Digital is different

Indian advertising may be missing the bus

In one unforgettable scene in the 2002 movie Minority Report, Tom Cruise (playing John Anderton) is seen striding through a mall, through a maze of extremely targeted and personalised advertising by the likes of Lexus, Bvlgari and American Express, among others. That was supposed to be the future of advertising - extremely focused and relevant. It has been more than a decade since Minority Report, and advertising in India appears totally out of sync with world trends. For proof, look no further than its performance at this year's Cannes Lions International Festival of Creativity. India bagged 13 metals in total, posting its worst performance in seven years. The conversion rate in terms of the number of metals bagged vis-a-vis the number of entries was a measly 1.4 per cent (there were 945 entries this year), against three per cent last year. Worse, India had no shortlists in vital categories such as mobile, cyber and product design.

For all the talk of growing up, Indian advertising seems hopelessly tethered to a bygone era, when television and print drove much of the business. Now, it is digital technology that is driving the industry globally. Look at the companies that have been descending on the French Riviera for the past few years. Companies such as Twitter, Microsoft, Google, Facebook and Yahoo! spent their time showcasing their technology-driven advertisement offerings to potential clients. Smaller start-ups, too, can be seen hobnobbing with big-ticket clients to drum up business - even as bankers and venture capitalists scout around for investment opportunities. What was once an opportunity for advertisement agencies and brands to celebrate creativity is now more about the larger business of communication, with the glitter and pomp of the digital advertising business on full display. Indian agencies seem lost in that giant circus; some even go as far as to complain they feel marginalised by the shift. Not that advertisers don't appreciate the potential of digital. When the advertising pie in the country touched Rs 37,100 crore in 2014, digital was the only medium to grow its share - at the expense of television, print and outdoor advertising, all of which lost spending share marginally. It is now at number three in the pecking order with a share of 11 per cent. Print is at the top with 41 per cent, followed closely by television at 38 per cent.

So what went wrong? How did Indian advertising miss the bus? Brands lay the blame squarely at the door of agencies. For one, the industry structure is complex. Besides traditional advertising networks, there are digital agencies, search marketing experts and social media champions. The idea of dealing with so many hands for less than five per cent of the advertisement budget is off-putting to start with. Then, the business itself is highly commoditised. A brand usually appoints a lead agency, which in turn ropes in smaller agencies - mostly based on who quotes the lowest for the likes, clicks and leads on offer. Meanwhile, agencies are also facing business model challenges of their own. Established networks are having to fight with dedicated boutiques to win business, even as technology firms automate some of the tasks and take away chunks of the services historically offered by them. Clients are putting more pressure on their compensation, and talent is scarce.

The way forward is to understand the economics of the digital world and the value exchange between the consumer and the brand. In digital advertising, the relationships are different. The consumers' time is at a premium and they are ready to shell out good money to block advertising that doesn't captivate. The attention economy demands that brands offer value in exchange for the time consumers give to the brand. And what works for consumers will work for judges in Cannes or New York. As technology changes consumer behaviour and complicates the business, the game itself will have to change - if not for the awards, then for the sake of growth.