Arun Tadanki, Managing Director, Yahoo! India

For us, the growth of the category is paramount. Internet penetration is 6 per cent and 70 per cent of that user base comes to Yahoo!, so the only thing we can do to grow is grow the category. One key area that can grow the category is the presence of more of local languages on the web. Web is still predominantly in English right now. Many steps have been taken towards creating local content, but there is a lot more that needs to be done. This year, we are looking at how we can make our service available in six different languages. We believe this will bring many more audiences to the medium.

Yahoo! India has been one of the key players in the digital space and with Arun Tadanki at the helm has taken some pioneering steps in educating advertisers and users on the digital medium and its potential. Despite its promise, the digital pie in India is still small.

Tadanki has over 17 years’ experience in managing various businesses in Asia. Prior to joining Yahoo!, he had worked for seven years at Monster.com, where he was President (Asia-Pacific & Middle East), reporting to the global Chairman & CEO. Before Monster, he had worked at JobsAhead for two years (a company subsequently acquired by Monster). He had started his career at Nestle, where he was eventually heading the Culinary Business comprising the Maggi range of products.

In this interview with Noor Fathima Warsia, Tadanki speaks on how Yahoo! is viewing the medium and what are some things that can be expected from Yahoo! in 2011.

Q. In India, who is key competitor for a Yahoo! – the local media properties, social media or the likes of Google and Microsoft?

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In a market like India, where Internet penetration is 6 per cent and the share of digital advertising is 4 per cent, it would not be right if you look at the category like it exists today. Our focus is very less on what others are doing and a lot more on what we are doing to drive revenues on digital as a medium. It will benefit us all. Even when we speak to advertisers, we speak more on the category than as an individual, and I do think that is the focus for all of us right now. This is not the category in which you can say who is a competitor and who is an opportunity. Take the example of social media. On the one hand, it is competition, but on the other hand, it is a huge opportunity. We allow readers to link our content through their social media accounts, and that in turn, brings more readers to that content. The key is to operate like an open source and let users choose how they want to use media.

Q. The digital pie is still stuck at 2 per cent to 4 per cent in India. How does someone such as Yahoo! view this?

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There is no doubt that the pie is small. If you see the components of digital advertising market today, it is divided equally between search and display. And there are largely small and medium sized advertisers or performance-driven advertisers that have come on the medium at present. This advertiser category does not constitute the large pie of advertising. That is still FMCG, telecom and such categories. This is one reason why the digital ad pie is still so small. At Yahoo!, we are working on addressing this. We are trying to focus on large advertisers and help shift some of their investments from offline to digital media. But that process, to leverage a new media like Internet, will take time.

Q. Has this helped you in the manner you had expected?

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It helps in creating awareness and gives a perspective to the advertisers. It also opens curiosity in their minds as to what they could possibly do with the medium.

Q. Being a media owner, when you are connecting with advertisers or agencies, which conversations do you find more informed and productive?

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All of them actually. One of the fundamental differences between promoting a digital solution versus something like TV and newspapers is that the latter are well established mediums and even if you dealt only with the agency, it was enough. It would contribute to the growth of the medium. But when you talk about a new medium, you have to talk to advertisers along with the agency, as the advertiser needs to have a certain basic understanding of what the medium can do and hence, commit to spending on the medium. But it would be the agencies that would then detail and plan out what are the steps that would make sense to that advertiser. Many advertisers don’t have detailed knowledge to assess and evaluate proposals and agencies really make a difference in that. This is a medium that clients and agencies want to learn about, so we are able to really engage both.

Q. How do you build brand loyalty in digital medium? Unlike TV and print, it does not take long for users to change their online preferences...

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That is in a way true for media consumption per se. Consumers see different brands for different purposes such as search, chat, news and so on. If you see 2010, we had an average of around 70 per cent of Internet users visiting Yahoo! in India. Consumers come to Yahoo! for purposes relevant to them. For instance, content like cricket or movies or mails, chats -- everyone has a reason depending on what users want. Also, it is not as if people go to 100 sites, there would be a set of five to seven sites that consumers go to and for a respectable digital player, it is important to be in that set.

