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Upping online ad connects

The economic slowdown is giving a growth fillip to online advertising as brands look more sharply at the returns on their investments. Rachit Vats writes. Digital advertising market

business Updated: Jul 09, 2012 01:46 IST
Rachit Vats

"We always look for efficiency out of our marketing spends and the digital platform is where we are seeing good response. We have increased our digital spends by 50%," said LK Gupta, vice president, LG India.

LG India has allocated Rs. 40 crore to the digital media for the current year, which is about 8-10% of its total ad budget.

A lot of other companies are also increasing their advertising and other brand communication spends on digital media, having tasted success in effectively reaching out to their target audiences. Digital segments such as search, display marketing and social media and more are getting higher attention and share of ad budgets from marketers.

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Besides LG, companies such as Hindustan Unilever, Maruti Suzuki and Hyundai have already taken steps to increase their online visibility. In the context of the slowdown, the trend is becoming even more relevant as companies begin looking more sharply at returns on marketing investments.

"The entire digital industry benefited from the 2008 slowdown as the advertising opportunity scaled up. Categories such as travel, automotive, information technology and telecom have increasingly started looking at the non-traditional media, with a clear emphasis on digital. The cost per contact for traditional media may be less as the reach is high; it works out to be more targeted and effective for digital media," said Madan Sanglikar, CEO, ad2c, a full-service mobile agency that caters to brands interested in marketing in the mobile space.

"There is an increase in the budgets on the digital media. Clients who jumped on to the bandwagon in 2008 don't mind paying five times or even more today. Meanwhile the overall marketing budgets are still the same. The appreciation is also because of the targeted reach the digital media provide, in addition to the fact that it is measurable," Sanjay Mehta, founder and joint CEO, Social Wavelength, said.

"Banking and finance products are finding digital media attractive, especially the social media. This is because both the investor community and the consumer is going digital," he added.

The increase in brand spends on the digital media is showing. According to the report, 'Pitch Madison Media Ad Outlook 2012', online advertising touched Rs. 1,535 crore in 2011, up 45% from 2010.

The FICCI-KPMG Indian Media and Entertainment Industry Report 2012 projects that India's spend on digital advertising is projected to go up from Rs. 1,540 crore (out of Rs. 30,000 crore advertising spend across all media) in 2011 to Rs. 5,700 crore, out of an all-media ad spend of 58,600 crore, in 2016.

While it is still early days to establish a clear trend, in the United Kingdom, digital ad spends are now larger than the ad spends in traditional media. "The shift is happening and it will be faster and sharper with the slowdown," Mehta predicted.

However, the growth of brand communication, including advertising, on the internet, is a phenomenon that goes beyond an economic slowdown. It's more about shifts in points of consumer influence that will prevail going forward, evolving the entire space of how consumers choose to buy what they finally buy.

"Advertising alone is not the most important thing in online brand marketing. With the rising influence of social media, people are able to learn about products, compare brands and get word of mouth information much before the marketer is able to reach them with conventional advertising. So the touch points of influence are shifting," LG's Gupta pointed out.

Online forums and websites have become paramount for some categories to invest behind, he added.

"Creating brand excellence at point of purchase becomes even more important because the customer comes armed with his own research; so conversion with demo and explanation has become an area of great focus," he concluded.