Mktg - Interview Google India CEO

Shailesh Rao, managing director, Google India, is pleased that Indian companies have begun to include digital in their marketing mix, but is not happy with the pace at which this “extremely flexible tool” is being adopted here. With a wide range of offerings Google, Rao believes, is poised to provide clutter breaking marketing opportunities to Indian companies, provided they are willing to come out of their skepticism. He believes digital advertising in India, projected at Rs 420 crore in 2008, will grow to a whopping Rs 1,100 crore by 2011. He can be bullish on this score as over 48% of Google’s revenues come from non-US markets, including India. Rao spoke to FE’s Radhika Sachdev about Google’s plans for the Indian market.
Can you share your estimates on the online advertising spend in India?
The total online advertising market in India is projected at Rs 420 crore in 2008, according to FICCI-PricewaterhouseCoopers. Within that, we see a great deal of diversity, depending on the principal objective behind a campaign—whether it is lead generation, customer acquisition or direct marketing. Online, is the most cost-effective means of executing a direct marketing strategy.
To my mind, advertising has always been a science by proxy. A 30-second television campaign for instance, always gives incremental gains but the beauty of the online medium is that its results are more cumulative and somewhat quantifiable. Thanks to the interactive nature of the digital medium, it’s a child’s play for a marketer to generate rich data for analysis, limited not just to the volume of traffic arriving to a site, analysing conversions etc, but also assisting in improving campaigns and their profitability.
Is there a way to measure the RoI (return on investment) from a digital campaign that would convince brands to commit more resources to the medium?
Of course, there is, and it’s more democratic and flexible a system than is possible with the conventional media. Let me explain that with the mechanics of Google’s
Adword programme. There is no rate card or ad inventory for our clients. Depending on what each customer is worth to the advertiser, the latter makes a cost per click (CPC) bid for an ‘opt in’. The bid would vary with the economics of the business, so the click-through rate (CTR) for a florist would be different from that for a jeweler (depending on the impressions served). This means they can set their bids according to their marketing budget and plans. Tell me, which other media affords this kind of flexible planning?
Indeed, there is a lot of science and a little bit of art in the visual advertising medium represented by Adwords. It can be used effectively both for brand awareness and for customer acquisition.
Which industries/categories are big spenders on the digital medium?
It’s difficult to answer as they come to us with diverse marketing goals and we, in turn, try to provide them solution-centric rather than product-centric service. Having said that, financial services, travel, wireless operators, hardware, media and gaming companies make better, or, let’s say, more use of this medium than the rest. In fact, an insight that we gained from an in-house survey of internet users is that nearly 68% always go online to research financial products that interest them, which suggests a strong visible relationship between online and offline advertising.
Can we say that peer-to-peer contact is the big driver for the online medium and that a more effective proposition for this media is its narrow focus rather than its wide reach?
You are right about the narrow focus, but besides that there are three other value propositions that we make to our clients. One, you can precisely target your prospect by selecting an appropriate digital tool. Two, you can determine your spend and put a cap on it, thereby deciding to grow your campaign at your own pace. You can make your ads useful to the user, so that the likelihood of clicking on the ad goes up (what we call as intelligent contextual advertising), and do rich data mining and trait analysis to understand your market.
And what picture does this rich data reveal? That there are some 40-50 million internet-browsing people in India, residing not just in tier 1 cities, but also in tier 2 and 3, who have ample disposable income and their propensity to spend is growing by the day.
In the US and the UK, with the economic slowdown, there is a sense of inevitability that one can perceive. But not in India. Here the consumer sentiment is still running high.
How has Google’s business in India grown over these years? How is the present market split between Google, Yahoo! and MSN?
We are happy to note that with Google’s Adword and Adsense programme, we command a share of 28.6% in the Indian marketplace. As for market share, in the online advertising business, estimated by the Kelsey Group at $45 billion globally, Google leads the pack with 28.6%, followed by Yahoo! with 15.5%, while Microsoft has just 4.77% of the online advertising pie.
Typically, what is an FMCG company’s spend on the online media? Has this proportion changed significantly in recent years, with increasing internet penetration, availability of broadband, greater awareness etc?
That’s difficult to guess, because it varies widely. It’s rather sad that given their marketing acumen and customer reach, FMCG is a grossly under-represented segment in the online media market. As a result, they are unable to leverage our result-driven programmes.
Google “FMCG” and you get millions of hits, which just goes to prove their point of contact. An intelligent marketer would want to somehow manage these numbers, but for the FMCG industry here, it’s a huge missed opportunity. Some of our clients, particularly in the financial services and travel sector, are unbelievably sophisticated. They are good at what they do, but there are very few of those in the FMCG sector.
Digital is great for lead generation. Is it also good for brand building?
Absolutely. Supporting a search campaign with content network campaigns, targeting sites with relevant editorial can be an excellent way of establishing brand associations. Search is not just about shouting to catch passing traffic; it’s also about keeping your shop open to destination shoppers. Taking a cost-of-sale approach to search means those doors are always open.
Digital is perhaps the only kind of medium that start-ups can afford. Does this make it a small business medium?
On the contrary, it can be anyone’s—small or big—medium. A small artisan trying to sell his handicraft to a global audience from a hamlet in Rajasthan can use Google Adwords just as effectively as a multinational bank in America. The potential is definitely there, whether you want to scale up is a different matter altogether. Depending on his scale and infrastructure, he can put a cap on his online budget, which is not possible with the TV or print media, where a given spot or column inch space is always sold by a fixed value.
Critics say that because advertisers are confused by the nuances of the new medium, they often end up treating digital as any other media. What do you do to convince your clients to change this mindset?
Some of our clients are incredibly sophisticated. For others, we have specialised account managers to help run successful campaigns at every level—whether you’re a small or a large business. We provide resources who are experts in their field and can work closely with advertisers to build and evolve relevant search and creative campaigns. Often that aspect is taken care of at our end.
Given the language hurdle, is video becoming more popular over text ads?
Embedded media is popular with the technology sector companies, and it does help in overcoming language barriers. There are other formats also that are gaining popularity, such as click to pay games, in-gadget applications etc, and our Indian clients have responded well to these formats. Gadget ads, videos and text ads are, in fact, a combination of print, electronic and sales marketing, all on one platform. We also tell our clients that they can ideate and change their campaigns daily with little effort, unlike the rules of conventional media.