With deeper pockets, e-tailers spending big on advertising

Written by Anushree Bhattacharyya | New Delhi | Updated: Aug 24 2014, 07:42am hrs
EcomIn 2013, e-comm companies spent Rs 1,355 crore on advertising.
Their business may be online, but when it comes to reaching out to consumers and creating a buzz, e-commerce companies turn to traditional platforms such as television and newspapers. Picture this: in the first six months of 2014, e-comm companies spent close to Rs 800 crore on their advertising on print, TV and radio, emerging as one of the largest ad spenders.

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In 2013, e-comm companies spent Rs 1,355 crore on advertising. In comparison, one of the largest ad spenders on traditional media auto companies spent around R1,500 crore. This year, analysts say, the total spends by e-comm companies will grow by around 20%.

For brand building and creating a buzz, traditional media such as TV, radio and print are still the most effective. Internet, because of its limited reach, isnt able to generate the same buzz as other media does. With most online players being in start-up mode, they are expected to spend more on advertising this year, said Ashish Pherwani, partner, E&Y.

Along with absolute media spends, these companies are also spending a lot on getting celebrities to endorse their brands. For instance, commercial classified site OLX roped in actor and comedian Kapil Sharma for its latest television ads, while it also launched a joint marketing campaign with Flipkart recently.

If one wants to reach out to a large spectrum of audience in India, one has to rely on traditional media.

Also, traditional media lends a credibility to the brands that helps in winning consumer trust, said Pranay Chulet, CEO, Quikr, another leading classified site.

Agrees Shoumyan Biswas, senior director, marketing, Flipkart. Some of our campaigns like shopping ka naya address have been extremely successful and did contribute towards making us a household name, he said.

The big spenders are also the ones with sound financial backing. For instance, OLX, which is backed by South African media company Naspers, has, so far this year, spent R26.7 crore on advertising on television, R17.7 crore on print and R6 crore on radio. Snapdeal, the second-largest e-tailing company in the country after Flipkart, has raised $100 million in May this year, spending R23 crore on advertising on television and R1.3 crore each on print and radio.

Meanwhile, Flipkart which was recently in the news for raising $1 billion, has, so far, spent R33.8 crore on print advertising and R21 crore on television.

A good amount of the funds raised by these companies are being spent on building their brand recall, besides firming up their online business, said Pherwani.

So far in 2014, print has been the biggest gainer of all the mediums, with online players spending R599 crore on advertising, followed by television where online players spend R170 crore, and finally radio, for which the ad spend stood at R13.9 crore.

As per Jehill Thakkar, executive director, media and entertainment practice, KPMG, in India so far advertising has been restricted to national channels and newspapers. But going forward, he sees this changing.

With online players expanding their reach and penetrating into smaller markets, they will use regional mediums, including television, print and radio, extensively to grab consumers attention, added Thakkar.