BCG Digital India 2015

1. 1. Digital India INSIGHTS FOR MARKETERS AND MEDIA

COMPANIES APRIL 2015

2. 5. The Boston Consulting Group |

3.
4. 3 INTRODUCTION Big changes are afoot. As many as 550 million
Internet users coming online in India in the next few years. A
rapidly evolving universe of connected consumers that is fast
becoming older, more rural, and more female. Users who are
spending more time with their digital devicesespecially
smartphonesas they discover new capabili- ties and content.
More people consuming more media online. What do these
changes mean, especially for marketers and media companies?
New re- search by The Boston Consulting Group pro- vides some
answers. We believe marketers have an opportunity to engage with
consum- ers in new and powerful ways and to develop new
offerings based on clearly identified user groups. Marketers that
fully embrace the changes taking place can go even further and
craft offerings that address the personal pref- erences of
microsegments or even individu- als, on the basis of data that
defines those consumers online behavior. Media companies
should take note that digi- tal usage is evolving as people gain
digital maturity and more content options become available. This is
a key indicator for future consumption, which we expect to grow
quick- ly. The question for publishers and electronic media
companies alike is one of opportunity: can publishers translate offline print domi- nance into digital attraction as consumers show a
growing preference for news con- sumption online? Can print and
television companies stake out digital territory with an- cillary
genres in the short term and core news genres in the long term so
that they maintain loyalty and relevance with existing readers and

viewers as well as attract new ones? Or, if they do not move

quickly enough, will they cede audience to digital upstarts? The
following two articles and infographic present the findings of two
recent broad- based consumer surveys by BCGs Center for
Consumer and Customer Insight in India and explore the questions
in depth.
5. 6. 4 | Digital India THE CHANGING CONNECTED CONSUMER IN
INDIA Everybody focuses on the numbers, which are impressive:
almost 200 million connected consumers now and another 200
million in the next few years. Some estimates put the total number
of Internet users in India at as many as 550 million 40 percent of
the populationin 2018. We expect the Internet to contribute $200
billion to Indias GDP (5 percent of total GDP) by 2020. But the
more interesting story lies in the changes taking place behind the
numbers. The Indian connected consumer is already a very
different individual (or group of individuals) than he or she was a
year or two ago. And the universe of users only a few years from
now will be far more varied in terms of age, occupation, wealth,
location, and, importantly, digital sophistication than users today.
These new users will approach the online experience with very
different expectations, needs, priorities, and goals. Understanding
the changes taking place in Internet adoption and use in India and
how these shifts will affect existing markets and ways of
communicatingand create entirely new onesis essential for
anyone doing business in the worlds second-most-popu- lous
country, which is soon also to be the worlds second-largest nation
of connected consumers. Tomorrows Connected Consumer The
next wave of growth in Indias online population will lead to
significant changes in who is using the Internet and how. In 2018, a
much larger proportion of Indian Internet us- ers will share the
following demographic characteristics: They will be older. In
2013, 40 percent of Internet users were 25 years old or older; in
2018, 54 percent will be 25 or older. Because older users have
more disposable income, they will likely transact more online.

