Trends of 2011 - Digital goes mainstream

The year 2011 witnessed phenomenal changes in the way we consume digital data, be it social network, net banking, buying goods or accessing information. The changes have been evidently pointing at a rapid inclination towards digitalization. The reach of Internet has been one of key driving features. In India, we have gigantic pool of Internet users, which roughly come up to 80 million. We are accepting newer technologies within our reach with wide arms; like about 6 months of 3G services has managed to garner 10 million 3G connections, which is almost equal to wireline broadband connections. There are several factors which have helped achieve this feat like wider acceptance of 3G, Internet connected devices and more. The Avendus report states the increasing digital trends and several factors that still need to be taken care of. Let’s unfold them one by one. 

PC/Mobile penetration
One of the key factors triggering the increase in the use of Internet is larger penetration of PCs. The increase in the number people opting to use Internet services for errands is obviously directly proportional to the time users spend online. This year has shown a rise in awareness as the penetration in tier II/III cities and towns has been faster, though it’s dominated by tier I cities. The increase in mobile users and introduction of 3G services has also played an essential role in the growth. However, on a whole, India contributes to only 7 percent of the global Internet use. Although there are 55 million PCs in India there seems to be only 15 million PC broadband connections (estimated to grow to 216 million by 2015). Likewise, the number of Internet users is expected grow to 38 million by 2015. These changes could come through the introduction of 4G services, wider acceptance of 3G and easier accessibility to data cards and net banking.

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Social networking
Indian Internet users have been very active on the social networking front. There are three key players in personal networking, professional networking and micro-blogging, which is currently dominated by Facebook, LinkedIn and Twitter respectively. In India, Facebook has 33 million users (until August 2011) and Twitter has become the preferred micro-blogging site with 3 million users that include celebrities, sports-persons and business tycoons, too. Google+ got its initial sign-ups, but struggled then on. However, the Indian social networks didn’t seem to hit the right chords and we didn’t see much from Gogio, ibibo and others. Some companies have leveraged on the Facebook platform, such as Zynga and its popular games like Farmville, Cityville and so on. Zynga is now purportedly estimated to have a higher valuation than Electronic Arts. In fact, social networks is a threat to portals and other Internet activity as users tend to spend their free time on these sites.

Advertising
Taking into account the overall advertising market, about 7 percent is online, which is driven by video, mobile and social advertising. In fact, online videos get the majority share of their income through advertisements, rather than subscribership. The online classifieds have already made their mark in the Indian terrain and it isn’t something new for the year with players like Naukri.com, Shaadi.com, Sulekha and more contributing to about 41 percent of online advertising trend. Facebook advertising has added another feather in the cap and Google and Facebook together contribute to 29 percent of the overall advertising revenue. Portals like Yahoo!, Rediff, Web18, Times Group and some more account for 22 percent.

Online advertising comes from...

eCommerce
Now, before we begin, the eCommerce in the Avendus report has been sub-segmented into online travel and e-tailing.  The ecommerce market in India is estimated to be around Rs.28,500 crore for this year and online travel contributes to a sizeable 87 percent of the market. The online travel penetration is 28 percent in India, which is comparatively higher than China and Japan. It is currently dominated by ticket bookings with air and railways, while bus, hotels and tour packaging is catching up. MakeMyTrip stands atop the list with 44 percent market share, followed by Yatra and Cleartrip. The Indian railways has become the undisputed winner when it comes to online ticketing. On the other hand, e-tailing had a slower and sluggish start. However, it is believed to get a typically slow start, which invariably increases to become a dominant force as the sector evolves. The two factors responsible for the slow start are the lack of touch, feel and time to build consumer trust and comfort. This notion has changed, and now we have more consumers who prefer buying goods online. Some Indian e-tail players are Flipkart, Futurebazaar, Homeshop 18, Fashionandyou, Bestylish and Letsbuy. Though companies spend years before getting into mass media, Flipkart, Bagittoday and Infibeam have been doing well. Flipkart seems to be leading and estimates to cross Rs. 300 crore in the FY 2011-2012, which is more than four times its revenues in 2010-2011.