The pandemic year led to companies reimagining their digital strategies, OTT becoming a way of life and blockchain technology making inroads in India, say experts
There is a common sentiment in the digital industry – that 2020 has been a watershed year for the sector. Some also call it a second wave since digital came to the rescue of Indian consumers who were forced to stay indoors due to the lockdown.
Digital has touched every facet of our lives, whether it is communication, entertainment, shopping or finance. It is becoming a way of life for those with access to the internet.
This has forced businesses to come up with a digital strategy to remain relevant in these times. For organizations, it is no longer an option but a necessity.
On the media & entertainment side, the over the top (OTT) platforms became mainstream as people took to streaming content in a big way. While ad-supported OTT platforms witnessed a surge in consumption, the adoption of OTT subscription services also witnessed a spike.
With newspaper delivery taking a hit due to lockdown, digital along with TV became the go-to destination for news consumption. Digital was already giving the print media a run for its money. The pandemic made things worse for the newspaper industry.
There was a spike in the usage of social networking applications in the first phase of the nation-wide lockdown. This stabilized in the following weeks with individual users reporting an average of 3 hours and 37 minutes on social media in the last week of June that year, according to Statista.
Covid pushed India’s monthly active internet user base to 639 million with rural India driving the digital revolution, according to a Kantar report that was published in May.
“2020 is going to be a watershed year for digital. It also marks almost 25 years of internet in India. From a maturity point of view, the internet and digital have become core to our everyday lives. That is clearly visible from the media consumption that we have seen. The financial services that we are now dependent on and e-commerce that came to our rescue during the lockdown,” said digital strategy consultant and Kurate Digital Consulting senior partner Uday Sodhi, adding that financial services, entertainment, and e-commerce have benefitted greatly during the pandemic.
Key trends in 2020
Listing out the key trends in 2020, Mindshare chief digital officer Vinod Thadani said that consumer tech is the new FMCG. Mobile has become synonymous with the app and mobile marketing with app inventory.
The second trend, he noted, is that ‘hyper-local’ is the new business model of the new normal and hyper-local physical availability calls for geo-fencing and data powered micro-marketing. He further stated that consumer goods businesses warrant a Grocery.com channel strategy.
Thadani added that brands need to make user engagement on messaging apps a lucrative channel to build relationships with audiences as cold emails have a 1% open rate while private messages have a 92% open rate.
Highlighting the importance of Artificial Intelligence (AI), he said that AI will enable a return to contextual targeting. It will provide new opportunities to find meaningful consumer segments beyond the cookie. Further, brands will explore the use of AI in creativity. He also stated that AI will revolutionize communications planning, especially in low involvement categories.
According to him, voice and visual search is the next frontier in digital marketing to enable interested consumers to gain access to more information. He further added that brands need to move from SEO towards SCO (Search Channel Optimization).
As per a consumer survey by IFPI, the average time spent by an average Indian internet user is 21.5 hours per week listening to music. It is 21% higher than the global average time of 17.8 hours per week.
He also noted that the data wells are going to dry up due to data privacy laws and the imminent death of the cookie. Therefore, organizations need to future-proof their first-party data (1PD) data strategy.
According to Mirum India Joint CEO Hareesh Tibrewala, one key trend that has become visible in 2020 is the importance of value marketing.
“Basically, everyone wants more value for the same rupee. While we are used to talking about RoI this was one year when we could see everybody just wanting to be sure that every rupee creates more value whether it is in the area of technology or digital advertising.”
He added that the second key trend is that the pandemic put an end to the debate “Do I need digital or not?”
“Today, every brand realizes that irrespective of when the pandemic ends, everyone needs a model that helps them reach the consumer, should they be unable to reach them physically,” he averred.
Concurring with Tibrewala, Sodhi said, “Any company today who wants to have a long-term view of surviving will need to have a strong digital strategy.”
iProspect CEO Rubeena Singh said that the COVID-19 pandemic has emphasized the importance of digital and the role that it plays in current strategies, as well as in the future.
“It has prompted a majority of marketers to either continue or accelerate with their plans to improve or transform their marketing operations,” she noted.
Digital media spends in 2020
According to Pitch-Madison Advertising Report 2020 Mid-Year Review, digital media AdEx de-grew by a mere 7% in H1 2020. Digital, the report said, accounts for a 30% share of AdEx both in H1 ‘20 and Q2 ‘20, versus 23% share in 2019, making it easily the second largest medium after TV.
Tibrewala said that the digital media ad spends is expected to de-grow by 10% in 2020 compared to 2019. However, this will still be better than the 25-30% kind of de-growth that the industry feared at the beginning of the lockdown.
“Q1 (JFM) was very good. The industry has overall done very well than what it was expecting to do. When we were having a conversation with our peers in April, nobody was sure where the bottom will come,” added Tibrewala.