They will be more rural. In 2013, 29 percent of Internet users lived

in rural areas; in 2018, approximately half of users will reside in
smaller towns and villages. This shift will open up significant
growth opportunities for those marketers and service providers that
keep in mind the dynamics of the rural market in India for
example, using online distribution through e-commerce to ensure
wider product availability. They will include more women. In
2013, 25 percent of Internet users were female; in 2018, women
will represent a third of all users. The increasing gender parity will
have a major bearing on the Internet economywomen control 44
percent of household spending in India.
6. 7. The Boston Consulting Group | 5 Similarly, the way they use the
Internet will change: Mobile connections will increase from 60 to
70 percent in 2013 to 70 to 80 percent in 2018. Approximately 200
million Indians used their cell phones to access the Internet in
2014. A majority of Indians who embrace the Internet, particularly
rural consumers, have bypassed the PC and are using mobile
devices to get online on the go. Some 70 percent of rural users
access the Internet from their mobile handsets. Content will be
more vernacular as the user base diversifies and grows to include
larger numbers of rural consumers. The use of vernacular content
online is estimated to increase from 45 percent in 2013 to more
than 60 percent in 2018, mirroring broadening consumption
patterns in off-line media such as print and television. Perhaps the
most significant of these factors is that the evolution of the digital
experience in India will take place entirely through users mobile
phones. This means that users will have to adjust to the inherent
constraints of a four- or five-inch screen. But it also means that
they will interact from the get-go with connectivity thats local (its
always where they are), person- al (its tailored to their needs and
preferences), social (all their friends are there as well), and always
on. In developed countries, continuous access to information,
communication, friends, and en- tertainmentamong myriad other
things has turned out to be addictive for many users. Already in

India, connected consumers are spending 35 percent of their

media consump- tion hours onlinea percentage that far outstrips time spent with newspapers and ap- proaches that spent
watching television. (See the article and infographic that follow in
this report.) Companies that move quickly to reach out to this
growing universe with content that is per- sonal and based on
where people are, what they are doing, and who they are doing it
with have a massive opportunity to engage consum- ers in entirely
new and powerful ways. The Factors Affecting User Growth The
full rate and extent of future Internet penetration depends on
several factors, but we expect the number of Internet users to at
least double, from 190 million in 2014 to 400 million in 2018. Our
most aggressive forecast predicts as many as 550 million users in
2018. In this scenario, the connected urban Internet population will
increase from 130 million to 300 million, but the real action will take
place in more-rural areas, where the user base could easily
expand by up to 40 percent per year from 60 million in 2014 to
280 million in 2018. In rural areas, the user base could easily
expand by up to 40 percent per year. Three factorsexpanding
reach, more afford- able access, and improved awarenesswill be
the primary drivers of online growth. First, network availability
needs to catch up with the expected increase in the installed base
of Internet-enabled devices, meaning that the current universal
coverage of 2G net- works in urban areas must be replicated in the
countryside and a similar improvement must take place in the
penetration of 3G and 4G services in major cities. Second, the
availability of low-cost Inter- net-enabled devices will be key to
increasing Internet penetration among the lower-income
population. Nearly two-thirds of mobile phones sold in India today
are Internet ready, but the least expensive models still cost $60 or
more. This is too expensive for many; prices need to come down.
There are signs that this is happening. For example, Intex
Technologies has launched a $33 smartphone (the same price as
a feature phone), powered by Mozillas new mobile operating

system. Accessthe other cost factoris expected to continue to

expand as disposable incomes continue to climb. The proportion of
house- holds that can afford Internet connectivity typically
defined as those with more than $3,300 in annual incomeis
projected to rise
7. 8. 6 | Digital India from 56 percent in 2013 to 67 percent in 2018.
The continuing decrease in data plan prices has also helped to
make Internet con- sumption more affordable. Telecom carriers are
increasingly offering a range of inexpen- sive, bite size plans
while facilitating the ease of making payments with onetimeprocessing options. The third big variable is simple awareness.
According to a study on digital consumers in rural areas by market
research company IMRB International and the Internet & Mo- bile
Association of India, 70 percent of non- users are currently
unaware of the Internet and the benefits it offers. This lack of
under- standing represents the most formidable barrier to online
adoption, with the unavail- ability of devices a distant second at 36
per- cent. At the same time, almost four-fifths of urban nonusers,
despite being aware of the Internet, are disinclined to go online.
More than half of the nonusers living in towns and smaller cities do
not yet see any value in us- ing the Internet. New Consumer
Segments Emergeand Evolve The bottom line for businesses is
that the In- ternet in India is no longer a limited-reach or principally
urban phenomenon, accessed pri- marily by young, high-income
users. As more consumers have become connected, the user base
is both expanding and diversifying to in- clude rural and lowerincome consumers across all age-groups. Companies that
overlook this shift risk missing out on a rapidly growing channel for
marketing, brand influence and engagement, and, ultimately,
commerce. Given the sweeping nature of the changes un- der way,
marketers will encounter fluid seg- ments of consumers for the next
several years. At the moment, we see six discrete seg- ments
based on digital consumption habits, demographics, and location
(most of the us- ers are urban). Each segment has clear com- mon

