Unlock 1.0: Digital will continue to take the bigger cut, share experts
How will ad revenue pie change?
As markets are now slowly opening up, we reached out to experts to find out if the ad revenue pie will change, too.

Unlock 1.0: Digital will continue to take the bigger cut, share experts

As markets are now slowly opening up, we reached out to experts to find out if the ad revenue pie will change, too.
  • The pandemic-induced lockdown accelerated digital marketing’s adoption rate in India.
  • A lot of brands have a digital-first and digital-only approach, while there are brands that want to start and stay only on digital.
  • So will this be a strong enough push for clients to invest a lion’s share on digital? We reach out to digital agencies to understand what we can expect in the future as digital takes precedence.
Digital marketing has taken precedence over all mediums since the outbreak of coronavirus. According to DAN’s digital report released in January this year, digital marketing was expected to grow by 10.9% and reach ₹75,952 crore by the end of 2020. However, with the nationwide lockdown, print, radio, OOH, in-cinema advertising saw a massive drop, enabling further acceleration in digital’s overall growth.

2019 was also another year with its own set of challenges. With the economic slowdown, advertisers decided to cut back on spends and market sentiments reached a new low but despite those hurdles, digital continued to flourish. Now with reading news, catching up with friends, dating, hanging out and many other social activities becoming virtual, the whole market dynamics have altered. This has led to marketers rethinking their strategies and digital agencies introspecting on how they can lead the change.

As markets are now slowly opening up, we reached out to experts to find out if the ad revenue pie will change, too. Experts opined that most advertising budgets and brands will be digital-centric in the times to come once we recover from the dent that COVID-19 has created.

Unny Radhakrishnan, CEO, Digitas India said, "Digital always had a year-on-year healthy growth. More often the growth stories are reported based on how much digital media spends are growing. While that is clearly an indication of growth, the current situation is triggering accelerated growth not just in digital media spends, but in the overall approach to digitisation. There is a renewed focus on digitisation of all customer touch points. Consumers are becoming increasingly comfortable with digital interfaces - from virtual showrooms to OTT to digital news subscriptions to e-commerce. So brands will continue to invest in this transformation and investments could be significantly skewed on to digital. Most of our conversations and engagements with our clients are in the areas of these transformations and building digital brands."

However, digital advertising will take some time to get its due back. Shamsuddin Jasani, Group MD, Isobar South Asia, highlighted that 95% of the ad revenue still comes from traditional beauty, FMCG and auto brands, who weren’t fully operational during the lockdown. He predicts a 40% drop in the overall digital revenue this year.

“Consumption has gone through the roof for various forms of content ranging from video, gaming to education. Ramayan and news viewership also gave TV a push. Unfortunately, the clients aren't able to keep up with the pace. So far, only 5% of ad revenue comes from a pure digital brand and 95% still comes from a traditional FMCG or auto brand. They’ll start spending in the days to come. Apart from that, e-comm players told me that 75% of their sales came back in lockdown 3.0. Hence, people are going to put their best bets on digital again. Lockdown did have a long-term impact because the ad spends have cut down,” said Jasani.

Ahmed Aftab Naqvi, CEO and Co-founder, Gozoop says an ‘even bigger uptick awaits us.’

“Digital spends are going to grow exponentially in the post-COVID era. CEO’s, CFO’s & CMO’s are experiencing the benefits of having a digital-only marketing strategy and once they have tested success, I don’t see them resorting to other forms of advertising, at least in the short to medium term. There will be an increased focus on martech and performance marketing strategies. I also expect inbound marketing and performance-led influencer marketing to become a critical tool in the arsenal of most digital first marketing teams.”

Sharing why digital has seen unhampered growth year-on-year despite the volatile environment in India, Sanjay Mehta, Joint CEO, Mirum India said, “It was due to various advantages that it offers, including sharp targeting, being very measurable, being able to track the ROI well, very efficient to create and manage campaigns, usable for small and large budgets, ease of starting, stopping, and tweaking campaigns, and not needing to stay committed to a creative or a medium, for long periods of time, etc. For all these reasons, digital advertising has been growing for years now. But marketers were still spreading their spending across media, including TV, print, OOH, cinema, radio, etc. Since all these mediums saw a drop, digital became a natural choice.”

Traditional brands who offer tangible products will also embrace digital in the days to come. Giving us an insight into which categories will be the first adapters during unlock 1.0, Jasani said, “There is a clear transfer of marketing monnies from mediums like outdoor, in-cinema to digital. Now, with this markets opening up, you should see much more activity from brands like mobile providers, who aren't termed as essentials but are important. Auto will see a boom because people will avoid public transport. But you will not go for a test-drive. This whole process will move to digital. Marketing will be around how safely it will be delivered it to you. So a lot of money will be spent on safety whether it is tourism, food, airlines, etc.”

Google’s report titled ‘What is India searching for’ revealed how dependence on digital is rapidly increasing as time spent on smartphones in the first 3 week of COVID-19 disruption inched towards 4.5 hours per day and online video accounted for more than 70% of India’s total data usage.

As a result, clients who have reached out to Gozoop lately are demanding digital-first strategy and Naqvi predicts that it will now get the lion’s share.

“A lot of brands that are coming to us today and want a digital-first approach with some only wanting digital as the main channel. I feel that the future of brand building is digital. It’s not just here to stay but is here to lead. When it comes to the brands that have traditionally relied on mainline, there will be some tactical work that will be done occasionally, but that’s not to say that print and traditional will die. However, the portion of spends will flip. Digital spends will go up from 20-30% of the current total media spends to as high as 60-70% in the post COVID era,” shared Naqvi.

The sudden transition to digital wasn’t really smooth for marketers. They were trying to figure out the market sentiment and how to communicate with consumers. Eventually, the importance of ROI was driven home.

“The economic challenges of the current period do force brands to think sharper on ROI factors, where marketing spends are concerned. Hence digital as a highly measurable medium, becomes a first call. Even within digital, data-driven marketing and marketing automation, become a must-do, since these generate even sharper focus and enable far better ROI on spends,” said Mehta.

There is a silver lining to this whole situation after all. Jasani predicts this consumer sentiment will pick up come Diwali.

“This is going to be the best Diwali since the past 2 years. First two months will go in stocking essentials but come Diwali, consumers are going to step out and buy things. It will be a good thing for the country and economy, overall,” said he.

Digital experts said that this shift to digital is an irreversible change in the marketing landscape.