An emerging market in so many ways, India’s economy is booming. As of late, Indian businesses have begun to embrace digital marketing as a viable business tactic. With the growing interest in online marketing comes a need for standardized search engine marketing practices. And with things heating up in India this year, Bruce Clay India just might be leading the charge.

In this article, we’ll take a look into online business in India, as we examine some of the trends in Internet usage and the online marketing tactics that are creeping into the business strategy. We’ll also hear from Siddharth Lal, managing director of Bruce Clay India, as he provides a comprehensive look into the search marketing climate in India, discussing the challenges and opportunities Indian companies face with online marketing.

Trends in Internet Usage and Search Marketing in India

With Internet usage rising across the country, even rural areas are beginning to access it. According to an April 2011 report by the Internet and Mobile Association of India, rural India Internet use is set to grow by nearly 100 percent this year, reaching nearly 30 million users by December 2011. That translates into more searches online for the products, services and content Indians are interested in.

A rising use in the Internet is causing businesses in India to think of new ways to market to their consumers. And while marketing tactics such as pay per click tend to be favored due to the instant-results model, says Lal, search engine optimization is starting to be embraced by those who understand the power of it.

And just as other parts of the world are seeing the value in social media as a marketing tool, so, too, is India.

Summer 2010 data from comScore shows Facebook as the No. 1 social networking site in India, up more than 150 percent from the year prior. At the Nielsen Consumer 360 India conference last year, talks of social media as part of the marketing plan emerged.

Coverage at that conference illustrates the Indian online shopper both young and old use social media to seek information on products or services prior to making purchases:

Q & A with Siddharth Lal of Bruce Clay India

Jessica Lee: What does online marketing look like right now in India?

Siddharth Lal:Online marketing is booming. The main reason is that the Internet population in India is growing rapidly.

A 2009 I-Cube report shows there were 50 million Internet users in India, out of which 50 percent were active Internet users – meaning they spent approximately 16 hours per week online.

I was at the VCCircle Ecommerce Investment Forum 2010 a few weeks ago and Rajan Anandan, vice president of sales and operations at Google India, revealed some very interesting statistics:

With regards to Internet marketing agencies in India, there is certainly a lot of competition. However, I believe that only a small percentage of agencies have the capabilities and expertise to actually handle Internet marketing. Search engine optimization, as we know, requires a fair degree of competency to implement successfully.

How does online marketing in India differ from the U.S.?

In India, we currently face the problem that a lot of people performing SEO are not trained properly. So a lot of times when I see websites, they have spammy Meta tags or the basic elements of SEO are missing.

The problem is, in India, we don’t have many industry conferences as other countries do, for example, SES, ad:tech, SMX and others. Ad:tech New Delhi on April 27 will be the first digital marketing industry conference in India. We need to have a few more of these conferences in India to promote professional development.

Another facet we lack is grassroots learning initiatives, where the basics of SEO are taught to newbies, so a lot of “Black Hat” SEO is performed due to lack of knowledge.

However, marketing professionals here can now learn about SEO, the latest techniques and best practices by taking Bruce Clay India’s SEOToolSet® SEO training course in Gurgaon, India. This training will be held on Aug. 2 to Aug. 4, 2011.

I believe that as Google algorithm updates span the globe, such as the Farmer/Panda algorithm change aimed at low-quality sites, SEO practices need to be standardized across the world as well.

At Bruce Clay India, we follow the Bruce Clay methodology and do not engage in any practice that will harm the client. Since we have had a lot of success using the same SEO techniques that our offices in Australia and the U.S. use, it proves that online marketing in India is not so different than in other countries.

What sectors are embracing online marketing the most in India?

In this past year, Indian businesses have woken up to the potential of the Internet and are now scrambling to get on the Internet marketing bandwagon. Some of them are also looking at e-commerce. We are seeing all types of companies who are embracing online marketing, including sectors such as telecom, travel, health and more.

Which digital marketing tactics are popular right now in India?

SEO, paid search and social media. Each company has a different approach to digital marketing in India, and therefore, all three mediums are popular.

Some companies are focusing their efforts on SEO, whereas others turn towards PPC because it delivers instant results. Even if PPC is the preference, companies soon realize that they need to add SEO into the mix, as SEO delivers long-term benefits and is seen as “free” traffic.

A lot of companies are making SEO the cornerstone of their digital marketing efforts as they begin to understand the power of it. We try to educate the business community by explaining that SEO is super important to reach the target audience at the exact time that they are searching for information related to their products or services.

We reinforce the idea that even if their company was not part of the online users’ core list of brands when they started their research, if the user saw the brand on the search engine results page, there is a high chance they will click through to the website. If a company is not utilizing the power of SEO, then it is at a disadvantage against other brands that are using it.

Social media is also getting a lot of attention in India. Facebook already has 24 million users and Twitter usage in is the millions as well. The majority of traffic for Facebook comes from Mumbai, New Delhi and Bengaluru.

We advise Indian businesses to use social media as an engagement tool to connect with their audience, and to create a dialogue with potential customers.

What are the biggest challenges of online marketing in India?

The biggest challenge, I believe, is that a lot of marketing execs in India have still not realized the potential of the Internet. They are willing to spend a significant amount more on traditional forms of advertising versus digital.

I believe this comes down to the fact that they are not familiar with the online medium. Further, all the terms used in digital marketing are an alien language to them – CPC, CPM, etc., which makes it harder to convince them.

In addition, the Indian economy is still largely a cash economy, so e-commerce is in its infancy. I believe there are only about 30 million credit cards and 60 million debit card users in India.

There are also issues with payment gateways, as the failure rate of transactions is considerably higher than Western standards. Currently, I believe there are less than 10,000 websites in India that have a payment gateway attached to it.

All challenges aside, the future is very bright, and this is the ideal time to be in the Indian market.

Where do you see Indian digital marketing headed in 2011?

Social media will start to be featured in the marketing plans due to all the hype associated with Facebook and Twitter. I also believe 2011 will actually be the inflection point for online marketing in India, and SEO will start to become an important part of marketing budgets moving forward.

About Siddharth Lal

Born and raised in New Delhi, India, Siddharth later moved to Australia where he graduated with distinction from the University of Western Sydney with a degree in marketing followed by an MBA specializing in e-commerce from the University of Technology, Sydney.

An entrepreneur, Siddharth launched his own company after years of working as a top sales partner for a leading Telco in Australia. With his Internet marketing knowledge and skills, Siddharth led his company to cross the $1 million mark in online sales in a short span of time.

As a big believer in “Online India,” Siddharth spearheaded Bruce Clay India in 2010. Siddharth is a certified Google Advertising Professional (GAP) and a guest lecturer at the National Institute of Advertising, India.

Contact Siddharth on LinkedIn or at SiddLal on Twitter.