Telecom firms like MTS India, Vodafone India, Aircel and others ramp up digital ad spends

MUMBAI: Indian telecom companies are ramping up spending on digital advertising as their business models tip in favour of data customers.

Some companies are earmarking 15-50% of their advertisement budgets for the digital medium compared with 5-10% a couple of years ago, experts say. The increase reflects telecom carriers? growing dependence on internet/data consumers to drive sales.

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MTS, which depends on sales of its Internet connection dongle, spends nearly 50% of its advertising budget on mediums such as YouTube, WhatsApp and Instagram, up from 7-10% in 2012, according to Amitesh Rao, director - brand & media, MTS India.

Rao did not ascribe a rupee value but said the company's overall spending on advertising has not changed since then.

Sistema Shyam Teleservices, which owns the MTS brand, had run an ad showing a newborn baby grabbing a cellphone to take a selfie with the nurse.

The video ran on TV for only a few weeks but got 27 million YouTube hits over the year.

Digital advertising, which two-three years ago accounted for 5-6% of Vodafone India's advertising budget, has taken center stage at the country's second biggest mobile phone operator.

The carrier's chief marketing officer Vivek Mathur said spending on digital advertising has risen to 15%, as is also the case with Aircel, which has high penetration in south India.

Vodafone India's annual advertising budget is estimated at Rs 200 crore, of which nearly half goes toward television. The rest is split between print, digital, out of home, and event sponsorships.

In contrast, Uninor, which operates in six circles and offers voice services in prepaid format, is still developing digital presence.

"Uninor is focusing on enhancing and building digital capabilities and presence on this media," said Rajeev Sethi, its chief marketing officer. "In future, we will be investing in building visibility across digital touch points to increase customer base."

For Idea Cellular, which has 60% dependence on rural customers, the estimated rise in overall spend on digital advertising is 35%, according to Shashi Shankar, its chief marketing officer.

Vodafone's Mathur said, "Bulk of advertising is still TV because it is the most cost-effective medium to reach a large number of people. But what?s useful about digital is it helps in catching the customer at the right moment."

Some companies see returns as the biggest advantage of digital advertising. "Due to the high effectiveness of the digital medium, it offers better RoI (return on investment) as wastage is reduced by having very specifically targeted communication," said Shankar of Idea Cellular, India's No. 3 carrier.

"Also, the rates are not just basis impressions, but basis conversions as well, in some cases."

Furthermore, since telecom companies own the customer database, they can tap users in more unique ways.

For example, Vodafone allows developers using its platform to sell their applications. They can also use the operator's customer database to promote these applications.

Vodafone then bills customers on behalf of the application developer, sidestepping the need of a credit card and the hassle of ID creation for AppStore or Google PlayStore.

Using digital advertising can also accelerate such revenue opportunities for telecom operators, Mathur said.

"There is a lot that is happening in self-discovery. The amount of growth that happens in consumption is such that today people go from 200 MB to 700-800 MB very quickly."

However, when returns are measured, the results show a very gradual uptick. The key, Mathur said, was in splicing the data.

In the 16-25 year age group, the growth in consumption and therefore opportunity for digital advertising is exponential, he added.