characteristics and displays its own par- ticular usage patterns,

lifestyle preferences, and online evolutionary path. (See Exhibit 1.)
But each is also undergoing its own metamor- phosis in size and
makeup, and new seg- ments could well emerge. Many current
active aspirers in the 15- to 22-year-old age-group, for example,
will morph into entertainment enthusiasts and novel networkers
over the next five years. At the moment, some 30 million of these
users spend eight to ten hours a day online, accessing the Internet
primarily on their phones and laptops. They use social-network- ing
sites and apps such as Facebook and WhatsApp to keep in touch
with friends, play games, and download content, habits that could
become ingrained. These are mostly young users, but they span
all locations and their ranks will swell to more than 55 million in
2018. Many of these new users are still in college and regularly
access informational sites while working on class assignments.
They also use online job portals to find em- ployment after they
graduate. Over time, their usage behavior will shift in line with the
changing demands of adult lifeeven as the intensity of the usage
itself persists. The Internet in India is no longer a limited-reach or
chiefly urban phenomenon. Another fast-growing category, novel
net- workers, accounts for some 7 million of Indias total online
population. Their ranks will quadruple in the next few years. This
group is predominantly female and belongs to Indias emerging
middle-income segment. These users are active online shoppers
and are exposed to a high level of digital influ- ence in the product
purchase cycle. They use both phones and laptops to get access
to brands and collections of apparel and ac- cessories that are not
available in their towns. They do extensive research using product
reviews on various portals before purchasing. Then there is a
huge, seventh segment of predominantly rural consumers coming
on- line. This groupthe data discoverers, who are new users in
semiurban and rural areas and span most age-groupsis set to
explode, from 50 million today to some 280

8. 9. The Boston Consulting Group | 7 million in 2018. Their fastgrowing ranks will propel much of the growth in overall Inter- net
usage. (See Exhibit 2.) This segment uses mostly mobile phones
and cyber cafs to get online, and the Internet is transforming their
lives as they discover data and information that has numerous
practical uses. The expanding experience is changing the way they
plan their travel and entertain- ment, for example. The Internet
helps them apply for jobs and loans. It is a source of glob- al
information, including news and details on general topics. These
users are not yet shopping or doing business online, because
many online merchants dont deliver to their villages, but this will
change as these users mature in both age and online
sophistication and companies cater more to this large and fastgrowing segment. For marketers, the challenge is clear: to develop offerings based on well-defined user groups and tailor those
offerings to meet the particular needs and situations of each category of user. But in the digitaland especial- ly the mobileworld,
there is an opportunity to go even further and craft offerings that
ad- dress the personal preferences of microseg- ments or even
individuals, on the basis of data that defines their online behavior.
Accelerating the Revolution The extent of the Internets influence
on con- sumer decision-making and behavior will be constrained
only by the rate of increase in penetration and usage. Already, a
rising num- ber of consumers in all segments are using the Internet
as their first port of call in framing and driving their purchase
decisions. BCGs Center for Consumer and Customer Insight
surveyed users in 25 cities and found that more than half of those
who have access to the Internet go online to make informed
purchase decisions. This number varies among different categories
of products and services, but it is on the rise everywhere.
Consumers climb the learning curve quickly. As they get more
com- fortable with digital capabilities, their usage Source: BCG
Center for Consumer and Customer Insight survey and consumer
interviews 2013. 1 Percentage of Internet users in each segment

