The impact of doing things in an environment which produces required results as expected.

1. 1
Executive Summary
Digital penetration: Video, Vernacular, Views
650M+ users will be online by 2020 | Time Spent on Digital same as TV
Digital Influence: Large, brace for exponential growth
$45 Bn digitally influenced FMCG consumption by 2020 | 7X of E-commerce
Winning Strategy on Digital
Digital Playbook for FMCG organizations
Digital Households: More valuable
Spend 2X of non-digital HHs | Riding the Natural wave

2. 2

3. 3
India's internet user base expected to surpass
the population of G7 countries
~600–650
Million
650+
Million
~390
Million
Population of
G7 countries
Internet users
in India
2020
2020
2016
Sources: TRAI, March 2017, BCG CCI Digital Influence Study, 2016

4. 4
Time spent on digital is the same as time
spent on TV in 2016
Video
Vernacular
Views
Print
Digital
TV
Time spent by urban internet users with digital access on various media channels (Hours/day) in 2016
Source: BCG CCI Digital Influence Study, 2016

5. 5
Digital Video has grown significantly over the
past 2 years
60M
200M+
Digital Video Reach
2015
Digital Video Reach
2017
3X in 2
years
275M
2/3 of TV
Reach
Urban TV Reach
2017
Source: BARC Broadcast Survey of India 2016 (BARC Urban Universe 15+); BCG analysis

6. 6
Significant boom in Digital Video since last year
Video calls
28%
Video downloads
31%
Video online
42%
Gaming
11%
Music downloads
14%
Online music
24%
Key activity being tried out for the first time on mobile by adopters on a new entrant's network
Given as a % of users trying the mentioned activity for the first time
Source: BCG TiE Billion Digital Volcano Study, 2017

7. 7
Consumers are increasingly searching, viewing
and demanding content in their local language
Growth in ‘Local language’
searches over the past
18 months
Higher growth in Hindi content
consumption on websites than
English content
Growth in watch time for
‘Regional’ content
on YouTube
2X
5X
10X
88% of Indian language internet users are more likely to respond to a
digital advertisement in their local language vis-à-vis English
Sources: Google Internal Data, Indian Languages - Defining India’s Internet report 2017

8. 8
Consumers turn to digital to look for “Views” of
Advocates
On YouTube…
Cooking
Watch Time YoY Growth
Beauty & Fashion
Watch Time YoY Growth
6x 5x
…and on Search
100
90
45
Food &
Recipes
Beauty &
Personal
Care
Baby Care Home Care
5
Sources: Google Internal Data, YouTube Watch Time growth in H1’17 vs H1’16, Indexed Searches (Jul’16-Jun’17)

9. 9
Higher searches for “Problem Solutions” vs
“Products”
Hair
Treatment
Skin Treatment /
Dark circles
Whitening
5x
1.8x
7x
Hair growth / fall
Acne/
Pimple
Pain / Ache
5x
1.9x
32x
Hair style
Home remedy for
skin
Ulcer
6x
6x
2x
Hair oil
Moisturizer
Toothpaste
2x
1.6x
x
Shampoo
Cream
Toothbrush
x
x
2x
3x
0.6x
Top searched
brand
Hair Care
Skin Care
Oral Care
Top searched
brand
Top searched
brand
4x
Sources: Google Internal Data Jan’17-Jun’17; Relative Search Volume for different spaces

11. 11
Consumers with digital access spend more 2X
more on FMCG than offline consumers
Personal Care
Food and Beverages
Home Care
1.4
Air Freshener Floor Cleaner Washing Powder Detergent Bar
4.4
2.4
1.1
1.9
Soups Chocolates Milk Food Drinks Edible Oil
5.4
2.9
1.1
1.8
Deodorants Diapers Shampoo Hair Oil
3.7
2.8
1.2
Relative spends on purchased product in Online Household to Offline Household; Online Household defined as a household with access to internet via Desktop, Laptop, Tablet or Smartphone
Source: IMRB Kantar Worldpanel 2016

12. 12
Consumers with digital access spend even more on
Natural brands
Shampoo
Average Natural Brands
1.8
2.2
+22%
Skin Cream
Average Natural Brands
1.4
2.3
+64%
Toothpaste
Average Natural Brands
1.2
1.5
+25%
Relative spends on purchased product in Online Household to Offline Household; Online Household defined as a household with access to internet via Desktop, Laptop, Tablet or Smartphone
Source: IMRB Kantar Worldpanel 2016

14. 14
$45 Bn digitally influenced FMCG
consumption by 2020
2016 2020
7-10 Billion
(10-15%)
45 Billion
(40%)
7X of E-commerce in 2020
E-commerce Digitally
influenced spend
$ 6-7
Billion
$ 45
Billion*
Digital influence is defined as the use of internet for conducting pre-purchase, purchase & post-purchase activities
Sources: BCG CCI Digital Influence Study – 2016; BCG – RAI report: “Digital in Retail”, Feb 2017; *Constant currency

15. 15
Digital Influence by Category
<25%
Grocery
Snacks
Oral Care
Household
Care
Baby care &
Pediatric
Health food
Nutraceuticals
Skin Care
Male
Grooming
Hair care
(Shampoo &
conditioner)
Fragrances
25-50%
>50%
Medium
Low High to Very High
Beverages
Digital influence is defined as the use of internet for conducting pre-purchase, purchase & post-purchase activities
Sources: BCG CCI Digital Influence Study – 2016

