Challenges and Prospects in Advertising

In advertising one has a diverse range of jobs to choose from, to suit one’s
inclination, talent and personality. The choice of working in an organization that
manufactures certain goods or provides certain services, to look after the advertising
of these goods or services would demand a particular kind of skills and interests. One
can choose to work in an organization that creates advertising and distributes
advertisements through different media. In such an organization there is a wide
variety of jobs calling for different types of skills and creativity.

To make matters easier, one has to start with simple definitions. The
manufacturer or provider of goods and services would be referred to at this stage as
the advertiser or, may be, the marketing organization. The organization providing
advertising services is the advertising agency. And advertising itself is the
communication link between the product or service and the consumer. The media of
course would include newspapers and magazines, radio, television, posters and
everything that can be used to inform the customer about a product or service.
Another expression that we shall be using at that stage is the market. After all, all
goods and services are brought and sold in the market – not necessarily only a market
or a fair, but also shops or retail outlets as they are called. In advertising we talk of the
markets to mean really the consumers. The producer of goods or services markets its
products and hence is referred to as a marketing organization. There are job
opportunities in these areas in the field of advertising and advertising-related services.
There is more. Today one can set up one’s own shop specializing in one particular area
of advertising or advertising-related activity. This would call for a combination of
many talents and different types of creativity.

Advertising in the sense of a communication link between a buyer and a seller or

a producer and a consumer is really as old as civilization itself. As we know it today, its
beginnings go back to more than 200 years. As an organized profession, advertising is
relatively young. During the last two decades, and particularly since the beginning of
the nineties, it has reached a fairly high level of maturity and sophistication
comparable with the standards seen in the advanced industrialized countries. Not only
has its progress been very fast in the last few years, its character has also undergone a
radical change.

This is due to a number of factors. First, the communication revolution has set in
motion a process of homogenization of consumer aspirations and value systems. This
has also homogenized the very pattern and form of communication between the
advertiser and the consumer. A more or less universal language of advertising is
emerging, even though conditioned and modified by local usage and expressions,
which are often a medley of western and Indian words, images, concepts and music.
The communication explosion has invaded the home with its message of
consumption-orientation. Multi-channeled television, through its entertainment
programmes and advertising, has generated an awareness of entirely new concepts of
living and with these, a desire for a whole range of consumer durables and non-
durables, which had not been thought of earlier.

Secondly, to meet the growing consumer aspirations and value systems,

particularly in terms of lifestyles, new products and services are coming in the market.
These are meeting new needs, generated by new ways of living. This is leading to
tremendous and even fierce competition among manufacturers of these products or
providers of new services. This is because, although the Indian population is massive,
the actual number of consumers of advertised goods or services is relatively small.
Different manufacturing, marketing or services organizations are offering the same
products. Thus the consumer has a wider choice. Sometimes two different products or
services might meet similar needs. For example, the consumer can choose between
two cola drinks manufactured by different companies. It is in this context that in
advertising and marketing one talks of brand names, brands or branded products.
With the same product being manufactured by different manufacturers, each company
has its own name for its product. Thus one brand of sunflower oil competes against
another brand. If you come to services, a number of banks today offer you mutual
funds as do insurance companies. Here too the consumer has a choice and every
mutual fund is trying to sell to the same consumer. Here is a challenge that people in
the advertising profession face every day – how to win over a consumer for one brand
against another and retain loyalty to the same brand, sale after sale?

Thirdly, such diversification of products or services and the expansion of the

market have been possible because of the opening up and liberalization of the
economy. There is now very or no restriction on the goods and services to be provided.
Lower tax on personal incomes has increased the disposable surplus in the hands of
the expanding middle class for discretionary purchases to meet the aspirations for
better living. The liberal entry of foreign manufacturers and the reduction in import
restrictions have made many new products and services more easily available than
before. The hire-purchase system, bank finance and credit cards are accelerating this
process of consumption-orientation in a section of the population. Advertising
intervenes at every stage of this process of a desire being transformed into a purchase,
of a concept of a product or service being transformed into a sale.