Q. What can we expect from Yahoo! India in 2011?

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For us, the growth of the category is paramount. Internet penetration is 6 per cent and 70 per cent of that user base comes to Yahoo!, so the only thing we can do to grow is grow the category. One key area that can grow the category is the presence of more of local languages on the web. Web is still predominantly in English right now. Many steps have been taken towards creating local content, but there is a lot more that needs to be done. This year, we are looking at how we can make our service available in six different languages. We believe this will bring many more audiences to the medium. At a tactical level, we have a campaign educating users about the medium itself, safe browsing and what they can do on the medium. Again, this is more work up from the grass-root level and it would take time before we start seeing results. We are also making investments in mass media such as television to create awareness with people who are not on the Internet yet, so you will see us really doing things with the intent to grow the category.

Q. By educating advertisers, you mean the case-studies that Yahoo! has been presenting to advertisers?

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Many advertisers have not tried the digital medium seriously for advertising. We had taken examples from different industries to give a sense of what digital advertising, when done right, can do for advertisers in similar or related categories. We have taken case studies like Citibank, Suzuki, Pepsi, Yatra, and so on. I truly believe that the medium is large enough and has immense potential in the market and advertisers need to understand the capability it has and see how it can be leveraged in the context of their brands.

Q. Many advertisers say they are upping spends – in fact, Maruti’s Chief was recently quoted that they are upping spends by 100 per cent in digital. So it would appear that large advertisers are also increasing digital spends?

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They are, but when you look at it from the total market perspective, there are clients who are spending 15-20 per cent of their budgets on digital, there are clients that are not spending any money at all. Hence, the average numbers become far lower. Since you quoted the Maruti example, it does not surprise us that there are clients who are looking to double their spends in digital this year. Most of them have been on the medium, and they know what digital can do for them.

Q. Among advertisers, it is not very surprising that there is a layer of early adopters who experiment with new kinds of media, but is the second and third tier of advertisers also spending now?

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First, everyone must understand, the early adopters are not necessarily the bigger brands, and for several reasons. From a big brand’s perspective, these are brands with a large consumer base and perspective. For them to do something new, needs to be a certain size and scale so it creates an impact. Brands that have spent early are brands that have been more performance-oriented, like commerce sites. They have a way of looking at it also, so they spent X and they expect a response to that. There is instant gratification in the message, so it becomes a bit of a no-brainer to utilise the medium.

Q. But these are also brands that brought about things like click-through and such metrics, which have proved counter-productive to the digital medium’s growth...

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I completely agree. I have maintained in the last two years that I have been here that click-through and sales leads are a very myopic way of looking at digital advertising effectiveness. When we do campaigns for large brands, we can show them the impact the campaign has had. It could be how many people have understood the message or how the brand preference has shifted because of the investment they have made online. We take controlled sample of people who have seen the ad online and not seen the ad online. With everything else like TV exposure being equal, this gives you the incremental impact of the digital activity. We can show advertisers how digital has helped them and their returns on digital spend.

Q. About how much time?

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Not something one can predict, is it? Many advertisers still don’t understand how large the numbers of internet users are. I draw this comparison to give a perspective at times, but Internet today has three times the audiences that the combined readership of English newspapers has. And yet only one-tenth of ad revenues of what English commands, is on digital. Despite this large audience, advertisers have yet not shifted dollars to digital from other media. One aspect of that we are trying to do is educate advertisers on the kind of numbers that are available on digital today. The second part is to tell advertisers how they can build brands online. Some brands are sold out on the idea of digital, but the bigger question is what and how. Things are changing, but it takes time before the shift happens. We have seen this in many markets – there is always a time lag between when consumers come online and how soon advertisers follow. One other thing to note here though is that while the digital pie is still small, it is growing much faster than the overall advertising pie.