Digital is inefficient when planning for mass brands: Sam Balsara

“It’s no secret that digital dominates our professional as well as personal lives. It, therefore, dominates advertising and AdEx too,” said Sam Balsara, chairman, Madison World, at the seventh edition of vdonxt asia Conference hosted by afaqs!.

Over the last five years, the number of individuals with a television set at home, has increased by about 100 million, the media veteran pointed out, as he delivered the keynote speech. The number of individuals owning a smartphone, has increased by about 300 million, he added.

In terms of reach, digital trails a bit behind TV. Data consumption is quite high in India, as it (data) is available at a low cost. There has been a 9x increase in short video content. Since 2016, Indians have spent almost five hours on their smartphones every day, which is the highest across the globe.

Youngsters tend to spend more time on digital, as compared to older people, who spend more time watching TV. Many advertisers and brands, therefore, want to focus on the youth.

Highlighting a significant change in media consumption, Balsara mentioned, “There’s been a dramatic increase in multimedia consumption, making a dominating share of voice strategies across media, quite expensive and difficult.”

Impact of change in media habits, on AdEx

While many things have changed across the world, advertisers’ confidence in advertising has not. Balsara pointed out that the global AdEx is now at a humongous $880 billion. It grew at a compound annual growth rate (CAGR) of 10% over the last five years.

“Digital’s share has grown globally, from 46% to 68%. However, all other mediums, including TV, declined year-on-year. Digital commands a larger share than the combined share of all other mediums. The Indian AdEx space, which comparatively has been slow to adopt digital because of lower penetration, is now galloping. Last year, it overtook TV AdEx to reach the top spot.”

This can be further exemplified by the fact that FMCG advertisers have started to embrace digital in a big way. Hindustan Unilever (HUL), India’s largest advertiser, is spending about 25-30% of its total advertising budget on digital, which amounts to about Rs 1,000 crore.

What makes digital AdEx go up all over the world, including India?

As per Balsara, one of the obvious reasons, is that consumer behaviour is changing. People are now spending a lot of time on digital screens. Other contributors of this dynamic shift are COVID, relatively cheaper Jio telecom services and handsets. All these have increased mobile penetration in India to unbelievable levels.

“Combined with all this, is digital's ability to give fantastic targeting opportunities to brands. Then, there’s the low threshold level to enter digital advertising, unlike TV, where the threshold levels could be much higher,” Balsara added.

With the help of digital, Madison was able to help a brand like Nicotex (a chewing gum that helps one to give up smoking) to target newlywed couples or new parents at a time when they’re most concerned about their health.

Similarly, for a jewellery brand like Tanishq, Madison created a special communication for those who were about to get married soon. Asian Paints used the digital medium to target young couples interested in home decoration.

Shortcomings of digital media

As intelligent people, whilst taking advantage of digital media, media planners and brands should also recognise its shortcomings, Balsara said.

“Digital publishers should be clear that the future of their business, isn’t just about performance, but in convincing advertisers to use digital for brand building purposes.”

Balsara stated that if a brand has substantial buyers beyond a narrow-defined target audience, then digital can be an expensive medium, as the brand could be leaving out 50-60% of its users.

“Second, digital is inefficient when planning for massy brands with very large number of users straddling many age and income groups. The way TV is bought, is very different from the way we’re forced to buy digital,” he explained.

TV is bought on cost per rating point (CPRP), whereas digital on cost per thousand impression (CPM) basis. In a growing market, CPRP works for the advertisers, while CPM works for media owners.

Despite these shortcomings, the reality today, as per Balsara, is that even large brands need to incorporate digital in their media plans to take advantage of its reach and unique targeting abilities.

He said that the reason is because linear TV GRPs have started to fall significantly. “Besides the fact that the time spent on TV is coming down, exclusive use of TV alone will lead to inadequate exposure of the brand’s message to light TV viewers.”

The use of technology enables brands to address these light viewers through digital media. It’s a powerful tool, because it offers behavioural targeting, data-driven analytics and contextual messaging. Also, the content can go viral on this medium. Today’s marketers and media planners must try to leverage digital’s advantages and minimise its shortcomings.