WINdia: Multiplying India’s Email Market Opportunity

Published June 2, 2024

1

Why So Small

In my essay in July 2021 (Part 13), I had estimated India’s email market at about Rs 175 crore. If we assume 15% CAGR in the past 3 years, the current market size comes to about Rs 260 crore ($31 million). As I have mentioned in the past, India’s email market size is less than 1% of the US email market size. The question to ask (and which we will discuss in this essay) is: what can be done to grow India’s email market? More usage of email can be hugely beneficial for brands in their Profipoly quest. I had ended my previous essay thus: “India with its low email usage (relative to WhatsApp) but very high penetration of Android and Gmail can be the perfect first market to try out many of these new ideas. WINdia, anyone?!” How can email win over India? Let’s begin by understanding why the email market size is not as big in India.

Mobile Dominance: The ubiquity of mobile devices in India has shaped consumer behaviour towards instant, app push notifications and in-app messages as the primary interaction mode. Mobile numbers are not only a universal identifier but also the preferred medium for receiving time-sensitive and actionable messages via SMS, WhatsApp, and RCS. This has overshadowed email, which is perceived as less immediate and interactive.

Focus on Acquisition and Brand Building, rather than Retention: In India, there is a predominant focus on capturing market share (“land grab” phase). Consequently, significant marketing budgets are directed towards adtech platforms that promise immediate visibility and customer acquisition, such as Google and Meta, neglecting the nurtured, long-term engagement that email marketing facilitates.

Preferences of Younger Audiences: Younger demographics in India, particularly millennials and Gen Z, show a marked preference for instant messaging apps like WhatsApp and social media platforms such as Instagram and Snapchat over traditional email. These platforms offer real-time communication, are perceived as more engaging with multimedia content capabilities, and align better with their lifestyle, which values immediacy and connectivity.  Email in India is often regarded by younger people as a formal mode of communication, primarily used for academic, official, or job-related correspondence. It lacks the casual and interactive essence that characterises the preferred communication styles of younger audiences. As a result, email is checked with less frequency and urgency compared to other messaging apps.

Urban-Rural Divide: While urban customers still use email, semi-urban and rural customers prefer other mobile-first channels. This disparity influences how brands tailor their digital marketing strategies, often prioritising more accessible and widespread platforms over email in less urbanised regions to effectively reach their audience.

Email Campaign Effectiveness: The prevalent “batch and blast” approach in India undermines the potential effectiveness of email campaigns. Unlike in the US, where email marketing is heavily personalised and integrated into customer lifecycle management, Indian brands often use email as a blunt instrument. This lack of segmentation and personalisation leads to diminished user engagement and portrays emails as mere digital billboards, contributing to high spam rates and low conversion. For US brands, email accounts for 20-40% of revenue, while in India, it is a fraction of that. Push notifications are the primary mechanism for brands to bring traffic to their website.

And yet, email has many advantages which Indian brands are missing out on.

2

Making It Big

There are many reasons why email can emerge as a powerful marketing channel in India.

Top of Pyramid Consumers: A little-known fact is that more than 100 million Indians open their inbox daily. This number goes to 150 million over a month. This demographic segment represents a substantial portion of the country’s consumer spending power. Thus, targeting this group via email could yield substantial returns for brands, given the direct access to a consumer base that is likely to have higher disposable incomes and a propensity for more frequent purchases.

Cost Effectiveness: Email costs 1-3 paise per message, while SMS costs 12-13 paise, RCS 25 paise, and WhatsApp 80 paise. Of course, WhatsApp open and engagement rates tend to be high, but for a brand with a base of a million, it is almost impossible to send anything other than email daily. Despite the higher engagement rates of platforms like WhatsApp, the economic efficiency of email makes it a viable option for regular, mass communication efforts, particularly for brands with large customer bases aiming for frequent interactions. What needs to be solved with emails is the problem of low open rates.

