By Contributing Editor Dianna Huff

India's middle class is young, growing rapidly and very familiar with US brands. More than 150 million Indians speak English, and they’re doing everything from buying items to paying bills online as well as purchasing mobile content.

The impression in America is that the Indian marketplace is booming. The good news: it is, compared to where it was a year ago. The bad news: it's smaller than you think, and there are significant challenges to overcome for ecommerce or consumer lead generation.


Quick Backgrounder: Demographics & Internet Usage

With 1.1 billion people, India is second to China in terms of population, and its gross national income per capita remains low at $630 US for 2004, according to The World Bank.

While Hindi is the country’s national language (the government recognizes 22 languages), India has the second largest population of English speakers in the world -- more than 150 million -- which they learn in school. However, this is just under 14% of India’s total population, so that number has room to grow. (Note: America's English-speaking population is around 250 million.)

More than 500 million Indians are under age 21, and the country’s median age is 24.6 vs 30 in China, 36 in the US and 38 in the UK. Of those, more than 70% live in 550,000 villages and the remainder in 200 towns and cities, according to the Census of India.

Tight family connections and low incomes mean adult children often live with their parents until well after marriage. The marriage business is big business, with arranged marriages still the norm. In fact, similar to US dating sites, Shaadi.com, India's biggest matrimony portal, dishes up love and relationship information and member profiles for those looking for spouses online.

By early 2006, India had close to 1 million broadband subscribers (a penetration of less than 0.1% of the total population). Currently, only 4.5% of the Indian population is online: business account for 45% of the country's Internet connections and households 55%, according to global telecom researcher Paul Budde Communications, quoting a study by the Manufacturers Association of Information Technology and the Indian Market Research Bureau. However, 60% of Indians who use the Internet routinely use one of the country’s 15,000+ cybercafés.

The typical Indian is online a scant three hours per month, according to global telecom researcher Paul Budde Communications. So what is he or she doing online? According to research conducted by India's Economic Times newspaper and a private online research firm, 89% of respondents are emailing and 86% regularly check blogs. Ecards (i.e. sending email postcards) came in at 57%, while job searching and reading news tied at 53%.

Other consumer online activities, according to Joy Das, Business Head Media & Analytics at Indian agency BC Web Wise, include music, video and software downloads, playing games and instant messaging.

Indians also pay bills online -- again, the 0.3 million people doing so represents only a fraction of the market -- with the average Indian household with Internet access in the top 10 cities paying 42 bills online annually to insurance, finance, telecommunications and utility companies, according to the Online Bill Payment 2006 report by the Internet & Mobile Association of India.

Like natives of most countries with underwhelming telecom infrastructures, Indians have embraced mobile phones. The country had 77 million subscribers by the end of 2005 and was seeing an annual growth rate of 60%. Mobile services revenues (think horoscopes, cricket scores, SMS, ring tones and the like) have increased every year since 1996 and topped $5.6 million US in 2005. (See link below for regulatory issues regarding wireless.)


Top Four Challenges for Westerners Marketing to India

Want to market to India? Here are four hurdles you need to overcome for your campaign to be a success.

-> Challenge #1: Indians are used to poor quality merchandise

"Indians, by nature, are more comfortable 'touching and feeling merchandise' before purchase," says Rajat Sethi, CEO of agency Wunderman India. "This comes from a history of being wary of poor quality merchandise."

-> Challenge #2: Deliverability issues

Sethi also says most Indians have a lack of confidence in timely delivery, again because of that history of deliverability problems.

-> Challenge #3: Online fraud angst hinders ecommerce

Indians like to use credit and debit cards, but not to make online purchases because they’re afraid of online credit card fraud. India lacks a "safe" online payment system. (Startups such as Wallet365, which began operating in June 2006 and is based on PayPal's model, are trying to change this but still don’t have traction.

One area of online growth has been travel. "Travel has traditionally been marketed offline and through mom-and-pop businesses across the country, but we're now seeing 20% of our Indian users searching for travel services," says Beatrice Tarka, CEO of travel search engine Mobissimo.

Indians aren't booking flights out of the country. Instead, they’re looking for low-cost domestic flights, Tarka says. A flight between two of India’s secondary cities costs only $25-$50 US thanks to new low-cost airlines that have sprung up.

Getting Indians to pay for these tickets online remains a challenge. Hence, airlines have formed partnerships with gas stations so = travelers can go to a gas station to pay for the transaction in cash or with a money order.

-> Challenge #4: Price sensitivity

"Indians are bargain hunters," says Raj Ganesan, Director of Planning & Performance Management for The Hackett Group. "Even if you’ve done research and have priced your product well, Indians will ask to pay less than the quoted price."

Because of low incomes and the emerging market, trial pricing is very important, says Cesar Brea of Marketspace Advisory. He advises marketers pursuing long-term brand loyalty to get the message and pricing right at the outset. "To encourage trial, don't be afraid to experiment with price."

