Consumer-Goods Brands Likely to Triple Online Spending in India Next Year

But the Medium Still Faces Challenges as Broadband Penetration Lags

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Fast-moving-consumer-goods brands in India are upping their spending on online advertising -- and how. According to the WebChutney Digital Media Outlook Report 2009, the online spending of the FMCG category, which stands at about $3.3 million (Rs 16 crore), is expected to increase to almost $14.8 million (Rs 72 crore) in 2009-10, a whopping 353% jump.

Online advertising is on the rise for many fast-moving-consumer-goods brands in India, including Coca-Cola.
Online advertising is on the rise for many fast-moving-consumer-goods brands in India, including Coca-Cola.
For a long time, FMCG brands have been using TV and print media, and though these media still lead the pack, the use of online advertising is also on the rise. For instance, in August 2009, Coca-Cola India launched its campaign for Sprite on the internet first. Pepsi, ITC Group and Colgate-Palmolive are some other FMCG brands that have begun using online advertising in a big way. In fact, the second half of 2008 saw Pepsi increasingly take to online advertising.

Amardeep Singh, co-founder and VP of Interactive Avenues, explained: "FMCG brands are increasingly spending online. Today you have clients like Colgate-Palmolive, Sony, ITC Group and so on who are getting active online and using the internet as a medium to build reach. With the growing number of internet users, people have started using the internet as a reach-building medium, and thus more advertisers are waking up to the fact that the internet is fast becoming an integral part of their media plan."

On the other hand, Saurabh Bhatia, co-founder and chief business officer of video-ad network Vdopia, said, "FMCG brands in India are increasingly spending online, and this is a growing trend. Nevertheless there is still a long way to go, because FMCG brands are still experimenting with the medium, whereas by now it should have already been a part of their media plan."

Mr. Bhatia added: "One major reason why FMCG brands must market their products online is because their competitors are not yet there; hence, for an audience, there is very little exposure of the FMCG brand, which, in turn, brings in a lot of freshness and curiosity, which the brands can reap benefits from. Since FMCG is majorly about brand and branding, the internet can play a very critical role. ... However, unfortunately the decision makers are mainly from a generation that did not spend their time on the internet, which is another challenge."

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Mr. Singh explained further: "Until now, brands were looking at performance of the medium to acquire the customer, but the moment they start looking at the reach and frequency metric of the internet, then automatically FMCG advertisers will come on board.

"The internet as a medium is not a static medium but a very dynamic one. With online video coming on board, FMCG brands will use video advertising in a big way. However, for online-video advertising to take off in the country, there is a need to increase broadband penetration, and once the penetration of wireless broadband devices increases, you will see an increase in video consumption. As a result a lot more FMCG brands will also be seen coming on board."

Said Mr. Bhatia: "At the decision-maker level, there is a lack of understanding amongst the clients about the digital media, hence there is a need to for the internet companies to educate FMCG brands about the value of the internet as a medium, and this is one area where they have not been very successful.

"Broadband penetration must reach the tier-two and -three towns as well. In fact, we are seeing increasing trends of internet consumption beyond metros as well. The presence of online video is a huge, welcome trend for the internet industry per se because it gives an opportunity to the FMCG brands to experience the medium in the most common denominator that they have been using, which is the 30-second commercial, thus making FMCG brands feel that internet advertising is no alien, but can be far more interesting."

While the FMCG brands are no doubt increasing their online spending, online advertising for these brands is more or less on an experimental basis. However, with increased broadband penetration and the growth of online-video advertising in India, FMCG brands are bound to take to online advertising in a big way.

The story was originally published at Exchange4Media.

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