Shift from Acquisition to Retention: As the digital marketing landscape in India matures, a significant shift in focus from customer acquisition to retention is inevitable. Marketers are beginning to recognise that the high costs associated with continuous spending on adtech platforms often do not yield proportional returns, particularly as the market becomes more saturated and customer acquisition costs escalate. This realisation points to a substantial drain on profitability, prompting brands to reevaluate their strategic priorities. As this reevaluation unfolds, the role of email as a cost-effective and efficient tool for customer retention becomes increasingly crucial. Email allows for personalised communication and ongoing engagement, making it an ideal channel for nurturing customer relationships and enhancing loyalty. This shift towards retention through email not only helps in reducing overall marketing costs but also aims at increasing the lifetime value of existing customers, thereby improving the brand’s profitability and sustainability in the long run.

Future Numbers: A key factor in favour of email’s growth in India is the sheer size of the potential user base. It’s estimated that there are around 600 million smartphone users in India, and virtually all of them already have access to an email account. This provides a massive existing foundation that can be leveraged and activated. Moreover, as incomes continue to rise and digital literacy expands across India, particularly in semi-urban and rural areas, the pool of potential email users becomes even larger. It’s estimated that 450 million Indians currently do not actively use email, representing a significant untapped opportunity.

To grow email marketing as a channel (Mission WINdia), we need to bring in the six email innovations (AMP, Atomic Rewards, AMPlets, Action Ads, AM (Microns), and AI) and seven growth cogs (more users, more brands, more usage, more opens, more data, more actions, more revenue) that I discussed in my previous essay.

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Innovations and Growth Levers

Here’s a summary of the innovations and growth cogs:

Key Email Innovations

  1. AMP: Introduces app-like functionalities directly within emails to increase engagement and conversions.
  2. Atomic Rewards: Incorporates gamification and micro-incentives to drive higher email open rates and interactions.
  3. AMPlets: Adds interactive elements like games and puzzles to the email footer to capture attention.
  4. Action Ads: Enables actions like form submissions and payments directly within the email ads, creating a new revenue stream.
  5. AM (Microns): Delivers consistent, and relevant content daily to integrate emails into the user’s routine.
  6. AI: Leverages AI to craft hyper-personalised email experiences and predict customer behaviours.

Growth Cogs

  1. More Users: Attracting a broader consumer base to use email regularly through engaging features and use cases.
  2. More Brands: Onboarding a larger number of businesses, especially smaller businesses and FMCG companies, to leverage email marketing.
  3. More Usage: Increasing the frequency and touchpoints where brands communicate with customers through email.
  4. More Opens: Driving higher email open rates through innovations like Atomic Rewards and AMPlets.
  5. More Data: Collecting more zero-party data from customers to enable personalised and relevant email experiences.
  6. More Actions: Boosting in-email conversions and actions by leveraging AMP technology and “inbox commerce” capabilities.
  7. More Revenue: Transforming email from a cost centre to a revenue generator through innovative ad formats and monetisation strategies.

The combination of these six email innovations and seven growth cogs can be particularly impactful in driving the expansion of email marketing in India. By leveraging the massive existing base of email-enabled smartphone users and addressing the factors that have historically limited email’s growth, such as low open rates and engagement, brands and email service providers can unlock the true potential of email as a powerful and cost-effective marketing channel.

Moreover, the scalability and personalisation capabilities offered by these innovations can help bridge the urban-rural divide, and effectively engage a diverse range of Indian consumers, from the tech-savvy urban elite to the rapidly digitising semi-urban and rural populations. The novel email experiences enabled by these new technologies can also help make email more appealing and engaging for younger Indian audiences, who have traditionally gravitated more towards instant messaging and social media platforms. This comprehensive approach can catalyse the growth of email marketing in India, transforming it into a thriving, customer-centric, and revenue-generating ecosystem.

