Covid-19 Is Exposing the Digital Marketing Fallacy in Tier-I India
How do you maximise RoI from your marketing efforts in regional India?
We’re spending too much money wooing Tier-I India.
There are more people outside Tier-I India. More people have smartphones and internet access outside the big 40 cities. There are more customers in the other 3,960 cities in the country.
And yet, as a nation, we spend the bulk of our digital marketing budgets on the around 100 million people who live in the biggest cities. That’s about 7.3% of the country.
The Lockdown’s Eureka Moment
As we are all forced to sit at home, OTT platforms have been thriving. After all, it’s just so much easier to watch a movie with lunch when you are working remotely!
In fact, this trend was spotted by our internet service providers who expected an average 20% bump in data usage after the lockdown was announced. With video streaming apps reducing the quality of their videos upon government request, the number has been closer to 10%.
For a second, let’s go back to that around 100 million — or 7.3% of the population — number. If you taken into account the number of smartphones in India today (over 500 million as of the new year), that number suddenly becomes nearly 20% of the country’s online population.
Think about that ratio for a second. 7.3% of India’s population — the population that lives in bigger cities, with larger salaries and costs — constitutes 20% of the digital market. No wonder we spend the bulk of our digital marketing budgets on them!
However, for the first time since the Jio Revolution swept the country, Covid-19 is showing us exactly the patterns of usage that we have been ignoring. As millions of internal migrants return home with the closure of daily wage work, there seems to be a clear signal on the relative potential of both markets.
As the average data usage in India has gone up 10% since the lockdown, Delhi has only seen a rise of 3% (including some districts where it has dropped). Meanwhile, states like Assam, Himachal Pradesh and West Bengal have seen rises of 13%, 14% and 15% respectively.
There is clearly a huge gap in internet usage between Tier-I India and the rest of the country. But, is there enough money in regional India for companies to turn a profit?
Is There Money To Be Made In Tier-II & Tier-III India?
Despite the fact that per capita incomes in the metro dwarf those in other parts of India — Delhiites have triple the average national income — there is a lot of money to be made in regional India.
According to ET, 88% of Amazon India’s new customers in 2018 came from Tier-II and Tier-III India! The previous Diwali, they had even managed to get at least one order from 99.3% of Indian pincodes registered on their site!
Similarly, on the eve of the SBI Card IPO last month, MD & CEO Hardayal Prasad claimed that regional India was the way forward for the company with the highly praised public listing. SBI Card had seen the future as far back as demonetisation. They had 58% of their new users come from Tier-II and Tier-III India!
As Prasad succinctly puts it, “that [regional India] is where the growth lies.”
Disproportionate Sums Are Being Spent On Metro Cities
Regional India has more people than Tier-I India. It has more smartphone purchases, and it has more data usage. It has been targeted by giants like Amazon and SBI Card, and yet, the rest of us tend to shy away.
If there is one lesson to learn from this pandemic, it is that we have been ignoring a large population of India for too long. The richest 7.3% of India’s population may control 20% of the online market, but that still leaves 80% (and rapidly growing) of the market ripe for opportunity.
The best part? They are ready to trust the Internet to make purchases. Arha Media, a paid subscription OTT platform for Telugu content targetting regional Andhra Pradesh & Telangana, celebrated a million downloads a little over a month after they launched.
Similarly, our internal research at Lokal shows that over 80% of our users have purchased an item from at least one e-commerce mobile application in the last six months. Remember, we are talking about an audience that is 99.6% from Tier-II, Tier-III and Tier-IV towns in Andhra Pradesh & Telangana!
Are you unsure of how your business’ marketing efforts can be redirected to maximise RoI from regional India? Please reach out to me at email@example.com, or at firstname.lastname@example.org.
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