Marketing 2.0 is here to stay

Mayank Pareek’s job has been fairly easy of late. As Chief General Manager, Marketing, at the country’s largest automaker, Maruti-Suzuki, his job, of selling cars, has rarely been easier.

Despite rising commodity prices (and, thus, car prices) and stiff interest rates, cars are still moving out of showrooms rather fast. But, Pareek has not been resting, and Maruti has been playing around with the Internet—not just sticking up banner advertisements at large websites or text-based ads through Google AdSense—by encouraging his team to interact with consumers using a host of online services.

“We have put up videos on services such as YouTube and have actively seeded discussions on online forums using social media. This is where the consumers are, this is where they interact; so, it makes sense for us to have a group on Orkut or Facebook,” says Pareek.

When Maruti recently launched the Swift Dzire sedan, it had a comprehensive teaser campaign online and invited people who clicked through the campaign to watch a live webcast of the event, and, according to Pareek, over 80,000 people did. “We have found that a large majority of people who are buying the car were actually influenced by our online campaign and visited the products website.

Format makes it easy

It isn’t just Maruti-Suzuki. Several large companies, selling everything from manufactured goods, to consumer products and services, are using the Internet to reach out to consumers. “The digital format makes it easy,” says Shailesh Rao, MD, Google India, “and this phenomenon will just increase as people start seeing actual results.”

But how does a company like Google, which depends on text advertising revenues, deal with the fact that companies, like a majority of web users, like the thought of doing things online for free? “We have tied up with partners on YouTube India and they are not paying us,” Rao jokes. “But I believe that traditional web advertising will co-exist with free services. So, if a car maker puts up a video of its car on YouTube, there will be contextual ads on the sidebar, maybe from a rival car maker. I think web advertising gels well in such a scenario.”

But given the limited reach of the Internet in India—the country has a claimed Internet reach of 46 million users and an active (defined as those who access the Net at least once a week) user base of 32 million— can the web be an effective marketing medium? “Nobody is suggesting that traditional advertising will wither away and die,” says Rao, but Nokia India’s ‘Go To Market’ Head, Vineet Taneja, has an interesting argument. “What is interesting in India is that Internet penetration is spreading, particularly in smaller towns and cities. And marketers have to realise that dismissing the Internet as a predominantly ‘urban’ phenomenon will be dangerous.”

Nokia India has successfully run campaigns riding the web, including an ongoing one (on http://www.remixrahmansada/) involving music composer A.R. Rahman where users can go online to a website, remix tracks from Rahman’s latest movie and win a session with the composer. “These campaigns have been hugely successful because we have added a social element in every contest by allowing peers to review entries,” Taneja says.

But he admits that it will be the mobile device that will really transform marketing in India in the nearfuture. The loudest votary of that impending change is Sanjay Kapoor, President, Mobile Services, Airtel. “The potential of the mobile phone is tremendous. Suppose a new movie is released and the producer wants to promote the music… why can’t he use a call-back tune as promotional material? In return for a user playing that call-back tune, the production house can give him free airtime or money.”

Mobile telephony, too

Vinod Thadani, Business Director (Digital), Group M, the ad-buying arm of global media conglomerate WPP, is equally excited about the potential of mobile telephone-based advertising. “Think about it; there are 300 million mobile users in India today, at least 15 per cent of whom actively use data-enabled devices. So, using a variety of ads— banner ads on mobile websites, callback tones and SMS advertising— we can reach out to a huge market.”

In fact, Group M, India’s largest media-buying house, has already seen a level of success in its mobile campaigns. “Last year, we did a campaign for ICICI Bank where we had to generate 20,000 leads. By placing ads on prominent mobile portals, we generated 72,000 leads in a month,” Thadani explains. But it is not just banner advertisements; Thadani also explains that Gupta’s idea of call-back tonebased advertising is not fantasy and can even be customised based on the caller’s profile. “It is possible for the system to know a lot of details about you if you exist inside the same network. So, you will get a customised ad based on your age, sex and the amount you bill along with where you are calling from and the device you are using,” he says, adding: “Even if 5 per cent of India’s mobile subscribers opt for the service, you will instantly create this huge platform for advertisers.”

Group M and Vodafone are already running a small pilot project running targeted call-back tone advertising in the Karnataka circle.

