Scenario of digital ad-spend among brands and agencies during this crisis period

Published: May 31, 2020 12:43 PM

According to Kantar IMRB ICUBE report, we currently have over 574 million internet users, which is projected to reach 639 million by the end of December

India’s rural areas are responsible for its digital revolution with a 45% surge in internet penetration in 2019 as compared to 11% contribution of urban IndiaIndia’s rural areas are responsible for its digital revolution with a 45% surge in internet penetration in 2019 as compared to 11% contribution of urban India

By Shibu Shivanandan

The sudden pandemic has drastically changed the behavioural pattern of the world in the last few months in unprecedented ways.

According to Kantar IMRB ICUBE report, we currently have over 574 million internet users, which is a 24% growth in the overall monthly active internet users as compared to 2019 and is projected to reach 639 million by the end of December. It is also mentioned in the report that India’s rural areas are responsible for its digital revolution, with a 45% surge in internet penetration in 2019 as compared to 11% contribution of urban India. There are over 264 million internet users in rural India which is expected to reach 304 million in 2020. The internet boom in rural India is driven by local language content and video. Mobile being the device of choice for 100% of active users to browse the internet, there has been a 2.5 times rise in internet penetration in the last four years.

The recent trend shows that due to the increase of work from home practice, users are consuming content primarily on their mobile phones or television. Due to higher active users and time spent on online entertainment (news, social media, music, OTT, videos, etc.) and streaming of television and video game apps, advertisers and brands are investing more spends in these platforms and channels to reach more consumers. According to BARC-Nielsen data, total TV consumption grew by 8% while as per other statistics and reports internet hits outpoured to 50-70 % across India during COVID-19 disruption period. It is evident that custom messaging and localization is the key to winning in the key growth markets.

However, we cannot ignore the fact that there has already been an impact in advertising expenditure on digital platforms across multiple categories; the increase or consistency in spends for Edutech, gaming, OTT and other categories, few other categories have dropped significantly. Also, digital platforms such as Google, Facebook, Twitter and Youtube have seen a major dip in their revenue numbers, especially in March and April. Some of the heavy-spending verticals such as travel, ecommerce, banking, auto, real estate and others are reducing their ad investments during these times. Even on social platforms, there is a scarcity of fresh content getting generated due to cessation of work in the production houses. Instead of completely pausing their ad spends, few brands are moving from performance and product-led messaging to cause-related marketing. Overall due to the increase in the time spent on digital platforms and lesser number of advertisers and reduction in ad spends, we are currently experiencing lower CPM’s and reduction in overall cost metrics across biddable platforms like search, social and programmatic by around 20-30%.

Reshaping is the key to the business community right now. Depending on the situation, it is imperative for brands and agencies to be ready to be flexible with re-thinking and re-planning strategies on many fronts for the business, looking after employees’ welfare (physical and mental health), restructuring of teams, maintaining and planning for cash flow both for the long and short term. Digital platforms would provide smarter ways to advertise as they have access to a more addressable audience online, thus allowing the brands to do sharper targeting and choosing relevant audiences to deliver their messaging with right tonality.

We already see an increase in digital marketing spends. Ecommerce brands are using technology to personalise their site and offering, thus moving with smarter ways to service in different locations according to zones. Nevertheless, with the relaxation of the lockdown, we are expecting brands would be able to service customers, and this should lead to a gradual increase in the digital spends. Brands and companies would soon start considering digital as their first go-to channel. Considering our growth and scenario, the digital industry is expected to bounce back sooner and faster compared to the other industries post the crisis.

The author is founder and managing director, PivotRoots

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