Advertising has now become part of everyday life. Today advertising influences
every day’s purchase decision, consciously or subconsciously. Young people, the main
target of advertising, speak the language of advertising, sing advertising jingles, dress
according to the fashions set by role models and stereotypes in advertising.
Advertising, in turn, picks up the language and the behavior pattern of the consumer,
particularly the youth. Many talented young people seek a career in advertising, not
mere job.

This environment and wider choice of goods or services also mean increasing
consciousness of quality and price among the consumers. The competition thus
becomes concerned with sensitivity to consumer expectations and even the
environmental conditions and processes of purchase decisions. It is here that
communication has to intervene. It is this wider dimension of advertising today that
offers unprecedented challenges and makes stringent demands on creativity,
imagination and innovative approaches from every person in the advertising
profession, whatever be his or her specific job in the communication link between the
product or service and the consumer. It should be obvious from this discussion that
advertising today is an integral part of the socio-economic and the cultural system,
too. It is linked to the distribution aspect of the economic system. By creating
demands, which might not have existed before, advertising helps determine the types
of goods or services to be offered and their quantum. Hence, advertising can even
influence the allocation of resources in different sectors of the economy. What is more,
advertising today has even become the communication link between political parties
and the electorate. It also plays a role in mobilizing public opinion and even action on
social and ideological issues, such as environment protection or prevention of AIDS.

No wonder, the annual average rate of growth of advertising is much higher than
that of the economy. It is obvious that the opening up of the economy, which had
begun very haltingly in the mid-seventies, gathered some momentum in the mid-
eighties and has now acquired considerably more speed from the beginning of the
current decade, has contributed significantly to the current boom in advertising. It is
this situation which is opening up wide and diverse opportunities in the profession.
The global mobile marketing industry is expected to grow to $24 billion by 2013, and with over
300 million mobile subscribers, it is no surprise that the mobile advertising space is bubbling
with enthusiasm. A study, “Why mobile advertising matters”, conducted by Nokia in partnership
with TNS India shows increasing patterns of the use of mobile Internet.

The research highlighted that mobile web users are using their mobile to access the Internet
almost as much as the traditional web (2.4 days per week versus 2.7 days.) More users are
finding out about new product information via the mobile web (28 per cent) than the traditional
web (26 per cent).

The research also highlighted a number of other trends – 84 per cent of mobile web users say
they would feel lost without their mobile device. 18 per cent of mobile web surfers said they had
noticed a mobile banner ad, while 56 per cent of those who noticed a banner ad went on to visit
the mobile site of the advertiser and 29 per cent of those that noticed a banner ad discussed the
campaign with someone else.

The TNS study was based on a sample of 3,500 consumers across 15 metro and Tier I cities.

It is widely believed that the success of mobile advertising will directly depend upon the
penetration and the success of mobile Internet. Currently, the mobile market in India according
to estimates is around Rs 50 crore, and in India, mobile advertising is still at a very nascent stage.
exchange4media speaks to some of the industry stalwarts on the growth opportunities of mobile
advertising in India.

Tom Henriksson, Head of Nokia Interactive Advertising, Nokia Services and Software, pointed
out, “It is all about making advertisements relevant to consumers. The future of potential of
mobile advertising is high and big brands will have opportunity. Rich opportunities and
experience are enabling even better targeting of consumers and brands. We are getting richer
information about consumers and therefore help us target more consumers at the right time. I
believe the slowdown has created great opportunities for mobile one reason is because it is
measurable.”

Sanjay Gupta, CMO, Airtel, said, “The cost of interaction of mobile is low, there is a huge cost
efficiency to use mobile for interaction, low cost of transaction and, therefore, there are big
opportunities for advertisers to leverage the use of this medium.”