Tibrewala noted that the ad recovery began in September just before the onset of the festive season. “Luckily, we have seen V-shaped kind of a growth and it has pretty much come to where it used to be in the first three months of the year,” he added.
DAN Performance Group CEO Vivek Bhargava agrees while claiming that the growth in 2020 has surpassed that of the previous year. Bhargava also noted that the pandemic has created a tailwind for digital.
“The recovery has been very good. Not only has it been V-shaped it has already crossed the numbers of last October. Diwali has been very good. Covid has created this tailwind for digital. There were lots of brands who were on the fence but now nobody is on the fence,” he asserted.
Singh said that the AdEx is currently at 80% approx. of the pre-Covid levels, with growth in digital, a near full recovery for TV, and a partial recovery for print and outdoor.
“This festive year, AdEx grew nearly 10% over last year’s festive period, mainly due to several big properties, such as IPL, which were launched during this period after being postponed. Also, consumer sentiment is buoyant, and is reflected in spending on discretionary goods.”
Thadani divulged that the digital has overtaken print sooner than expected in terms of AdEx due to the rapid shift in consumer behaviour.
“According to industry reports for 2020, this was the year where we forecasted Digital will overtake Print to take up the second place to TV in terms of ad spending. The consumer shift in behaviour in the ‘new normal’ has only accelerated this trend and perhaps Digital gained its position even faster than what was predicted,” he stated.
Bhargava pointed out that the big digital platforms like Google, Facebook, and Disney+ Hotstar are the obvious gainers of digital AdEx growth but the tailwind is going to come for everyone whether it is publishers or agencies.
FMCGs – no longer on the fence
While some categories and brands have been early adopters of digital advertising, the FMCG companies have not been as enthusiastic about digital. However, that seems to have changed in 2020 with FMCG brands taking to the digital big time.
Bhargava mentioned that this is the second time tailwind is coming to digital. The first tailwind happened during the 2008 financial crisis. “The last 5-8 months has created a transformational change that digital is the future and I don’t think anybody is going to come at pre-Covid levels for print or some other mediums,” he claimed.
FMCG companies, he noted, are no longer fence-sitters as they have started aggressively advertising on digital. “E-commerce, EdTech and all the digital companies who had some tailwind were big spenders. Lately, a lot of FMCG companies, who were fence-sitters, have realized the power of digital and have started spending on Amazon, Google, and Facebook,” Bhargava said.
According to Singh, the FMCG, Auto, Retail, Media & Entertainment, Consumer Durables, and Telecom have been the big spenders on digital.
“Media & Entertainment, Consumer Durables and Telecom are the major categories driving digital growth. Share of digital spending on these categories has seen immense growth over the last year. Some categories like healthcare, EdTech, and Gaming have also assumed new importance during the pandemic,” she stated.
OTT steals the show
According to Sodhi, OTT has emerged as an alternative consumption medium and has gone truly mainstream in 2020. What used to be an option till about 1-1.5 years ago is now a part of our everyday life.
“The number of people who are watching online video is now almost 400 million. It is a fairly large medium and it has happened in five years. Hotstar came in 2015, Jio came in 2016 and now in 2020 we are talking of almost 400 million consumers,” he opined.
He also contended that the subscription VOD business has become mainstream because Covid brought in a lot of premium consumers who couldn’t go to multiplexes and therefore OTT became their primary medium.
“Premium homes have made subscription OTT their way of life. Most homes have 2-3 subscriptions,” he said.
He also pointed out that the OTT content has become mainstream as it has become part of day-to-day conversation.
Zirca Digital Solution Director and CEO Neena Dasgupta feels 2020 has truly been the breakthrough year for the OTT industry.
“While the lockdown crippled the theatre experience and threatened the film fraternity, the movie industry found its way around by adopting the format. The direct to the digital trend has been well received as OTT players have customized and curated seamlessly to woo their audience. Their growth hasn’t been just a metro story but has succeeded Pan India with their success being recognized commercially and critically,” she explained.
Blockchain, data analytics and high-speed internet
For Dasgupta, 2020 seems to be the year when blockchain technology has finally arrived. “Amazon’s AWS leads with subscription-based services while all the major players in the big leagues (Apple, Microsoft, IBM) have started exploring its applications.”
On data analytics, she said that the industry has seen its potential multiply and continues to evolve to process information even better than before to create insights for business transformation.
“One thing the pandemic and its consequent economic effects exposed was the fragility of a business that was optimized for profit. Organizations have slowly started to invest in cost-saving structures which can equip them to make better decisions,” she specified.
Dasgupta also opines that faster internet is the need of the hour as it is expected to revolutionize the way we receive information at our fingertips. “The impact of 5G and WiFi 6 is one that is supposed to reverberate across industries making them faster, more efficient, and even more connected than before. The spectrum of opportunity is supposed is extremely vast- Telecommunications, Auto, Medicine, Governance- 5G coupled with a better understanding of data will make the world turn faster.”