Post on 31-Jan-2020
The digital imperative in SEA
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September 2017
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Executive Summary
Digital penetration: Video, vernacular, and views 650M+ users will be online by 2020 | Time spent on Digital same as TV
Digital households: More valuableSpend 2X of non-digital HHs | Riding the natural wave
Digital influence: Large, brace for exponential growth$45B digitally influenced FMCG consumption by 2020 | 7X e-commerce
Winning strategy on digitalDigital playbook for FMCG organizations
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Digital penetration:An all-pervasive force
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India’s Internet user base is expected to surpass the population of G7 countries.
Digital penetration:An all-pervasive force
Sources: TRAI, March 2017, BCG CCI Digital Influence Study, 2016
2016 2020
Population of G7 countries
Internet users in India
0
100
300
500
700 650+Million
650+Million
~390Million
~600–650 Million
55
Time spent on digital was the same as time spent on TV in 2016.
Digital penetration:An all-pervasive force
Time spent by urban internet users with digital access on various media channels (Hours/day) in 2016Source: BCG CCI Digital Influence Study, 2016
3.6 Hours
Digital: 1.5 Hrs
TV: 1.5 Hrs
Print: 0.6 Hrs
Vernacular
Video
Views
6
Digital video has grown significantly over the past two years.
Digital penetration:An all-pervasive force
Source: BARC Broadcast Survey of India 2016 (BARC Urban Universe 15+); BCG analysis
of TV reach
Digital video reach 2015
Digital video reach 2017
Urban TV reach 2017
in two years3x
60M 200M 275M
2/3
7
There’s been a significant boom in digital video since last year.
Digital penetration:An all-pervasive force
Given as a % of users trying the mentioned activity for the first timeSource: BCG TiE Billion Digital Volcano Study, 2017
0
10
20
30
40
50
Key activity being tried out for the first time on mobile by adopters on a new entrant’s network
11% 14%24% 28% 31%
42%
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Consumers are increasingly searching, viewing, and demanding content in their local language.
Digital penetration:An all-pervasive force
2X
5X
10X
Higher growth in Hindi content consumption on websites than English content
Growth in watch time forregional content on YouTube
Growth in “local language”searches over the past 18 months
88% of Indian-language internet users are more likely to respond to adigital advertisement in their local language than they are to one in English.
Sources: Google Internal Data, Indian Languages - Defining India’s Internet report 2017
99
Consumers turn to digital to look for views of advocates.
Digital penetration:An all-pervasive force
6X 5XCooking Beauty and
FashionWatch time YoY growth
Watch time YoY growth
On YouTube... ... and on search
0
20
40
60
80
100
100
80
40
5
Food & recipes Beauty & personal care
Baby care Home care
Sources: Google Internal Data, YouTube Watch Time growth in H1’17 vs H1’16, Monthly Searches Indexed to the largest category (Jul’16-Jun’17)
1010
Higher searches for “problem solutions” vs “products”
Sources: Google Internal Data Jan’17-Jun’17; Relative Search Volume for different spaces
Digital penetration:An all-pervasive force
Skin care
Oral care
Hair care
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Digital households: More valuable
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Consumers with digital access spend 2X more on FMCG than offline consumers.
Digital households: More valuable
Relative spends on purchased product in Online Household to Offline Household; Online Household defined as a household with access to internet via Desktop, Laptop, Tablet or Smartphone Source: IMRB Kantar Worldpanel 2016
Home care
Food andbeverages
Personal care
13
Consumers with digital access spend even more on natural brands.
Digital households: More valuable
Relative spends on purchased product in Online Household to Offline Household; Online Household defined as a household with access to internet via Desktop, Laptop, Tablet or SmartphoneSource: IMRB Kantar Worldpanel 2016
+25%+22% +64%
1.5
Average Naturalbrands
Average Naturalbrands
Average Naturalbrands
1.4
2.32.21.8
1.2
24
Skin creamShampoo Toothpaste
14
Digital influence: Brace for exponential growth
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$45B digitally influenced FMCG consumption by 2020.
Digital influence: Brace for exponential growth
Digitallyinfluenced
spend
E-commerce
$6-7B $45B*
Digital influence is defined as the use of internet for conducting pre-purchase, purchase & post-purchase activitiesSources: BCG CCI Digital Influence Study – 2016; BCG – RAI report: “Digital in Retail”, Feb 2017; *Constant currency
*7X of e-commerce in 20202016 2020
40%
10-15%
$7-10B
$45B
1616
<25% 25%-50% >50%
Digital influence by category.Digital influence: Brace for exponential growth
Digital influence is defined as the use of internet for conducting pre-purchase, purchase & post-purchase activitiesSources: BCG CCI Digital Influence Study – 2016
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28M elite + affluent households (HHs) contribute 60% of digitally influenced consumption.
