Oppo Mobiles, Snapdeal, FlipKart, Amazon killing off Pepsi, Coca-Cola ad-spend wars?

Is the year 2014 signalling the end of the cola wars? A surge by smartphone makers and e-commerce companies and their constant effort to get the all important eyeballs has ensured that the likes of PepsiCo and Coca-Cola take a backseat as advertising space gets captured by these new kids on the block.

The situation has changed so dramatically that sports advertising, and in particular cricket, that traditionally got sponsorships from cola companies and other large FMCG companies, has been encroached upon sensationally by smartphone makers. So while Oppo Mobiles India, has taken over the title sponsorship rights of the prestigious Champions League Twenty20 tournament and is also the power sponsor for the popular Big Boss Season 8, e-commerce companies like Snapdeal, FlipKart, Amazon.in are not too far behind in driving huge advertising spends.

?This is a fairly new category that needs to penetrate the Indian market and work towards brand building in an intensely competitive market. This can only be done through aggressive marketing and advertising. I expect that current aggressive strategy on marketing and advertising by smartphone makers and e-commerce companies to continue for next 3-4 years after which the market would settle down,? said Jehil Thakkar, partner and head of media and entertainment, KPMG India.

One of the advantages that smartphone makers get in India is that they have received more than adequate funding from foreign investors and private equity firms. This has provided them the added cushion to outsmart competition through intense promotion and advertising.

?There is no denying the fact that television is one of the most important media for any brand looking to establish itself. And till date, sports and entertainment rule the roost as far the television ratings are concerned. So for any brand looking to establish its name in the market coupled with a widespread reach, it is best to associate with popular cricket formats and television programmes,? said Tom Lu, CEO, Oppo Mobiles India.

The focus to get the eyeballs becomes important for these companies as there are numerous players in the segment, big or small, each vying for attention from the Indian consumers and trying hard to create top of mind recall value for themselves. This is also because industry data suggests that India is one of the biggest smartphone markets in the world.

As IDC states, the smartphone penetration in India still hovers at 10% and it is expected to grow due to a variety of factors including greater availability of low-cost devices and additional sales emphasis by top-flight vendors on less populous parts of the country.

?We are still very new to the India market and hoping to build a better base in India. Therefore, we will take necessary steps to build a brand connect with the Indian consumers for a long term,? Lu said.

Oppo is not only restricting itself to advertising on television, but they are experimenting and innovating with on-ground stuff too. In case of Oppo CLT20, Oppo is using 3D Mats on the ground. The company is going all guns blazing on social media too where they are launching several contests and campaigns to woo Indian consumers. Some other companies like Micromax and Karbonn are sponsoring Dare 2 Dance and India?s Raw Star respectively, the much hyped shows among youth.

Similarly, e-commerce companies like Snapdeal, Flipkart, Amazon.in along with smartphone makers are driving huge advertising spends. The launch of Google One initiative has shown that ad spend of these companies would only grow in future. In fact, India’s largest media planning & buying agency GroupM predicts ad spends of these entities to grow 12.5% during Jan-Dec FY ’14.

?Its not that beverage giants have been taken over by these companies. Their spends are more seasonal and tend to pick up during summers and other festivals. Moreover, coal companies have already booked their space on big ticket events catering to urban market and are now focusing on increasing penetration in rural markets, where smartphone makers are yet to make inroads,? KMPG’s Thakkar said.

If we look at advertising market, the largest share of around Rs 10,000 crore is spent by FMCG companies followed by the white goods segment at around Rs 4000-5000 crore annually. The smartphone makers still form just a portion of of this white good segment.

?There is a lot of enthusiasm in these companies but their spends are still a small fraction of what the Pepsis and Coca Colas do. But there is no doubt that they have generated a buzz in the market and all would gain from it,? said another analyst tracking the development.