buying online or digitally influenced. Exhibit 1 | Six Consumer

Segments Today in Urban India Reflect Different Sets of Internet
Use Habits Active aspirers Entertainment enthusiasts Late learners
Novel networkers Professional pros Social shoppers Internet
penetration (% of the population) 47 (33) 44 (27) 15 (18) 15 (8) 79
(8) 53 (5) % digitally influenced1 (% of the influenced population)
50 (30) 56 (27) 61 (18) 67 (8) 70 (10) 49 (5) % buying online1 (%
of the buying population) 17 (25) 21 (26) 33 (26) 32 (12) 20 (7) 18
(4) Activities Heaviest use Social net- working (72%) Watching
videos (36%) Watching videos (42%) Searching for informa- tion
(77%) Reading news (43%) Searching for informa- tion (80%)
Searching for informa- tion (84%) Using e-mail (79%) Chatting
(62%) Other uses Employment Education Online music,
gaming, and apps Shopping Ticket booking Blogging
Shopping Childrens educational information search Location
information Forums Banking Ticket booking Forums
Downloading videos, music, and apps Spending profile Limited
shopping Direct to home Mobiles Rail, bus travel Apparel
Appliances Nutritionals Appliances Home decor Mobiles and
tablets Highly influenced, moderate purchasing Air travel
Holidays Insurance
9. 10. 8 | Digital India patterns exhibit growth that belies age and
other demographic variables. Consumers, the government, and
private-sec- tor companies will all benefit from furthering Internet
penetration and use. Six areas re- quire attention: Increasing
access through expanding net- work reach and bringing moreaffordable devices and mobile plans to market Facilitating digital
transactions and easing payments Developing a regulatory
framework that facilitates content development and does not hinder
the growth of local applica- tions and services and the content
sector Developing an Internet governance and regulation system
that does not constrain private-sector innovation and does enable
all stakeholders to function effectively Enabling entrepreneurial
ventures through ease of financing, mentorship programs, and the

development of a skilled digital workforce Facilitating the creation

of local-language, or vernacular, Internet content to boost usage in
nonurban areas The sooner these priorities are addressed, the
faster the development of Indias Internet economy will be and the
sooner more con- sumers will begin to participate in the bene- fits.
This will lead to more opportunities for growth and profit for
forward-looking compa- nies that capitalize on the developing
sources of digital demand. Active aspirers 2013: 28 million 2018:
55 million Entertainment enthusiasts 2013: 23 million 2018: 95
million 15 to 22 35 to 5423 to 34 Tier Age (years) Data discoverers
2013: 49 million 2018: 280 million Rural Tier 2, 3, and 4 cities and
towns Tier 1 cities Novel networkers 2013: 7 million 2018: 30
million Social shoppers 2013: 4 million 2018: 10 million
Professional pros 2013: 7 million 2018: 5 million Late learners
2013: 15 million 2018: 20 million 55 and older Source: BCG Center
for Consumer and Customer Insight. Note: Tier 1 cities have
populations of 100,000 or more; tier 2 cities have populations of
50,000 to 99,999, and tier 3 and 4 towns have populations of
10,000 to 49,999. Exhibit 2 | Seven Future Consumer Segments
Will Be Differentiated by Location, Income, Gender, and Age
10.
11. The Boston Consulting Group | 9 DIGITAL DISRUPTION
IN INDIAS MEDIA INDUSTRY SEIZING THE OPPORTUNITIES
Media companies in India are at a tipping point. New research by
The Boston Consulting Groups Center for Consumer and
Customer Insight shows that the Internet is having a measurable
and growing impact on media consumption, and that will have
significant ramifications for traditional media compa- nies, both
print and electronic. The disrup- tion of the media industry in India
will play out differently than it has for companies in other national
markets, but Indian media providers that do not address the
coming changes will find themselves no less severely affected. The
Changing Media Consumer Internet penetration is expanding
quickly in India. The number of users is expected to more than
double, from about 200 million in 2014roughly 16 percent of the