Email contests with "free" or "save" in the subject line get about 10% to 12% clickthrough rates, adds Sethi. "It's all about the hook and relevance of the subject matter and headline. What marketers in the States may consider old-fashioned, again promotional messages, work really well here in India."


Three India-Specific Online Marketing Tips

-> Tip #1: Go viral

"If you want to spread your message, you have to think about how people in groups relate and interrelate," Brea says. "Recognize family and extended family is important. You should have less reliance on straight banner ads and more on email and SMS to propagate your message."

Wunderman India did a viral campaign for Microsoft's Office Live Meeting, "It was basically targeted at senior executives for whom extended travel is a pain point, and the idea was for them to share their negative experiences and for the viral to lead them to the Microsoft Live Meeting Web site," Sethi says.

Here are three consumer examples of viral campaigns:

1. BC Web Wise, the online agency for Hindustan Lever, rolled out the sunsilkgangofgirls.com site for Sunsilk shampoo with online advertising. The entire site works on a viral platform where the concept is for women (ages 15-25) to blog, discuss hair issues on forums and learn more about hair care.

In just five weeks, the site had more than 100,000 women sign up. In fact, Unilever promoted a variant shampoo product as the online consumer insight it gleaned also mirrored its offline market research feedback.

2. Makeyourmoves.com is another video viral campaign BC Web Wise created for Clinic All Clear. 3.2 million page views were generated in five weeks with 77,000 unique visitors and 14,000 registrations.

3. Webchutney's MakeMyTrip viral series, which was one of MarketingSherpa's top viral campaigns for 2006, promoted the India-based travel company’s competitive airfares.

-> Tip #2: Static banners and telemarketing follow-up

Highly trafficked Indian portals include Rediff.com, India123.com, IndiaTimes and the local versions of Google, MSN and Yahoo! These sites follow the same formats as US portals, complete with news feeds, links to "channels" within the portal, email, search and banner ads.

Creative for banners is similar to the US (indeed, you can barely tell the difference between Yahoo! India and Yahoo! US -- even the advertisers are the same). Because so many Indians use dial-up, creative is still mostly static and graphically "light" to save on download time.

According to Sethi, clickthrough rates for banners his agency places run anywhere from 0.5% to 2%. People will enter their contact info via a landing page (but not their personal financial info or a credit card number).

Lead generation follow-up is typically conducted by telemarketers to verify information. Yes, the same firms being used as US support call Indians during the day while Americans are asleep.

-> Tip #3: Learn Hinglish and get local approval on copy and creative

"Hinglish," according to the Christian Science Monitor, is spoken by 350 million Indians. A jumble of English and Hindi, Hinglish is often spoken in the same sentence -- as in, "I have hazaar things on my mind right now." ("I have thousands of things on my mind right now.") Because it's used mostly by urban youth, Hinglish is becoming more common in consumer advertising targeting young people.

Also be aware that India is a large country made up of 28 states -- each with its own dialect and culture. While it isn’t necessary to translate copy for campaigns running in major metro areas, you should run things by someone to ensure it doesn't commit a cultural faux pas.

"Coke's original theme, 'Coke is the real thing,' doesn't translate well in India," Ganesan says. "In Coke's major metro ads you'll see, 'Thanda matlab Coca Cola,' which means, 'Cold is Coca Cola.'"

Finally, don't forget India is a former British colony so it uses British spellings.


Useful links related to this article:

Creative Samples of 4 Indian Online Campaigns
http://www.marketingsherpa.com/cs/csindian/study.html


Top-tier Indian portals (in alphabetical order):

1. 123India
http://www.123india.com/

2. Google India
http://www.google.co.in/

3. MSN India
http://www.msn.co.in/

4. Rediff India
http://ia.rediff.com/index.html

5. Yahoo India
http://www.yahoo.in


Association sites:

1. Direct Marketing Association India
http://www.direct-marketing-association-india.org/

2. Internet & Mobile Association of India
http://www.iamai.in/

3. Internet Service Providers Association of India
http://www.ispai.in/

4. Mobile Marketing Association’s International Journal of Mobile Marketing (includes information on India and Southeast Asia, but you must print out and mail in a form to buy a copy)
http://www.mmaglobal.com/modules/content/index.php?id=3
8&submenu=mymenu6

5. Telecom Regulatory Authority of India
http://www.trai.gov.in/


Agencies/Consultancies listed in this article

1. BC Web Wise
http://www.bcwebwise.com

2. The Hackett Group
http://www.thehackettgroup.com

3. Webchutney Studios
http://www.webchutney.com

4. Wunderman India
http://www.wundermanindia.com/


Other businesses listed in this article

1. Budde Communications
http://www.budde.com.au/

2. GroupM
http://www.groupm.com

3. In Touch Media Group
http://www.intouchmediagroup.com

4. India Times
http://in.indiatimes.com/usdefault.cms

5. Marketspace Advisory
http://www.marketspaceadvisory.com

6. Mobissimo
http://www.mobissimo.com

7. PR Machine
http://prmachine.blogspot.com

8. Shaadi.com
http://www.shaadi.com/

9. Wallet365
http://www.wallet365.com


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