16. 16
28M Elite + Affluent HHs contribute 60% of digitally
influenced consumption
16
Elite
Affluent
Aspirers
Next Billion +
Strugglers
10
(4%)
11
(4%)
20
(8%)
224
(84%)
31
(11%)
228
(80%)
15
(5%)
13
(5%)
Type of HH basis
annual income
No. of HHs
(Million) 2015
No. of HHs
(Million) 2020
Consumption
Contribution 2020
Digitally
influenced FMCG
consumption 2020
39%
22%
40%
18-20%
18-20%
60-65%
265 Mn 287 Mn
TOTAL
Sources: BCG CCI Digital Influence Study – 2016; BCG – RAI report: “Digital in Retail”, Feb 2017

17. 17
Higher digital influence observed in relatively
underpenetrated categories
Perfumes
Baby care
2x
Shampoo & Conditioner
2x
Face cream, moisturizer
Dietary supplements
Health / nutrition food
Underpenetrated categories Penetrated categories
Hair Oil
Grocery & staples
Packaged food & bev.
Washing powder
Home cleaner
5x
5x
5x
3x
1.2x
1.5x
1.5x
1x
1x
Personal care
Food & Beverages
Consumer health
Home care
Source: BCG CCI Digital Influence Study – 2016

18. 18

19. 19
Digital spends ≠ Time spent by consumers on digital
Digital
Others
10%
90%
2016
While costs of online video advertising
reduced by 66% in last 2 years
x 1/3x
Share of advertising spend on different formats (%); Others includes Print, TV, Radio, Cinema and Outdoor.
Sources: Pitch Madison Advertising Report – 2017; Google Internal YouTube Auction Data, 2017; BCG analysis

20. 20
Advertisers lagging due to multiple reasons (1/2)
z
z
13
13%
Lack of awareness of
importance of digital
Intertia of current
way of working/
traditional media
Limited capability in
the organization for
digital
Lack of clarity on what
to do in digital / returns
from digital
63%
13%
38%
What stops you from spending more on digital?
Source: BCG–Google CXO Survey, Aug-Sep 2017

21. 21
Advertisers lagging due to multiple reasons (2/2)
Metrics in place but limited
linkage to business results
Clear understanding
on returns on digital
spend with defined
metrics
Limited
understanding of
returns from
digital campaigns
75%
25% 0%
Which of the following best represents your current state on digital impact measurement?
Source: BCG–Google CXO Survey, Aug-Sep 2017

22. 22
Companies aware of importance but leadership not
spending adequate time on driving digital
0
38
63
Top 3
75%
<10% of the
management
committee's time
>10% of the
management
committee's time
25%
Do you see using digital as one of the top priorities for
your business?
Is the progress on digital strategy clearly monitored and
discussed in the management committee?
Source: BCG–Google CXO Survey, Aug-Sep 2017
Top 5 Top 10

23. 23
Magnitude and shape of digital influence varies significantly
based on “intent” of consumption & category penetration…
Penetrated categories
Eg: Soap, Home cleaner,
Edible oil etc.
Intent: ‘Conventional’ Usage Intent: 'Solutions' space
Under-penetrated categories
Eg: Hand-wash, Deodorant,
Conditioner etc.
'Problem solutions' space
Eg: Weight loss, Natural breakfast,
Hair style etc.
Increasing order of digital
influence

24. 24
…thus, brands can follow a simple approach to understand
how best to approach digital
Use digital as one more medium
to engage the customer
Think ‘digital first’ to target the
right customers & create / adapt
content specially for digital
Drive association with trust, build
familiarity, & use insights for
innovation
Penetrated categories
Underpenetrated categories
Remain relevant &
capture attention
Think digital first, invest
in online for cat. creation
Establish content destination
backed by authority of trust
Intent: ‘Conventional’ Usage Intent: 'Solutions' space
Increasing order of digital
influence
'Problem solutions' space

25. 25
Share of digital in ad spend for FMCG can
potentially grow to ~30% by 2020
Digital
Share of advertising spend on different formats (%)
25-30%
Others 70%
2020
Can be significantly higher
for select, premium spaces
50-75%

26. 26
Key implication for the FMCG Companies
The New Reality Call for Action
Institute the right measures of performance for
digital spends and build capability in the org
Leverage digital across touch points in
consumer journey
Actively create and shape the digital strategy
around the 3’V’s
Invest in 'data driven' marketing to win
with these HHs
Index the extent of digital basis relevant category;
differentiated approach for different spaces
Digitally influenced spend in FMCG likely to
rise to $ 45 Bn by 2020
Significant growth of 3Vs –
Video, vernacular, views
Spends in digital under-indexed: organizations
unclear on how to leverage digital effectively
10% of households to account for 60% of digitally
influenced FMCG consumption by 2020
Extent & nature of digital influence depends upon
the intent of consumption & category penetration

27. ARE "WE"
READY TO
MAKE THE
SHIFT?

28. SEPTEMBER 2017
THANK YOU