Indian FMCG Companies Betting on Online Advertising

Sapna Agarwal | Business Standard | Mumbai, April 20, 2009

They have been large spenders in traditional advertising mediums like television, outdoor and print. Fast moving consumer goods (FMCG) companies are now increasing their focus on the digital medium, with larger budgets for some of their brands.

The overall budget allocation for the digital medium is still 1-2 per cent of their total advertising spends, but industry experts say this will go up substantially as FMCG companies realise the power of engaging consumers online.

Pushkar Sane, chief digital officer – North and South Asia, Starcom MediaVest Group, says online advertising budget outlays in India will increase from 1-3 per cent of the overall budgets to close to 10 per cent —at par with the Western countries —in the next 18 months. “As marketers experiment with the medium and get success, online advertising will grow exponentially,” he says.

There are enough reasons why marketers have no option but to experiment with the new medium. The internet medium has 50-60 million users online and is largely accessed by people in the age group of 20-35 years living in the metros and Tier I cities. So no company can ignore the medium for products targeted at this segment.

Companies like Hindustan Unilever, Proctor & Gamble, Cadbury’s and Tata Tea have increased their digital ad budgets for individual brands. “FMCG companies are experimenting with increased budgets for one or two brands by increasing the brand outlay from 1 per cent to 3-5 per cent. It’s even 8-10 per cent in some categories,”says Prashant Mehta, chief operating officer, Komli, one of the largest digital advertising and technology companies in India.

The biggest plus point is that it is an interactive medium, so customers can be roped in easily. Look at the success of Sunsilk’s sunsilkgangofgirls.com or Mattel’s barbie.com. The GoaFest’s internet & new media category saw a surge in entries, with the winners being brand campaigns such as Axe Spray Chocolate, Cadbury’s ‘Celebrate with Cadbury Dairy Milk’ and Tata Tea’s ‘One Billion Votes’. Each of them had a huge role to play in the success of the brands.

But many FMCG companies say the digital medium will have only a limited role to play for some time, given the low internet penetration in the country. “The medium is not suitable for mass market brands as the target audience is not present online. It is better suited for brands targeted at urban consumers, professionals and housewives,” says Sangeeta Talwar, executive director, Tata Tea.

Not many agree with that. “FMCG companies must change their mindset to use the medium more effectively. They are used to one-way communication (television, print) and are using the medium largely to supplement their mass media campaigns and for one-way interaction,” says Rajesh Ghatge, executive director and chief operating officer of 141 Sercon, a digital media marketing company.

But these companies shouldn’t forget that it’s a growing medium that is being used by a lot of young users in the age group of 13-20 who access the internet in schools and at homes. “Marketers must also learn to engage with this segment,” Ghatge says.

© 2009 Business Standard

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