India should up digital spend

3 October 2014

NEW DELHI: Indian businesses need to spend three or four times as much on digital marketing as they currently do, a leading industry figure has argued, even as a new report shows that 85% of Indians remain offline.

Speaking at a Mumbai event organised by exchange4media, Vikram Sakhuja, global CEO of Maxus, suggested that the current 8% share of advertising expenditure accounted for by digital should be significantly higher, at 25% or 30%.

"Everyone is talking about digital, but in silos," he said. "But the consumer does not live in a silo. We are in a situation where we are just dipping our toes."

Sakhuja further opined that Indian companies could lose up to Rs 1,000,000 crore in topline sales over the next few years in terms of opportunity cost by continuing their current attitude towards digital marketing.

Elsewhere, Jeff Bezos, CEO of Amazon, was also excited about India's digital future and encouraging smaller businesses to get involved in the digital economy using Amazon services such as Easy Ship and Fulfilment By Amazon.

"What is stunning about India is the speed at which it is growing and that is one of the tailwinds for the growth of e-commerce," he said, adding that "India is unbelievably energising; the people are focused on learning and extremely inventive."

But not everyone is going to be part of the bright future being envisaged by the digital enthusiasts. A study by McKinsey and internet.org, a Facebook-backed project to bring more people online, found that India ranked 20th out of 25 countries on the Internet Barriers Index, above Nigeria but below Egypt.

Fully 85% of the population were classified as being offline with most of these being rural (73%) and a high proportion female (54%). Further, 43% were illiterate and this was a major barrier to participation in the digital world.

Encouragingly for Bezos, however, the report identified e-commerce as a powerful driver of internet adoption, especially in the urban, high-income segment, and expected that mobile-messaging apps would play an increasingly important role in the future.

"Mass e-commerce in India will likely follow the same path as China where messaging platforms such as Tencent's WeChat are becoming the de facto connection, transaction, and payment platforms," the report said.

Data sourced from exchange4media, Times of India; additional content by Warc staff