popula- tionto at least 400 million, and potentially as many as

550 million, in 2018. More and more of the new consumers will be
rural and will span multiple income groups. Already, In- ternet
penetration has increased from 19 per- cent in 2012 to 26 percent
in 2013 in tier 2 cities; in tier 3 and 4 towns, it increased from 18
percent to 27 percent over that time frame. Penetration also rose
significantly among all income groups except the least af- fluent.
The impact of digital technology on media consumption in India
shows the power of the Internet to disrupt traditional industries by
changing the way consumers go about their daily activitieseven
when penetration rates are still relatively low. The average
consumer today spends three to five hours a day with media, with
remarkable consistency across lo- cation, gender, age, and
occupation. Digital consumers already spend 35 percent of that
time online. And while digital consumption is lower in rural areas
and lower-income classes, it already far outpaces print
consumption and is rapidly approaching TV consumption levels
across all demographics. Men, urban dwellers, younger people,
and business executives are particularly heavy digital-media
consumers, but more interest- ing is the fact that even people aged
46 to 55 in second-tier towns (where Internet penetra- tion is only
27 percent) are spending about a third of their media consumption
time online. In urban areas, women trail men in digital consumption
by 10 percentage points (40 to 30 percent) and a much lower
percentage of women in rural areas are online (15 percent
compared with 39 percent of men), but this gap is expected to
close in the coming years. Most urban connected consumers are
looking at small screens, often while on the move. Mobile devices
are the most popular means of consuming media: 56 percent use
smart11.
12. 10 | Digital India phones; 23 percent, feature phones.
The use of feature phones is highest in rural areas. (See Exhibit 1.)
Nationwide, only 20 percent of connected consumers use PCs and
laptops. We expect the percentage of smartphone us- ers to rise in

the coming years as more peo- ple gain 3G and 4G access and
more lower- priced smartphones reach the market. This is a
significant trend for traditional media companies to bear in mind
when developing digital strategies. The experience of watching
video or reading a newspaper on a smart- phone or feature-phone
screen is very differ- ent, of course, as is the challenge of presenting video or display advertising. Digital consumers spend most of
their media budget on expenses related to broadband ac- cess,
such as purchasing a phone and a data plan. Their spending on
print is limited and higher only in smaller cities, where multiple
subscriptions are common. Evolving Consumption Patterns Digital
has a strong impact on all aspects of media consumption, with
usage increasing as users gain digital maturity and more content
options become available. This is a key indi- cator for future
consumption, which we ex- pect to grow quickly. Indian consumers
cur- rently spend only about one-third of the time on media that
their U.S. counterparts do, leaving plenty of room for expansion.
We expect the percentage of smartphone users to rise in the
coming years. Consumers who have been online less than a year
spend 30 percent of their media- consumption time on their
devices, but after a year the percentage of digital consumption
jumps to 34 percent, and after three years, it jumps again, to 39
percent. Those with more than five years of digital experience
spend 42 percent of their media-consumption time on digital
devices. This shift comes primarily at the expense of television.
Print consump- tion remains relatively constant as digital 00 8 12
23 56 0 20 40 60 80 100 Digital consumers using a device as a
primary medium of access (%) LaptopPCSmart- phone Feature
phone Tablet Cyber caf ~80% of consumers use mobiles as their
primary digital-access medium 0191217 62 0 50 100 Digital
consumers using a device as a primary medium (%) Smart- phone
001111 24 53 0 50 100 00116 30 53 0 50 100 Survey question: In
order of your preference, please rank the top three gadgets that
you use to access the Internet LaptopPCFeature phone Tablet

