What's Google up to?

The looming shadow of Google touches anyone who has anything to do with the online world – publishers, ad agencies, marketers, suppliers, everyone. That’s true in most parts of the world but even more so in India.

To find out what Google has in mind for India, afaqs! caught up with Shailesh Rao, who has been the face of Google in India for the last two years, as managing director of Indian operations. Before this assignment, Rao was a director of local search for Google at its US headquarters.

Excerpts:

Q. Michael Maedel, president, JWT Worldwide, recently stated in an interview with afaqs! that “Competition for us is companies like Google.” Comment.

A. Maedel probably wanted to convey that until the agency community embraces digital as a medium that is a major part of their business, it will sit outside of the (advertising) industry and the more threatening it will be.

If that was his message, I agree with him. My message to Indian advertising agencies is – ‘don’t let what happened to ad agencies in the West happen to you.’ In the West, nobody expected internet advertising to become big. Today, it has passed most agencies by. They were neither prepared nor trained for it. They had neither reorganised their agencies nor their commission structure. They did not change their sales pitches and media plans.

Q. How are Indian agencies responding?

A. Some have a greater sense of urgency while some don’t – and that’s frightening.

We are not independent of the situation. Google wants to partner with ad agencies and invest in training their employees. We can work together to develop clients. We are doing it more today than ever before. We’ve spent a year ramping up our resources in the arena of agency relationships. We want to be a friend or partner to the ad industry. Agencies embracing digital will be a critical determinant of our success in India and abroad.

If I don’t have to worry about the creative and media strategy, it will make my life much easier. At the end of the day, we are an engineering company. We want to put up most of our resources on developing a better advertising platform, so that agencies and advertisers can take advantage of it.

The more evangelism I have to do, the more it takes me away from our core strength.

Q. How is Google placed in India?

A. We are more successful in India than in other parts of the world. We are the leader in social networking, video sharing, e-mail, blogging platform and search via Orkut.com, YouTube.in, Gmail, Blogger.com and Google.co.in. In the US, we are not the No 1 in social networking and e-mail.

On the advertising side, we are the leader in digital advertising. We own a large share not only in search but in display advertising as well. Google is capable of reaching 80 per cent (40-48 million) of the total online population in India, estimated at 50-60 million people. Hardly any print publishers or radio stations offers that reach. Few TV channels and Hindi newspapers have that reach.

I don’t think of Google as an internet company. I think of Google as a company with offerings that could add value to advertisers.

Q. How do you reconcile the fact that though there are lots of sites and millions of blogs, the bulk of the traffic is routed through the world’s top 50 sites?

A. I don’t think it is true. But in India it is particularly skewed, the success of Google and big brand names is skewed. And it is quite alarming. While I am excited about our success, we just need to make more aggressive investments in entrepreneurship.

Compared to other media, on the internet you generally find a stronger tail and a much stronger torso. On TV, you have couple of hundred channels, in radio you have a few hundred stations. But on the internet, you have millions of websites.

More people going to fewer sites is an India-specific phenomenon. I think that the internet ecosystem in India has largely leveraged the fact that we have a large population which speaks English. In a sense, the development of ecosystem in Indian languages has been stunted.

If you want to build the internet in Brazil from its inception, you have to figure out how this whole ecosystem works in Portuguese. It is the same with China, you have to do things in Mandarin.

In India, we have been a little bit delayed as we have 35 million people or so who have fairly functional command in English, who can use the internet in English and leverage the existing content from the US, UK, Canada and Australia.

The large majority of searches are still in English while regional language content search is very small. Our search monetisation is entirely based on English language content.

A. Over the next five years there will be an absolute explosion in content, commerce and communication offerings designed for Indians. The next level of growth will have to come from a very different kind of user. This is not unusual, you have seen this happening on TV and print, and now you will see it in the web space as well.

We need to be a little attentive to some of the mechanism in place to support entrepreneurship. A two-time entrepreneur on my team delivered a talk at one of the IIM’s. He asked the students there, ‘How many of you will start your own ventures?’ No one raised their hands. At Stanford, the reaction would have been the opposite.

Q. What are your big challenges in India?

A. Our experience in India has been surprisingly pleasant. Our challenges are more about how we can grow the overall internet market in India.

Some of the big challenges include educating and evangelising the power of the internet among key influencers. That takes time and investment. Others include figuring out how we can deliver digital services to regional language users and how we can grow our mobile market.

Q. What are you doing to hasten market growth here?

A. On a day to day level, we have people out there who are talking to key influencers. I spend a lot of time talking to CEOs, parents, teachers, government and law enforcement officials about the internet, how it works and what they could do.

We are building awareness about the internet in tier-2 and tier-3 cities via Google Bus. We are creating awareness about the internet through the students “Be Net Smart” programme. We educate students on how they can use the internet safely.