The hooks Indian companies are using the Net to hone their marketing 2.0 strategies. Online communities: Companies like Hindustan Unilever have built communities like GangOfGirls around shampoos. While the site has a section on haircare, brand association is an important aspect—data mining allows the company to capture snapshots of what its user base (usually girls and women between 15 and 25) are thinking. Web-based contests: Nokia India is trying this around several contests, including its latest one with A.R. Rahman. Not only does this allow for more innovative contests and even a higher entry rate but also brings users to the company’s umbrella of sites for the first time and many stick on. Seeding communities on social networking sites: While fan communities may have already existed on online communities such as Orkut or Facebook, companies such as Maruti-Suzuki, looking to capitalise on these communities, have become actively involved with these communities and selectively release information, pictures and videos through them. For free.

Value-added services

Group M is selling space on mobile phone screens, thanks to its tie-up with Affle, a small start-up, which has developed an application called SMS 2.0, which adds colour and more interactivity than the standard messaging application. Anuj Kumar, Executive Director, Affle, explains the logic behind the service for advertisers. “People spend most of their time on a phone talking, but it is when messaging that people spend the most ‘screen time’ on their phones. Our application makes texting cooler, but it also adds a small bar at the bottom of the application with information on user-selected topics, and, occasionally, an ad, too.”

The benefit for the user? “They get a cool application and a limited amount of data services for free,” says Kumar. The cost of the free service is seeing an ad across the lower quarter of the page. But going forward, the service can offer advertisers an even more targeted campaign. “The service provider will not lose control over user information, but the advertising delivery system can be developed in such a way that it will deliver the ads best suited to a particular user’s profile.”

“The cool thing about the digital format is that marketers can try new and innovative things,” says Rao. “And as India builds the talent to take advantage of that shift, I am very sure you will see more and more happening.”

No place to hide Ads on phones may soon become a reality across the country. This might sound preposterous, but very soon, when you call a mobile number, instead of hearing the phone ring, or even a cheesy film track as a caller tune; you might actually hear an ad. The technology involved is not rocket science, and according to Group M's Vinod Thadani, a pilot project is already underway with Vodafone in Karnataka. But it will not be mass-market advertising; such a system can be used to deliver highly targeted ads to consumers. This is how the system will work. Say, you call another number of the operator you subscribe to. It is likely that the service provider already has a lot of data about you— like your phone patterns and your travel patterns and, thus, can extrapolate other information. So, if you make a lot of calls to the US, for example, the system will presume that you might like to hear an ad offering cheap airfares to the US. So, if you were to call a friend on the same service provider, and your friend has “rented” out his caller-tune space to the service provider to sell to advertisers, you will have an ad targeted at you play right there. Maybe an airline or travel website will buy the space. Your friend might make a few rupees (or, if he gets a lot of calls every day, even finds his entire phone bill subsidised by advertising), but you have to put up with the ad. Privacy advocates will be outraged, since your information is being used to irritate you. “Advertising is not about buying hoardings on the Western Express Highway (in Mumbai) or prime-time TV anymore. It's about getting a message across using innovative new technologies,” says Thadani. Welcome to the digital future.

The challenges

The big problem is not one of talent, but competition from traditional media like print and television. “Both traditional forms of the media are expanding rapidly right now, but I believe that Indian media firms should learn from the experience in the US and the UK. The Internet has become the main source of news in these countries. This is the time for Indian companies to build up their web and mobile resources because they can learn from the American experience,” says Rao.

But the media distribution game is also changing, with companies that were previously simple telecom companies now getting into Internet-Protocol TV and Direct-to-Home satellite TV, where the differentiator will be the exclusive content that firms can generate.

That means traditional media firms will have to compete with the likes of Airtel for revenues. “I think it is a logical step for us to move into the media distribution space. The user will also benefit because he will have a one-stop shop for his content needs,” says Airtel’s Gupta.

But what about privacy concerns? After all, user information will be used to deliver advertising to people, who might already be inundated with hundreds of telemarketing calls and SMS messages.

“There will always be a free ad-supported service, the trick is not to make the advertising too intrusive, but still make sense for the advertiser”, explains Rao. “Most of these services will be optin services. If people want, they can subscribe to them,” says Thadani. Not that opting-out will spare someone from hearing advertising when they call up friends.

“Today, digital, search and online make up around 5 per cent of the total ad-spend,” says Thadani, who has the digital accounts of almost 400 brands under his belt, “but by 2010 you will see exponential growth, almost 12 per cent of ad revenues will be going to digital.”

If current growth rates are maintained, the Indian advertising industry will be worth Rs 25,000 crore by 2010. The digital part of the pie will, therefore, be worth close to Rs 3,000 crore. No wonder, everyone is so excited. Yet, with technology always changing, no one is quite sure what challenges lie ahead in this brave new world.