Cyber caf Smart- phone LaptopPCFeature phone Tablet Cyber

caf Smart- phone LaptopPCFeature phone Tablet Cyber caf Tier
1 Tier 2 Tier 3 and 4 Source: BCG Center for Consumer and
Customer Insight quantitative survey of approximately 6,300
digital-media consumers. Note: Because of rounding, not all
percentages add up to 100. Tier 1 cities have populations of
100,000 or more; tier 2 cities have populations of 50,000 to 99,999,
and tier 3 and 4 towns have populations of 10,000 to 49,999.
Exhibit 1 | Mobile Devices Are the Most Popular Way to Access
Digital Media
12.
13. The Boston Consulting Group | 11 consumption
increases. As one user told us, When I started accessing the
Internet, I was not aware of all media available on digital. Its only
of late I have realized how conve- nient watching movies and
serials online is, and [I now] spend a lot of time online.
Downloading and listening to music are the most popular digital
activities, followed by downloading videos and online gaming. This
is hardly surprising given that most of these are online-only
activities. But reading and watch- ing news, checking scores, and
accessing knowl- edge websites show significant increases after
the first year of Internet use. (See Exhibit 2.) Several categories of
consumption, including classified and job-related advertising,
search- ing for knowledge material, and real estate research, have
already migrated substantially online. More than 80 percent of
consumers both English and vernacular-language read- ers
prefer digital channels to access this content. As digital
consumption increases, Indian con- sumers discriminate among
different types of media for various types of news and entertainment. For more than a quarter of con- sumers, print remains
the preferred outlet for local news, Bollywood news and gossip,
and international news. Consumers recognize that newspapers do
a good job of delivering these types of content, and for the moment
at least, there is much more print than digital content for nonEnglish speakers. Consumption is becoming a shared experi- ence

for many. Social interaction, pictures, blogs, and videos are

growing in importance. Websites and apps such as Google,
Facebook, and YouTube are often first destinations for digital
consumers. As one user put it, Friends talk about [politician and
former chief minister of Delhi] Arvind Kejriwal. It is important for me
to know what is happening so that I can participate. Said another,
I do search on Google but read news on Yahoo be- cause it has a
lot of photos. Consumers have good recall for many Indian digital
brands. However, very few consumers pay for digital media. In
general, consumers equate paying for data with paying for con- 2 6
8 12 11 12 16 13 11 24 22 22 20 33 46 62 3 4 5 8 8 9 11 10 13 14
17 18 27 27 40 57 2 2 3 6 8 9 7 5 6 12 10 20 25 26 28 46 2 4 5 9 9
10 12 9 10 17 17 20 24 29 38 56 0 50 100 Visiting a matrimony
website Watching sports Doing research Downloading TV shows
Watching TV shows Visiting a cooking website Checking scores
Watching news Reading classifieds Reading news Visiting a
knowledge website Watching videos Online gaming Downloading
videos Listening to music Downloading music Penetration of
activities (overall) Using the Internet for less than 1 year Using the
Internet for 1 to 3 years 0 50 100 0 50 100 0 20 40 60 80 Using the
Internet for 3 or more years One year of digital consumption is an
inflection point in overall consumption Survey question: Which of
the following activities have you done on the Internet in the last
month? Source: BCG Center for Consumer and Customer Insight
quantitative survey of approximately 6,300 digital-media
consumers. Exhibit 2 | Consumption of News Genres Online
Increases with Maturity of Digital Usage
13.
14. 12 | Digital India tent, and they believe that any content
they seek can be found for free online, which, ow- ing to lax
intellectual-property laws, is often the case. The Opportunity for
Media Companies As digital penetration increases, three prima- ry
trends will likely play out: Overall media consumption will
increase, driven by a rising amount of time spent on digital
consumption. Consumer spending on data plans will rise

