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Marketing And Strategy

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Advertising and Marketing Industry in India

November, 2013


The chances of achieving objectives and goals are greater when a company has an effective marketing strategy in place. Though there is always room for traditional strategies such as targeting the audience through television or radio, the modern consumer is progressively using other methods (the Internet, mobile phones, etc.) to access information. Here, social media marketing is vital, especially in a country like India which is one of the youngest in the world demographically and has a growing broadband market. It is not far-fetched to suggest that marketing strategies are the blood line of any business and that a company’s long-term goals are dependent on their efficacy.

Marketing Industry Dynamics

Marketers in India typically utilize television, print and the Internet for marketing their offerings. Some key figures related to these sub-segments are given below:

  • The Indian media and entertainment (M&E) industry grew from Rs 728 billion (US$ 11.74 billion) in 2011 to Rs 820 billion (US$ 13.22 billion) in 2012, a growth of 12.6 per cent.
  • Total advertising expenditure (AdEx) across the media sector stood at Rs 327.4 billion (US$ 5.28 billion) in 2012, while advertising revenues grew by 9 per cent.
  • Print continued to dominate, accounting for 46 per cent of the advertising revenue at Rs 150 billion (US$ 2.42 billion).
  • Television led in the M&E industry while new media segments (like animation/VFX) and Films and Music segments also recorded discernible growth. Radio is projected to record a compounded annual growth rate (CAGR) of 16.6 per cent in the period 2012–17, post the roll out of Phase 3 licensing.

Advertising and Media & Entertainment Industry

The Indian M&E industry is expected to grow 11.8 per cent to garner revenues worth Rs 91,700 crore (US$ 14.79 billion) in 2013, according to an industry report. Traditional media such as television, print and radio continue to dominate. However, other segments such as animation, visual effects, films and music are quickly gaining acceptance due to their content and the advantages of digitization.

Conventional media such as television and newspapers remain the masses’ preferred source for information and entertainment; they account for over four-fifths of the advertising revenue. However, the Internet has gradually been increasing its share in the advertising pie. Spends on digital media hovered just above 1 per cent of the total advertising expenditure in 2005; in 2012, it stood at a respectable 7 per cent.

Search advertising catered for about 38 per cent (Rs 850 crore [US$ 137.14 million]) of the total online advertising spend while display advertising formed a significant 29 per cent (Rs 662 crore [US$ 106.86 million]) by March 2013, according to the findings of ‘Digital Advertising in India’ report conducted by the Internet and Mobile Association of India (IAMAI) and IMRB International.

Advertisements on mobile phones and tablets have increased from a 7 per cent share in FY 2011–12 to 10 per cent of the online advertisement market in FY 2012–13, which amounts to expenditure of around Rs 230 crore (US$ 37.17 million). Social media, email and video advertising comprise 13 per cent, 3 per cent and 7 per cent of the online advertising market, respectively.

Social Media as a Strategy

Social media is increasingly being used by companies, big or small, to reach out to potential consumers. The advantage of social media is that a business can interact with its customer in a closer, peer-to-peer manner, something that is not always possible with non-digital marketing. Social media is a unique instrument of communication that facilitates interaction not just between two entities (the company and the consumer) but between multiple parties (i.e. the company, its clients, stakeholders, employees, etc.). With social media, companies can create, sustain and leverage connections and strengthen their position in the market.

Multinational American Express is an example of a company which is active in both B2C and B2B spaces. It has established conversational platforms, both independent (Open Forum) and mainstream social media (Amex on Facebook), in an effort to improve communications with small businesses and potential investors. American Express regularly updates its website with news pertinent to its audience (e.g., facts and trends about small businesses), often posting challenging questions aimed at involving them in discussions as well as facilitating meaningful interactions between small businesses. This way, the multinational has successfully established itself as a hotbed of information exchange within the industry.

Professional networking site LinkedIn is another hot spot for marketers, especially with the site gaining popularity among Indian users. Experts opine that unlike users of other social media platforms, LinkedIn users, being professionals with disposable income, are more likely to purchase products and services.

Recent Developments

  • Chinese personal computers (PC) maker Lenovo is competing for a substantial market share in India’s smartphone market. The company, which launched six smartphones in the Indian market in June, 2013, has established deals with three national distribution chains while entering into a partnership with HCL Care for after-sales service. The popular PC company plans to use its multi-crore advertising and marketing campaign to convince the Indian consumer that it is more than just a PC brand.
  • French advertising and public relations multinational Publicis Groupe has acquired Beehive Communications, an Indian advertising and communications agency. The agency, which is now rebranded as Publicis Beehive, is believed to have been purchased for around Rs 150 crore (US$ 24.20 million). Beehive is headquartered in Mumbai and has offices in New Delhi and Bangalore. Its clientele include Tourism Malaysia, General Motors, Bosch and Hard Rock Café, among others.
  • State-run National Textile Corporation (NTC) is targeting a launch of 300 retail stores over the next two years. The company is looking at starting 100 showrooms by March 31, 2014 and a further 200 stores by March 31, 2015. This strategy would enable NTC to sell 2.6 million metres of garments. The corporation’s turnover during FY 2011–12 was Rs 700 crore (US$ 112.98 million) and the marketing strategy is being undertaken with the aim of doubling that figure.
  • Mobile advertising spend in India is projected to reach Rs 430 crore (US$ 69.40 million) by March, 2014, a 43 per cent increase from the Rs 300 crore (US$ 48.42 million) spent in FY 2012–13, according to a study conducted by the Mobile Marketing Association (MMA) in collaboration with media platform, exchange4media. Cheaper smartphones and tablets as well as small and medium businesses utilising mobility solutions for their promotions are some of the factors for this increase in spending. Today, businesses are showing a greater willingness to invest in mobiles as part of their marketing strategy.
  • Philips India, in association with Electric Lamp and Component Manufacturers Association of India (ELCOMA) will seek to educate consumers about the various advantages of LED lamps. It also plans to inform people about the difference between quality LED lamps and cheaper duplicates. The prices of quality LED products have come down over the last two years and will become more affordable in the near future, according to Mr Sumit Joshi, marketing head of Philips Lighting India.

Marketing and Strategy – Road Ahead

Industry body NASSCOM in collaboration with AbsolutData Research and Analytics, has released a report: ‘Marketing Analytics – An opportunity for India to Lead’ which states that the Indian marketing analytics industry is expected to grow from its present value of US$ 200 million to US$ 1.2 billion in 2020, a CAGR of 25 per cent. The report highlights that companies have begun to use marketing analytics insights more and more in order to gain competitive advantage in the market.

Exchange Rate Used: INR 1 = US$ 0.01613 as on August 3, 2013

References: Media Reports, Press Releases, KPMG report