Digital influence: Brace for exponential growth
Sources: BCG CCI Digital Influence Study – 2016; BCG – RAI report: “Digital in Retail”, Feb 2017
Next billion + strugglers
Total 265M 287M
Aspirers
Affluent
Elite
Type of HH basis annual incomeNo. of HHs (million) 2015
No. of HHs (million) 2020
Consumptioncontribution 2020
Digitally influenced FMCG consumption 2020
20 (8%)
224 (84%)
11 (4%)
10 (4%)
31 (11%)
228 (80%)
13 (5%)
15 (5%)
22%
40%
39%
18-20%
18-20%
60-65%
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Higher digital influence was observed in relatively underpenetrated categories.
Digital influence: Brace for exponential growth
Source: BCG CCI Digital Influence Study – 2016
5x 5x 5x
2x 2x
1.2x1.5x 1.5x
1x 1x
3xUnderpenetrated categories
Penetrated categories
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Winning strategy on digital
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Digital spend doesn’t equal time spent by consumers on digital.
Winning strategy on digital
90%
2016Others Digital
10%
$ $ $$ $ $$ $ $
$ $ $$ $ $$ $ $
Share of advertising spend on different formats (%); Others includes Print, TV, Radio, Cinema and Outdoor.Sources: Pitch Madison Advertising Report – 2017; Google Internal YouTube Auction Data, 2017; BCG analysis
3X
While costs of online video advertising reduced by 66% in last two years
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Advertisers lag for multiple reasons.Winning strategy on digital
Source: BCG–Google CXO Survey, Aug-Sep 2017
63%
38%
13% 13%
Lack of clarity on what to do in digital/returns from digital
Limited capability in the organization for digital
Inertia of current way of working/ traditional media
Lack of awareness of importance of digital
What stops you from spending more on digital?
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Advertisers lag for multiple reasons.
Source: BCG–Google CXO Survey, Aug-Sep 2017
Winning strategy on digital
Clear understanding of returns on digital spend with defined metrics
Metrics in place with limited linkage to business results
Limited understanding of returns from digital campaigns
75%25%0%
Which of the following best represents the current state of your digital impact measurement?
2323
Companies are aware of importance but leadership isn’t spending adequate time driving digital.
Winning strategy on digital
Source: BCG–Google CXO Survey, Aug-Sep 2017
25% 75%
>10% of the management committee’s time
<10% of the management committee’s time
0%63% 37%
Is progress on digital strategy clearly monitored and discussed with the management committee?
Do you see using digital as one of the top priorities for your business?
Top 5 Top 10Top 3
2424
Magnitude and shape of digital influence varies significantly based on intent of consumption and category penetration.
Winning strategy on digital
Intent: Conventional usage Intent: Solutions space
Soap, home cleaner,edible oil, etc.
Penetrated categories
Hand wash, deodorant, conditioner, etc.
Underpenetrated categories
Weight loss, natural breakfast, hair style, etc.
Problem solutions space
Increasing order of digital influence
2525
Brands can follow a simple approach to understand how best to approach digital.
Winning strategy on digital
Intent: Conventional usage Intent: Solutions space
Remain relevant and capture attention. Use digital as one more medium to engage the customer.
Penetrated categories
Think digital first, invest in online for cat. creation. Think digital first to target the right customers and create/adapt content specially for digital.
Underpenetrated categories
Establish content destination backed by authority of trust. Drive association with trust, build familiarity, and use insights for innovation.
Problem solutions space
Increasing order of digital influence
2626
The share of digital in ad spend for FMCG can potentially grow to ~30% by 2020.
Winning strategy on digital
Share of advertising spend on different formats (%)
Others Digital
70%
25-30%
50-75%
2020
Can be significantly higher for select, premium spaces
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Key implications for FMCG companiesWinning strategy on digital
Digitally influenced spend in FMCG likely to rise to $45B by 2020
Significant growth of 3 Vs: Video, vernacular, and views
10% of households to account for 60% of digitally influenced FMCG consumption by 2020
Extent and nature of digital influence depends upon the intent of consumption and category penetration
Spend in digital is under-indexed. Organizations are unclear of how to leverage digital effectively.
The new reality
Leverage digital across touchpoints in consumer journey
Actively create and shape the digital strategy around the 3 Vs
Invest in data driven marketing to win with these HHs
Index the extent of digitally based relevant categories; differen-tiated approach for different spaces
Institute the right measures of performance for digital spends and build capability in the org.
Call for action
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Are we ready to make the shift?
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THANK YOU September 2017