We are putting a lot of our services on mobile handsets. We started SMS Channels, a product developed in India, through which content owners can publish their content on mobile. We have launched a local phone search in select cities.

We are doing certain things to connect with the Indian users – not just English speaking users in major metros. We make our search, email and social networking facilities available across various Indian languages. We introduced a translation tool as well.

To summarise, we are very focused on delivering Google services for average Indian users. That is our central mission. We will keep on investing and experimenting until we accomplish this goal. We will do it through local languages and make our services available through multiple modes of access - be it mobile, voice or SMS.

Q. Are the government’s efforts to increase broadband penetration working?

A. The proof of the pudding is in the eating. Two years ago, Brazil and China were somewhat comparable to India. Two years from now, we will not be even close, they will have left us in the dust. It is a crisis!

As a societal phenomenon, the internet is far short of what it needs to be in India. It is unacceptable that India has less than 10 million broadband users, less than 30 million PCs. It is totally unacceptable.

We believe that India is a technology country because of the success of IT-enabled services and telecommunication industries. But the twenty first century’s parameter of success is the internet and nothing else.

In many regards, the internet is so well suited for India. It is a free platform in a country that is looking for value for money. It is tailor-made for a country that has finite resources.

Q. Does Google think language computing is the way forward? Or is it something else?

A. The growth of the mobile market is tremendous. You easily have 85-100 million people using SMS and 20-30 million active mobile internet users. People are driving towards more advanced phones. Throw in impending 3G licensing, number portability and low ARPU (Average Revenue Per User) rates - all these point towards the potential of mobile internet or data.

We are wondering how to take Google to the next level. The answer lies in making a bigger impact on the mobile side. So it is one of the aspects in our strategy where we will make investments and pay lots of attention.

We are bothered about how we can deliver mobile applications which are meaningful for a large population of mobile subscribers.

Q. Have you started seeing revenue flowing from mobile?

A. Yes, we have.

Q. You have a huge user base in India for Orkut, YouTube and Gmail, but the revenue from these properties is relatively negligible.

A. Orkut and YouTube have great advertising opportunities. I think about their monetisation together.

Since the advent of AdWords, our advertising portfolio has grown more sophisticated. Today, not only can you do search advertising but also brand advertising against content on our AdSense network. We have also opened up advertising on Orkut.

Advertisers can choose the option that works for them based on their marketing objective. Search advertising is at the bottom of the funnel. It can be used for direct marketing, in case the objective is generating leads and return-on-investment. We are doing a lot of work on the branding part as well.

The large majority of our ad revenue in India still comes from core online search ads. On the mobile side, double digit percentage of total internet search is happening through mobile but ad revenue generated from it is still very small.

Three areas that are very strategic for us include pure brand advertising, advertising on mobile and advertising by SMBs (Small and Medium Businesses).

Q. Which industries – or verticals – are doing well with Google?

A. We have five verticals: local and classified, technology and telecommunications, travel, financial services, media and entertainment.

Four years ago, we were largely interested in pure-play internet companies - classifieds, online travel agencies and matrimonial sites. Three years ago (and until last year) we were focused on companies that have had a history of direct marketing – companies in travel, airlines, financial services companies offering insurance and credit card services.

More recently, we are seeing companies in technology and telecommunications, media and entertainment very excited about the advertising opportunities. People are using the internet to announce the launch of a movie, a mobile handset or sell a consumer electronics appliance.

We also focus on a number of nascent areas which are seeing tremendous growth, especially automobiles and FMCG (Fast Moving Consumer Goods). For the first time, I am seeing big brands here say that the digital medium is important and can’t be ignored. This is an important trend.

We have figured out that across various product categories, especially for research-intensive products, consumers are not buying products from the store until they first research it online.

Many companies are capturing this opportunity. So if you are a kitchen appliance selling company or an insurance company, you will find that the first point of interaction of consumer with the product is actually online. Consumers have already decided what product they want to purchase before coming to the store. This is driving many companies online. Categories which have shown the most amount of aggression towards online are telecom and consumer electronics.

Q. Who do you consider your competition?

A. Culturally we don’t think about that. We want to focus our energies on things that we can control. Can I control my competition? No. What can I control? I can control educating the market, building better products for consumers and make sure that my partners are happy. This has worked for us for 10 years of our existence and we are trying to do the same in India as well.

Q. Although Orkut has a larger user base in India, Facebook is growing faster. What about that?

A. Orkut is doing extremely well in India and has been the No 1 social networking site. It continues to grow 50-100 per cent over last year. The challenge is that people who are influencers, such as CEOs and media people, seem to be using Facebook because they have many friends settled outside of India.

We are much more connected to mass of youth in India and Facebook seems to be more successful with the intelligentsia-type crowd, but numbers suggest that Orkut is not only biggest social network in India but also growing continuously.

Last year, we did some modifications with Orkut. We introduced personalisation of profiles, spam control and offered regional language support as well. Consumers responded to these changes very well.