Chhavi Bhargava, Executive Director, TNS, observed, “The online digital space is the most
active. Once people click through those advertisements, they also go through it, therefore, people
engaging in this medium are much more involved. The younger people in rural India are more
inclined to mobile advertising and to most people’s surprise, it is the Tier II and III cities that are
leading the way for mobile.”

Opportunities for mobile advertising in India Abhijit Saxena, CEO, Netcore Solutions, noted,
“Mobile advertising this year will definitely grow and print, radio, television and Internet in this
will be only other mediums that will grow on mobile. Even individuals or companies will look at
how is it the most effective way of reaching the consumers on the mobile, so for sure in the next
couple of years mobiles will grow significantly.”

“I believe all the opportunities that mobile provides, whether it is WAP advertising, SMS
advertising, and once 3G comes in there will be more involved advertising and I believe all the
aspects of the mobile will be used by advertisers to create innovative solutions,” he added.

Viren Popli, Senior VP – Mobile Entertainment, Star India, observed, “Mobile in India is still at
a very nascent stage in terms of numbers. Right now, there are no premium sales happening and
it is all about bulk sales. This is largely still WAP banner sales, so there is still a lot more to
advertising than just WAP banner sales. So, there is still a lot more to be done both in terms of
technology and customer experience and advertising options.”

He further said, “Opportunities are abundant, and as you go forward, you will see more and more
interesting models open up in terms of advertising. 3G and mobile video will add significant
opportunities, GPRS will allow richer videos and advertising and all of them are in the pipeline.”

Prasad Narasimhan, Chief Marketing Officer, Virgin Mobile India, opined, “Opportunities in
mobile advertising are immense, but marketers are not leveraging this medium. However, going
forward, I believe a lot of advertisers like me would like to spend more and more money in this
medium compared to our current level of spend.”

Things to do Netcore Solutions’ Saxena was of the opinion, “Clients need to use more and more
of this medium, and if people who understand mobile medium and who can work alongside with
clients on their requirements, for them we create specific solutions, which is something that will
help grow mobile advertising. Therefore, it is very important that both of us work hand in hand
and in a 360-degree kind of solution.”

According to Star India’s Popli, “If anyone is creating trends in mobile advertising, then it is
only in this part of the world and not the West. The things we need to learn from them are their
technology features on customer targeting, customer focus and so on, but as we go forward, we
will have to create our own metrics and systems to both create and sell advertising.”

Meanwhile, Virgin Mobile’s Narasimhan asserted, “The question is whether the money put in
the medium is good enough, either for it to become big or the industry to become much stronger.
My view is that it can happen only when a more result-oriented approach that both advertisers as
well as the suppliers take. So, only when you prove success over small steps will advertisers
have the guts to take large steps.”

Online Advertising seems to be the buzzword in the Advertising Industry these days. It is
exciting for all of us in the Internet AD world to note that our media, which is still less than 3%
of the total Media bought, receives over 50% of the voice share by the Industry gurus and the
press. This attention is largely fuelled by the almost 100% year-on-year growth of this medium
and the various industry reports suggesting that 80% of all media bought by 2020 would be
digital media.
The proof that Internet Advertising works comes from the excellent growth registered by the
early adopters such as the jobs, finance, travel & matrimony businesses. These are the businesses
who trusted Internet with a large share of their AD budgets and they are the one’s who have to
stood to gain returns.

As much as the small success of the Internet Media excites us, what remains a concern is
whether we are ready to face the rude challenges thrown up to this industry.

The Challenges…

Adoption of The Medium

With so much of hype around the medium the bitter truth still remains that only 20% of the
advertisers have adopted the medium. The biggest challenge today is that Internet is increasingly
getting branded as a ROI medium. A few doubts still remain in the minds of the marketers and
they doubt whether this should be the medium of choice when it comes to ROI.

