your brand advertising is only present safe publishers or content avoiding objectionable content.
Globally, ad fraud is a big area of focus for us. We have proprietary tools that we have built that constantly track all the campaigns that we are running. It warns us if any impressions are fraudulent. We also have a team called the Fraud Squad which works across the world to monitor new forms of fraud emerging in digital and ensure all teams are aware. Our fraud squad constantly scans the environment and whenever they see a new form of fraud, they intimate teams across the world. If our team in America finds a new form of fraud, then my team in India will know about it in 24 hours.
Our Ad operations team does more than just deploying ads but is also the custodian of BAV (Brand Safety, Ad Fraud & Viewability) for our clients’ digital advertising. They are constantly in touch with new tech products being launched to check if these are more effective than what is currently being used to improve our BAV standards.
Which are the top ad categories on digital and is any change expected?
If you look at FMCG while their share of digital spend is 11-12% it is a large amount in terms of volumes. All D2C categories are of course very big on digital like e-commerce, online financial services, and other online services. The majority of BFSI customer acquisition happens online. Auto in terms of four-wheelers has grown significantly. Earlier they used to spend huge amounts of money on print. Today, a lot of those spends have shifted to digital. The telco is also important, and they have fairly large digital outlays.
What is likely to change is that as e-commerce grows in the country and as people increasingly buy groceries online a lot of FMCG advertising will happen on e-commerce platforms. As consumers buy more and more of their groceries online, the ad spends on platforms like Flipkart, Big Basket, Grofers will jump. These spend today are relatively small. This is something to definitely watch out for as e-commerce purchases go beyond categories like phones, fashion, shoes, etc.
So, brands advertising on e-commerce platforms are going to grow?
No question! E-commerce brands are the new retail of digital space. FMCG brands have always invested significantly in trade activation like trade discounts, point of sale advertising, shelf space investments, etc, as physical retail is the last mile to convince a consumer to buy the product. When the consumer is in the store you want to ensure that your brand has the best offer, visibility or the best shelf.
Today with e-commerce platforms becoming a virtual store for consumers, they are also becoming a keyspace to ensure last-mile conversion. When a consumer goes onto, say Flipkart, and does a product search you want to ensure that your product is among the top results. You need to ensure that your product is displayed in the right way and has the correct information provided to the customer. Building the correct E-Commerce strategy is a new skill stream and brands are now scaling up their e-commerce presence as more and more consumers go to e-commerce platforms during their purchase journey.
Many OTT platforms have launched. Have they reached enough scale to be of value to advertisers?
They are getting there for sure. If you look at platforms like ZEE5 and Hotstar they have really scaled up very, very quickly. ZEE5 has a lot of original content not just in Hindi, but in regional languages as well like Bengali, Tamil, Telugu, and Kannada. This has helped get a new set of consumers to come onto OTT, who, otherwise, would not have done so as most of the early OTT platforms focussed on English or Hindi content.
ZEE5 has created a very large and strong new base of OTT consumers. Having cricket has been a huge plus for Hotstar. The IPL is obviously a massive event that happens every year. We already see advertisers investing in these platforms. And as these platforms offer better tracking, measurement and impact evaluation, we will see advertiser interest increase.
What innovation in ad formats are we seeing?
A lot is happening. Google DV 360 has a product like Parallax which creates a lot more user engagement than the standard banner ads. And has both a static and vertical video version. Then Instagram offers Instagram Stories. Facebook has recently launched in-stream videos. The evolution of creative formats will keep happening.
However, I believe that formats alone cannot create magic. What is more important is how you adapt your messaging to the digital ecosystem and especially to a mobile screen. The challenge today with digital is that brands communicate with consumers in a similar way that they do on TV or other media. Consumers on digital, engage with that platform in a very different way from say, television. The same principles for advertising in traditional media cannot be blindly applied to digital.
You need to consider how the consumer is watching your ad, where are they watching, are they watching in a vertical or horizontal mode, are they on a social platform? Are they on a video platform?
Digital ad spends are getting sucked up by Google and Facebook. Will this trend continue in the future as well despite the emergence of the likes of other platforms like Hotstar?
I don’t think that it is right to say that spends are being sucked up by Google and Facebook. Today if you look at consumer engagement where is it happening? Where are they spending most of their time? It is on platforms like YouTube, Facebook, Search, etc. If Google and Facebook engage consumers the most then they will get the lion’s share of advertising.
And this is true for other mediums as well. On television, the top 20% get 60% of viewership. So automatically those channels get the bulk of TV investments as well.
But tomorrow if new platforms emerge that engage consumers in a similar manner then automatically, they will start getting a fair share of advertising. It is not about Google and Facebook versus everybody else. It is more about where consumers are today. Where are they spending most of their time? That is all an advertiser should be interested in.
Based on that, brands allocate their budget keeping in mind the fact that you want to reach this audience in the most cost-effective manner. If Google and Facebook continue to dominate the consumers’ attention in the digital space, then, of course, they will also continue to dominate ad spends on digital.
Digital is the most measurable medium but does not have a common measurement system. Is that due to vested interests?
Just because television has a common measurement system, we should not expect that every medium can also have one. Digital is far more complex than television. On television, while there are 600+ channels only 120 odd channels are getting watched. In the digital ecosystem, there are millions of websites & apps that consumers could be engaging. It is just not practical to expect to have a single measurement currency for all of digital.
However, does that mean that digital cannot be measured? Of course not. You can track the consumers’ journey from the time they see your ad on digital to the point they buy your product or download your app. With the right kind of technology, you can measure the efficacy of digital far more accurately than for offline media.
That said no form of measurement is an exact science. As advertisers use multimedia – especially television and digital together, being able to attribute the impact of each on their business is an emerging challenge. This is where data and analytics are now playing a critical role in helping advertisers measure true ROI.
What tools does Essence use to measure the ROI of digital?
Analytics is a key practice at Essence. We deploy different types of measurement studies for our clients including Media Mix Modelling, Attribution Studies, Portfolio optimisation studies to help allocate budgets well, and Segmentation studies using first part data. Measurement has to be tailor-made basis objective.
We strongly believe in a test & learn principle in media. For example, we try out a new media option in each campaign but measure efficacy so that you know whether to scale up investments or not. In a rapidly evolving digital ecosystem, with new formats and opportunities emerging, it pays to follow this principle and stay ahead of the curve.
Has banner advertising become irrelevant as most Indians access the internet through the mobile?
No, I don’t believe that the role of Banners is dead. In fact in measurement we have done, we have seen the impact of banner vs video vs using both and certainly, there is merit in using banners today. The dominance of the mobile screen, in digital media, means that new formats like vertical banner ads are far more effective.
It is not the role of banners which is changing. It is the form of banners which is changing. Formats being created are more and more friendly for the mobile screen be it a static format or a rich media format or a video format compared to five years ago.
Finally, as a genre, why are online news publishers struggling to get ad monies?
I don’t think that all of them are struggling. There are certain news platforms that have become hugely popular. More and more consumers are letting go of hard copy broadsheets and are adopting digital apps to get their daily dose of news.
News Apps have been designed for today’s consumers, where the format of the content is breezy news pieces and not long drawn out articles. Consumers want to keep up to date with what is happening in the world, but they want this to happen in a user-friendly shorter format.
Publishers initially created the e-newspaper, a digital version of the paper. Are consumers online going to read the same long articles, now in a digital format? Unlikely. Some publishers have moved to an app-based format and those who have done this well are starting to do well. However, a majority of these publisher apps still need to adapt to formats that are more consumer-friendly, especially for the Millennials, who are moving away from the physical newspaper.