India set for mobile boom

18 February 2011

NEW DELHI: India could become the first "truly mobile digital society", with ad agencies, brand owners and media companies all expected to play a key role in such a process, McKinsey has argued.

The consultancy stated that just 7% of Indians are currently connected to the web, measured against 32% in China, and 77% regarding the US.

"Yet India has an opportunity to lead the world … by becoming the first truly mobile digital society," it added.

One distinctive characteristic behind this shift, a forerunner for other developing economies, is the likelihood of "bypassing" PCs, and moving straight to popular wireless internet adoption.

Given the country's geographical scale, widely divergent incomes and limited infrastructure, a model on this line may prove at least relatively simple and effective.

At present, 81m Indian consumers regularly surf the net, with 76% utilising personal computers, 10% deploying mobile phones, and 14% exploiting both channels.

More specifically, only 20% of India's urban residents fit this profile, trailing the 60% level recorded in China.

In comparison, 233m people in China go online via handsets, equating to an 18% penetration rate, figures attaining 17m, or less than 1%, in India.

Looking ahead, McKinsey predicted India's web population would expand fivefold during the period to 2015, reaching 450m individuals - or 35% of the potential audience.

The study forecast that 41% of netizens will then solely utilise wireless devices, alongside 21% exclusively using PCs, and 38% mixing these routes.

"Even though typical Indian consumers have no online access, they have a remarkable appetite for digital content," the company added.

"In fact, they consume an average of 4.5 hours of it daily across offline channels such as television, DVDs, and CDs."

Many firms now provide music download platforms tailored to mobiles, and over 70% of shoppers in cities spend at least $1 a month on content and services through offline sources, a sector worth $4bn per year.

In five years time, the value of digital content consumption might arrive at $9.5bn, hitting $20bn when incorporating access fees, a pace of growth eclipsing China.

Rolling out more attractive data packages, improving reception, offering easy-to-use handsets - including voice- or touch-activated browsers and apps - and balancing free and paid-for material are all vital.

Although the cost of most smartphones is prohibitive for a large number of Indian subscribers, the average price has fallen to $125, below that for PCs, and a trend that is due to continue.

The unique conditions pervading in India may require prioritising alternative income streams than elsewhere, however.

"India differs from other Asian mobile-internet leaders, such as Japan and even China, where access charges generate enough revenue for operators to finance the ongoing creation of value-added services," said McKinsey.

Brand owners can also assume a central position in fuelling the mobile web's progress, benefitting from increased penetration as a result.

"Selling regional and local advertising on mobile devices is essential," McKinsey added.

"It's the fastest-growing form of advertising in India, and there's a desperate need for local content, given the country's 23 official languages."

Accurately demonstrating return on investment should equally lure marketers to this medium.

"Advertising agencies can adopt new approaches to developing concepts, pricing, and measurements of effectiveness," the report concluded.

"And marketers can better address the way consumers now make purchasing decisions, finding new analytical approaches to the allocation of spending and the management of 'buzz' and word of mouth."

Data sourced from McKinsey; additional content by Warc staff