There is no problem with seeing the internet as a ROI medium but is approach to the measure of
ROI correct. What needs to be corrected is that marketers need to consider Internet advertising as
a tool beyond the lead generator. It is high time that we used the more advanced AD Matrix to
measure ROI’s on Internet. The Internet might be at the early stage of e-commerce but it is for
sure the most preferred & high engagement medium when it comes to influencing one’s
perception about a brand or a purchase decision. But, how many (I am sure not many…..)
marketers are really using the right Matrix to calculate the ROI.

Check out the success of the I-Coke platform in China – a community of 20 million users and
still growing- and the Adidas worldwide platform. When you consider these examples, you will
put aside all inhibitions about the possibility of successfully building Brands and Communities
on Internet. I am sure these were campaigns launched with goals that beyond CPC, CPL & CPA!

Marketers just need to be more innovative & evolved with the quarterly sales targets not being
the “be all and end all” of it.

Critical Mass
It is very disheartening for me when a client says, “well I like everything that Internet can do for
me. But you know I am a mass brand and the reach of Internet in India today is not exciting
enough for me to put serious time and money behind it”.

Whether the Internet in India has already achieved the critical mass or not is ofcourse, a very
subjective and debatable topic. There is still huge growth potential for both the increase of user
base and quality inventory. Many more local ideas are available to create compelling content to
fuel the growth of Internet in India. It is true that not every business created on the Internet will
have the potential to come out with an IPO. But as long as it is an idea with some value for an
Internet user, trust me you will be able to run a decently profitable business. We need more
entrepreneurs who can fill the huge gap of quality inventory vs demand.
Infrastructure
Whether it is the Internet or the Mobile, bandwidth continues to remain the big roadblock to
unleashing the true potential of the medium. Most innovative advertising solutions are bandwidth
hungry and to a large extent the growth of broadband and internet advertising are directly
proportional. We are all waiting for 3G to make our mobile phones the true convergence device
and suddenly we would add up 130 million users. Advertising on the Mobile is going to be big
and would give an immediate upside to Online Advertising. Internet advertising agencies will
have to gear up to service the needs to Mobile advertising as a lot of Internet Advertising is
going to converge with the hand held device.

People
The average age of executives in India’s Internet AD agencies is between 26-27 years. Why are
the traditional advertising guys who know so much about Advertising shy of choosing the
Internet? Why is it that not many creative gurus of the leading advertising agencies are willing to
do Online Advertising? They all believe that Digital is the future yet they are not adopting it. Is it
that they are unwilling to learn Online or the clients are willing to invest almost nothing on the
Online Creatives. The same guy who spends almost Rs. 25 lakhs on a TV commercial finds if
difficult to invest even a lakh on Online Creatives.

Offline Agencies Vs The Online Agencies

As much as the marketers agree that Online is a high engagement medium for the consumers,
they also need to realize that the job of Online Agencies is equally high involvement. It will be
unfair when the fee’s paid to Online Agencies is benchmarked with the fee’s paid to the Offline
agency. The scale and involvement are both not in favor of the Online Agencies to be compared
to the offline agencies.

Yes you may find a few desperate-for-business agencies taking your mandate on unviable
business terms, but be rest assured that the bigger loss is that of the advertiser because he will
never receive his money’s worth with this approach. This approach unfortunately also leads to
creating a wrong perception towards the effectiveness of the medium.

Localization Of Medium
Finally, there is serious dearth of local Internet inventory today. A lot more needs to be done
whether in terms of local/regional content, vernacular advertising, more targeted IP & behavioral
advertising. This will not only make Online advertising more targeted & relevant for the national
players but shall make way for the yet to be tapped huge SME advertiser market. In a country
where organized retail is less than 2%, the potential of the unorganized SME advertiser is too
large to be ignored. Companies such as Google Ad Sense and TYROO are doing a great job in
helping consolidate the local publishers and advertisers.

While these are all very real challenges being faced by the industry, I am sure they are not
insurmountable. The Internet AD world will slowly but surely grab a much larger share of the
advertiser’s pie in times to come.