because most new users will be consum- ing on their mobile

devices. With increased digital usage, more media companies
will offer digital alternatives, further propelling the overall shift to
digital-media consumption. Traditional media players have an
inherent opportunity to take advantage of these trends, and those
that move quickly are likely to establish an advantage (assuming
they pro- vide a good product) in user familiarity and loyalty. For
example, there is a big opening for a digital vernacular destination
that cuts across genres, especially as penetration rises in lower-tier
cities. Approximately 60 percent of all consumers read vernacular
print, and the percentage is even higher in nonurban areas. We do
not foresee Indian print companies ex- periencing a significant
shrinkage in revenues as digital influence increases, at least in the
short term, which is a big difference from the pattern seen in other
markets, such as the U.S. The question is more one of opportunity:
can publishers translate off-line print domi- nance into digital
attraction as consumers gain digital maturity and show a growing
preference for news consumption online? There also appears to be
plenty of scope for traditional companiesboth print and televisionto stake out digital territory with an- cillary genres in the
short term and core news genres in the long term. Indian consumers are loyal to brandsthey already go to print sites as a
primary destination for searching news and to TV channel sites for
TV shows and information. Existing media brands should consider
expanding their presence to the digital medium to tap this loyalty
and maintain relevance with existing readers and viewers as well
as to attract a new audience. Media companies looking to move
into digital will have to come to grips with the fact that consumers
do not want toand more signifi- cantly, do not see the need to
pay for con- tent. They also want a social or shared expe- rience
online. Advertising-supported content-delivery models may work,
as they have in other markets. But to provide adver- tisers with a
sufficient audience, content com- panies may have to help boost
usage. There is a big opening for a digital vernacular destination

that cuts across genres. There is an opportunity to create bundled

of- ferings in which both operators and content owners benefit. Socalled sponsored data plans, which shift the cost of accessing
social networks or other content from the consumer to the content
company or the network oper- ator, are one model to explore.
These plans are available in multiple emerging markets, including
India, and have resulted in dou- ble-digit growth in access. One
telecommunications company has shown substantial success at
building mobile- data usage, increasing its revenues at twice the
rate of the market, by revising its pricing and marketing with the
goal of positioning itself as a leader in data as well as voice usage. The company revolutionized pricing by offering 3G data
packs that put the price and value benefits of these offers in stark
contrast to traditional pay as you go 2G plans. At the same time,
it changed its mar- keting from emphasizing Mbps to focusing on
uses. The data packs were organized around access to
information on popular pastimes such as cricket and movies as
well
14.
15. The Boston Consulting Group | 13 as social-networking
and video apps such as Facebook and YouTube. Implications for
Advertisers Substantial percentages of advertising spend- ing in
multiple categories have already moved online. One-third or more
of ad spend- ing for air travel; computers, laptops, and tab- lets; airconditioners; other consumer dura- bles; and cars is now devoted
to digital channels. In some categories, the digital share
approaches 50 percent. Categories such as fi- nancial services,
mobile devices, scooters and motorcycles, and small appliances all
experi- enced significant increases in online versus off-line share
from 2012 to 2103. It is no sur- prise that these are the same
categories in which our research shows increasing digital influence
on the purchase process. Almost 35 percent of digital spending
goes to search advertising and another 30 percent to display
advertising. Significant and growing shares (13 percent and 10
percent) are spent on social media and mobile, respectively. More