Additional Reading (some of my essays written over the past few years):

4

Three Unlocks

In Email 2.0: The Magic Bullet for the Profipoly Quest, I had written: “[Email 2.0] is the one solution that can address all the three problems: it can reduce marketing waste by enabling reactivation instead of reacquisition, it can eliminate funnel friction by powering in-channel commerce (inbox commerce), and it can create a data-rich foundation by enabling zero-party data collection right inside the email…The vision for Email 2.0 extends beyond mere communication; it aims to be a comprehensive platform for brand engagement, conversion, and customer retention, offering a cost-effective alternative to messaging apps like WhatsApp, which, despite their effectiveness, come with a higher cost barrier for mass marketing. Email 2.0 represents a promising avenue for reinvigorating email marketing by blending the efficiency of instant messaging with the affordability of traditional email, setting the stage for a new era in digital marketing. Email 2.0 can transform the EnCoRe (Engagement, Conversion, Retention) funnel, making it an important foundation for the Profipoly journey.”

To transform India’s email marketing landscape and drive 10X growth in the opportunity, three key “unlocks” are essential as part of Mission WINdia:

  • A B2C “Killer App”: Developing a highly engaging, personalised, and utility-driven email-based application that becomes a daily habit for Indian consumers, much like the ubiquity of WhatsApp. This could take the form of a comprehensive knowledge and learning platform, a gamified daily content experience, or an intuitive personal assistant that seamlessly integrates with users’ lives.
  • The “E3 Wrapper”: Implementing the innovative “E3” email packaging that incorporates features like Atomic Rewards, AMPlets, and AI-powered personalisation. This would create a must-open, high-engagement email experience that drives increased open rates, data collection, and in-email actions for brands.
  • Monetisation and Incentive Alignment: Establishing a robust monetisation model that taps into the substantial “AdWaste” in India’s marketing budgets. By creating a new email-based media network that subsidises email delivery costs and shares revenue with brands, this unlock can align the economic incentives across the email ecosystem, making email marketing a rewarding and sustainable channel.

These three key solutions – the B2C killer app, the E3 email wrapper, and the monetisation model – can together create a powerful flywheel effect to drive exponential growth in email marketing within India.

The B2C killer app, with its engaging “play-learn-improve” proposition, will attract a wide user base of Indian smartphone owners to regularly use and interact with email. This expanded user base and increased email usage provides the foundation for the next step.

The E3 wrapper, with its innovations like Atomic Rewards and AMPlets, can then be applied to brand emails, transforming the email experience and significantly boosting open rates, data collection, and in-email conversions. This enhanced email engagement for brands creates a virtuous cycle, driving more value and incentivising greater investment in the channel.

As email becomes a more effective and measurable marketing tool, the monetisation model that taps into the substantial “AdWaste” (wrong acquisition and reacquisition) can further align the economic incentives across the ecosystem. Brands benefit from better returns on their email investments, while the email service providers and infrastructure can be subsidised and incentivised to continuously improve the email experience.

This flywheel of the B2C killer app, the E3 wrapper, and the monetisation model can together unlock the full potential of email marketing in India, attracting more users, brands, and usage, and generating increased data, opens, actions, and revenue – a true transformation of the email ecosystem.

5

Opportunity

India’s digital advertising market is estimated to be about Rs 60-80,000 crore, growing at 20-25% CAGR. For our calculations, let’s go with Rs 70,000 crore (about $8 billion). In contrast, the email market size (as mentioned at the start of this series) is about Rs 260 crore ($31 million). So, the email market is a miniscule 0.4% of the digital advertising market.

This stark disparity presents a significant opportunity for email marketing to capture a more meaningful share of India’s burgeoning digital advertising landscape. Through the implementation of the “Mission WINdia” strategy, the email marketing market in India has the potential to grow 30-fold over the next three years, transforming it into a $1 billion industry and capturing approximately 6% of the overall digital ad spend. [Here is the math. In 3 years, assuming 25% growth, the digital advertising market will double to $16 billion. If email can grow to $1 billion (33X its current size), it will then have a meaningful 6% share of the digital advertising spending.]

To achieve this ambitious goal, the strategy relies on the simultaneous expansion of four key levers:

  1. Users: Increasing the active email user base from the current 150 million to 500-600 million, effectively matching the ubiquity of WhatsApp in the country and covering every smartphone user.
  2. Brands: Onboarding a broader range of brands, especially app-first and smaller businesses, to build direct relationships with customers through email, making email ID collection as crucial as mobile number acquisition.
  3. Usage: Encouraging brands to shift from the current average of 10 emails per month to a daily cadence, thereby tripling the overall email volume and engagement.
  4. Monetisation: Leveraging innovative ad formats like Action Ads to enhance the effective CPM of email advertising, potentially tripling or more the current rates of 10-30 cents per email. A smarter email reactivation program can also help increase the email spending, by moving money away from expensive and wasteful reacquisition being done via adtech platforms.

