Why Digital !! Why It’s Important !!

Digital Marketing Business & Its Tax Implications- In India

Going Digital: Why It’s Important to Have Digital Transformation Strategy

Today ‘digital’ is the talk of a town. We hear about digital technologies, digital data, digital media, digital transformation, digital marketing. Everyone wants to go digital. But which way to go? And why it’s important to have a digital transformation strategy ?

We know now that mobile is the future of everything. With the rise of the Internet of Things and mobile devices our lives and habits have clearly changed. Everything is now connected and if it’s not, it’s about to. We live in a world where you can connect your coffee machine to the Internet and make your coffee via Bluetooth. If your coffee machine can go online and you’re still only thinking about it, what does it say about you?

Go ‘digital’ or go home. What is digital transformation?

So, you’ve decided ‘to put yourself out there’? But before you move with your digital strategy, it’s important to understand what it really means and thus how to be able to benefit from it.

55% of start-ups have already adopted digital transformation strategy.

Digital transformation is often viewed as an implementation of digital technologies into all areas of business in order to build more sustainable relationships and better understand the needs of customers.

But this is just one of the ways to look at it. When talking about digital, we can think of discovering new frontiers and using innovation and technologies to push your business. It’s about finding new possibilities of an existing service in order to design and deliver a better experience for your customer. Some might argue it’s a new way of interacting with customers. None of these definitions is truer that the other but what we can all agree on is that today

What is the logic behind going digital? Among the most popular reasons are:

·        Improve customer experience and engagement

·        Increase efficiencies

·        Improve business decision making

·        Improve innovation

·        Transform the business

What to remember before you move with your digital transformation strategy

Think fast in terms of innovation

Change is the only thing we can be sure of. Strive for innovation and greatness now in order to stay competitive.

Embrace the Internet of Things

The Internet of Things has arrived and it is a key to creating your innovative experience. Everyday objects are now connected to the Internet, like a fridge that determines when you’re low on food and orders it for you. This creates a lot of new opportunities for marketers. Businesses and customers will only continue to benefit from it.

Go with the trends

When it comes to marketing, the party is happening in the digital world also. Traditional media is slowly dying while digital media is projected to become the number one channel for ad revenue by 2019.

Don’t underestimate big data

There’s myriad of valuable data out there but not everyone knows how to use it fully. Analytics helps us understand how customers behave, what they really think about the brand and how your business is seen by the market.

Adapt to the new needs of customers

The one lesson we can definitely learn from Kodak is that if you ignore your customers, soon they will ignore you. It’s not enough to have a great product, you have to see a bigger picture. Kodak was not in the film business, their business was of storytelling and they ignored that.

Think outside the box

Be a frontrunner in your field, create value where everyone else thinks it’s impossible.

Digital marketing is marketing through advertisements on various online platforms through digital means and digital technologies. For example, social media, search engines like google and yahoo, mobile apps, Computers and laptops, PPC, etc.

Mode of Digital Marketing:

·        SEM (Search Engine Marketing)

·        SEO (Search Engine Optimisation)

·        PPC (Pay-per-click)

·        SMM (Social Media Marketing)

·        Content Marketing.

·        Email Marketing.

·        Influencer / Affiliate Marketing.

·        Viral Marketing.

·        Contextual Advertising

·        Coupons & Promo Code

·        You Tube Vloggers

·        Other Traffic Source

Some of the digital engines with content are mentioned below:

Search Engine Optimization 

SEO is a very important component of digital marketing. SEO is about increasing the ranking of a website in search engine results. You rank in top pages then it increases traffic to your site and that increases your chances of turning visitors into customers.

Pay Per Click

PPC is online marketing in which you run paid ads and you pay for each click to your ads. 

Social Media Marketing

Social media marketing is promoting and advertising a product or service through various social media platforms like Facebook, Instagram, LinkedIn, Pinterest, Twitter, etc. 

Content marketing

Content marketing is about building a strong relationship with your targeted audience by providing them quality content. This content should be relevant to the need of your audience.

Email Marketing

Email Marketing is about sending some sort of content like a newsletter to all of your subscribers via email. This can increase traffic and leads to your website.

Influencer/Affiliate Marketing

Affiliate marketing is about promoting a product and earn a commission if someone buys that product through your promotional tactics.

Pricing Model:

Below are the pricing model under digital marketing business:

·        CPA (Cost Per Action)          

An online advertising pricing model where an advertiser pays a publisher for a specific action performed by a user who was brought by the publisher to the advertiser's website. Depending on the action type, CPA can be divided into CPL (Cost Per Lead) and CPS (Cost Per Sale).

·        CPS (Cost Per Sale)

In the CPS (cost per sale) model, a publisher receives a reward for purchases made by attracted users on an advertiser's website. The reward in this case is a percentage of the total order. CPS is the most commonly used pricing model in the e-commerce.

·        CPL (Cost Per Lead)

The CPL (Cost Per Lead) model can be often found when working with online games, online services, and financial offers. A lead can refer to a registration on a website, filing an application, placing a subscription, or another action associated with personal data input. The lead cost is usually fixed.

·        CPI (Cost Per Install)

In this case, payment is taken for the download and further installation of an application. Typically, we are talking about mobile apps, but it can also apply to desktop software as well (e.g. antivirus software). As a rule, advertisers pay a fixed price for every downloaded app.

·        CPC (Cost Per Click)/PPC (Pay Per Click)

An online advertising pricing model where an advertiser pays a publisher for a user's click on a banner, link or text placed by the publisher. The click cost is calculated in each case individually, depending on a number of parameters including the traffic quality.

Tax Implication on Digital Marketing Biz:

Google Tax !! Equalization Levy Tax !!

1. Section 165 of Finance Act 2016 introduced Equalisation Levy to be charged at the rate of 6% from the consideration paid or payable to a non-resident person for the online advertisement services and other related services such as provisioning of digital space;

2. The scope of equalisation levy is extended to all sales, gross receipts or turnover of non-resident not having PE, who is providing the online sale of goods or provision of services or both to a person resident in India or a non-resident in specific circumstances. i.e. E-commerce operator

E-commerce operator means a non-resident that owns, operates or manages a digital or electronic facility or platform for the online sale of goods or the online provisions of services. It mandates equalisation levy @ 2% on the sum received or receivable by an e-commerce operator from e-commerce supply of goods or services made or provided or facilitated to-

1. A person resident in India; or

2. A person who buys such goods or services or both using internet protocols located address in India; or

3. A non-resident person in the following circumstances:

(i) Sale of advertisement which targets a customer who is resident in India or a customer who accesses the advertisement through internet protocol address located in India; and

(ii) Sale of data collected from a person who is resident in India or from a person who uses internet protocol address located in India.

It is to be noted that in the following cases equalisation levy @ 2% shall not be levied:

1. where the e-commerce operator making or providing or facilitating e-commerce supply or services has a permanent establishment in India;

2. where the equalisation levy is liveable u/s 165 of the IT act, @ 6%;

3. if the sale, turnover or gross receipts of the e-commerce operator from e-commerce supply or services made or provided or facilitated to the persons mentioned above is less than Rs. 2 crores during the previous year.

It is to be noted that unlike in the case of equalization levy governed by section 165 (@ 6%), the equalization levy @ 2% shall be paid by the e-commerce operator to the credit of central government on a quarterly basis.

Please reach to Sajjan Singh at [email protected] or [email protected]