and more fast-moving consumer goods companies are using social

media to deepen consumer engagement with their brands. Mo- bile
ads are useful for reaching consumers in areas that are not well
served by other media. Some marketers are segmenting online
and off-line spending by type of product and tar- get market. The
digital share of the ad budget for a typical luxury sedan, for
example, could be 25 to 30 percent, while the comparable share
for an economy model could be approx- imately 5 percent.
Similarly, digital ad spend- ing for higher-priced mobile devices is
much greater than for low-priced phones. Digital advertising is still
in its early days in India. Smart advertisers and their agencies can
learn a lesson from the experience of more developed markets and
begin to take steps now to avoid the complexity and ineffi- ciencies
that have plagued campaigns in the U.S. and the UK and to
employ the advanced techniques available today that can result in
far greater campaign effectiveness. (See Cut- ting Complexity,
Adding Value: Efficiency and Effectiveness in Digital Advertising,
BCG Fo- cus, May 2013, and Adding Data, Boosting Im- pact:
Improving Engagement and Performance in Digital Advertising,
BCG Focus, September 2014.) Digitals disruption of the Indian
media landscape will only pick up speed. The changes will play out
in uniquely Indian fash- ion, but there is little question that
consump- tion patterns will changesome radically and that the
industry will look much different in just a few years time. Big
opportunities are already presenting themselves for companies,
both traditional and start-up, that move quick- ly. Those that do,
and those that are willing to experiment and innovate with new
delivery models, can attract a fast-growing user base in the near
term and establish a strong digital advantage for years to come.
15.
16. 14 | Digital India Digital disruption in Indias media
industry: Who will win? Internet use in It took 2 decades for the first
200 million connected consumerswill jump as high as The number
of Internet users in India to come online India is soaring in 2018
550 million In 2018,India will see big changes in whos online Older

Rural Female From 40% to 54% age 25 or older From 29% to 50%
in rural towns and villages From 25% to 35% of all users
16.
17. The Boston Consulting Group | 15 The average
consumer today spends 3 to 5 hours a day with media Mobile
devices are the most popular means of consuming digital media
Digital consumers spend 35% of this time online Media
consumption is moving online 23% use feature phones Vernacular
content is on the rise Non-English online content is estimated to
increase from 2013 2018 45% 60% Only 20% of connected
consumers use PCs or laptops 56% use smart- phones Digital
consumption increases with digital maturity Less than 1 year More
than 1 year More than 3 years More than 5 years Amount of media
consumed online Experience as an online consumer 30% 34%
39% 42% The key question: Can traditional media players
translate off-line print and TV dominance into digital attraction or
will digitally native upstarts disrupt the industry and erode
traditional players positions? The big opening? Creating digital
destinations with vernacular content that cuts across genres (e.g.,
news, sports, gossip, Bollywood) 35%
17.
18. 16 | Digital India The Boston Consulting Group has
published other articles on the im- pact of digital technologies.
Recent examples include those listed here. Expanding
Participation and Boosting Growth: The Infrastructure Needs of the
Digital Economy A Report by the World Economic Forum in
collaboration with The Boston Consulting Group, April 2015 Which
Wheels to Grease? Reducing Friction in the Internet Economy A
Focus by The Boston Consulting Group, April 2015 The Growth of
the Global Mobile Internet Economy A Report by The Boston
Consulting Group, February 2015 The Mobile Revolution: How
Mobile Technologies Drive a Trillion-Dollar Impact A Report by The
Boston Consulting Group, January 2015 Delivering Digital
Infrastructure A Report by the World Economic Forum in
collaboration with The Boston Consulting Group, April 2014 From
Buzz to Bucks: Capitalizing on Indias Digitally Influenced

Consumers A Focus by The Boston Consulting Group, April 2013

Through the Mobile Looking Glass: The Transformative Potential of
Mobile Technologies A Focus by The Boston Consulting Group,
April 2013 FOR FURTHER READING
18.
19. The Boston Consulting Group | 17 About the Authors
Shweta Bajpai is a principal in the New Delhi office of The Boston
Con- sulting Group. Nimisha Jain is a partner and managing
director in the firms New Delhi office. Kan- chan Samtani is a
partner and managing director in BCGs Mumbai office. About
BCGs Center for Consumer and Customer Insight The Boston
Consulting Groups Center for Consumer and Customer Insight
(CCCI) applies a unique, in- tegrated approach that combines
quantitative and qualitative consu- mer research with a deep
under- standing of business strategy and competitive dynamics.
The center works closely with BCGs various practices to translate
its insights into actionable strategies that lead to tangible economic
impact for our clients. In the course of its work, the center has
amassed a rich set of proprietary data on con- sumers from around
the world, in both emerging and developed mar- kets.