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By holistically addressing these four levers, the “Mission WINdia” strategy can catalyse a dramatic transformation in India’s email marketing landscape. Combining the expansion of the user base, brand participation, email usage frequency, and monetisation potential, the email market can realistically grow 30-fold over the next three years, from its current $31 million size to a substantial $1 billion industry.

This growth would not only significantly increase email’s share of the overall digital advertising pie in India, rising from 0.4% to 6%, but also establish email as a powerful marketing channel that can drive significant value for brands and consumers alike.

Ultimately, the successful execution of “Mission WINdia” can position email as a strategic pillar in India’s rapidly evolving digital advertising landscape, empowering brands to forge deeper, more personalised relationships with their customers and redefine the marketing landscape in the country.

6

AI Inputs

Here are critiques and suggested enhancements from ChatGPT, Claude, and Gemini.

ChatGPT

Critique

  1. Data Presentation:
    • Your use of data to highlight the potential of the email market in India is compelling. However, ensure that all data points, like the growth rate calculations and market size comparisons, are backed by the latest sources or industry reports to enhance credibility.
  1. Assumptions Clarification:
    • While the growth predictions (CAGR) and strategic shifts from acquisition to retention are well-articulated, clarifying the assumptions behind these predictions could strengthen the argument. For example, detailing the factors that might influence the projected CAGR or explaining how consumer behavior trends support this shift could provide a more robust foundation for your predictions.
  1. Audience Engagement Strategies:
    • The essay outlines the challenges and innovations in email marketing effectively but could benefit from more specific examples of successful email marketing campaigns or strategies from other markets that could be adapted for India. This would not only illustrate the potential effectiveness of your proposed strategies but also serve as a blueprint for marketers.
  1. Impact on SMEs:
    • Consider expanding on how small and medium-sized enterprises (SMEs) could particularly benefit from adopting advanced email marketing strategies. Since SMEs often struggle with marketing budgets and reaching wider audiences, demonstrating the cost-effectiveness and scalability of email could resonate well with this segment.
  1. Technological Barriers:
    • The discussion on technological advancements such as AMP and AI is crucial. Still, it might also be beneficial to address potential barriers to adopting these technologies, such as infrastructural limitations or the digital literacy gap in semi-urban and rural areas.

Additional Suggestions for Making WINdia a Success

  1. Government and Industry Collaborations:
    • Encourage collaborations between the government, industry bodies, and private sector players to standardize and promote ethical email marketing practices. Initiatives could include setting up training programs for digital marketers, promoting digital literacy among businesses, and encouraging transparent data practices to build consumer trust.
  1. Incentive Structures:
    • Develop incentive structures for businesses that adopt and demonstrate innovative and effective use of email marketing. These could include tax breaks, subsidies, or awards, which would not only promote the use of email but also highlight its effectiveness through case studies and success stories.
  1. Consumer Education Campaigns:
    • Launch consumer education campaigns highlighting the benefits of engaging with brands via email, such as receiving personalized offers, maintaining privacy through direct communications, and having a record of transactions and interactions. These campaigns can help shift email from a formal communication medium to a more engaging and trusted channel.
  1. Integration with Mobile Technologies:
    • Since mobile penetration is high, strategies that seamlessly integrate email with mobile technologies could drive adoption. This could include enhancing the user experience on mobile devices, ensuring emails are optimized for mobile viewing, and developing mobile-first email content.
  1. Localized Content Strategies:
    • Develop strategies for localized and vernacular content, which could significantly boost engagement, particularly in semi-urban and rural areas. This approach can personalize the email experience for diverse linguistic and cultural demographics, increasing relevance and engagement.

Claude

Overall, this is an excellent and comprehensive essay that lays out a compelling vision and strategy for growing the email marketing landscape in India. The key strengths of the essay are:

  1. Thorough analysis of the current state of email marketing in India and the factors limiting its growth, including mobile dominance, acquisition focus, generational preferences, and urban-rural divides.
  2. Clear articulation of the inherent advantages of email marketing in India, such as the large base of potential users, cost-effectiveness, and the shift towards retention-focused strategies.
  3. Detailed explanation of the six key email innovations (AMP, Atomic Rewards, AMPlets, Action Ads, Microns, and AI) and the seven growth cogs that can drive exponential expansion.
  4. Identification of the three critical “unlocks” – the B2C killer app, the E3 email wrapper, and the monetization model – that can create a powerful flywheel effect.
  5. Quantification of the opportunity, outlining how the “Mission WINdia” strategy can grow the email market 30-fold to capture 6% of India’s $16 billion digital advertising landscape.

To further strengthen the essay and improve the chances of successful execution of the “WINdia” vision, here are some additional suggestions:

  1. Emphasize the importance of partnerships and ecosystem development:
    • Highlight the need for collaboration between email service providers, brands, technology vendors, and industry bodies to collectively drive the adoption and innovation of email marketing in India.
    • Discuss initiatives like joint go-to-market programs, knowledge-sharing platforms, and regulatory engagement that can accelerate the maturity of the email ecosystem.
  2. Address the challenge of email infrastructure and deliverability:
    • Discuss strategies to improve email infrastructure, such as investing in server capacity, enhancing email authentication protocols, and optimizing delivery algorithms.
    • Outline initiatives to educate and support smaller businesses and brands on best practices for email list management and deliverability.
  3. Incorporate success stories and case studies:
    • Showcase real-world examples of Indian brands that have successfully leveraged the email 2.0 innovations and growth cogs, highlighting the impact on their marketing outcomes.
    • These case studies can help inspire confidence and provide a roadmap for other brands to follow.
  4. Explore the role of government and policymakers:
    • Discuss opportunities for policymakers to create favorable regulatory environments, incentivize email adoption, and promote digital literacy initiatives.
    • Engage with government stakeholders to position email as a strategic channel for economic and social development.
  5. Incorporate a go-to-market plan and timeline:
    • Provide a high-level roadmap outlining the key milestones, resource requirements, and expected outcomes for the “WINdia” strategy over the next 3-5 years.
    • This can help demonstrate the feasibility and actionability of the plan.

Gemini

Strengths:

  • Compelling Opportunity: You’ve clearly identified a significant gap in India’s digital advertising market and present a convincing case for email’s potential.
  • Actionable Solutions: The “Mission WINdia” strategy with its three unlocks (B2C killer app, E3 wrapper, monetization model) and four growth levers (users, brands, usage, monetization) offers a roadmap for achieving growth.
  • Data-driven Arguments: You’ve incorporated figures to illustrate the market size and potential growth trajectory.

Areas for Improvement:

  • Source citations: Consider incorporating citations for the statistics you mention about the digital advertising market size and email user base in India.
  • Addressing Counterarguments: Briefly acknowledge potential challenges to WINdia, such as competition from established messaging apps or user resistance to more frequent emails. Propose solutions to mitigate these concerns.
  • Metrics for Success: While you outline goals for user base and market size, consider including specific metrics to measure the effectiveness of the proposed solutions (e.g., open rates, click-through rates, conversion rates).

Additional Ideas for WINdia:

  • Security and Privacy: Highlight the importance of robust security measures and user privacy in building trust and encouraging email adoption.
  • Focus on User Benefits: Emphasize how email can benefit users beyond marketing messages. This could include streamlining communication for essential services (e.g., bill payments, appointment confirmations) or offering exclusive content and deals.
  • Regional Language Support: Catering to users in their preferred languages can improve accessibility and engagement, particularly in non-metropolitan areas.
  • Industry Collaboration: Collaboration between email service providers, brands, and government agencies can foster a more supportive ecosystem for email marketing in India.

Published by

Rajesh Jain

An Entrepreneur based in Mumbai, India.