As funds inflows slow down, ecommerce ad spends plunge

By: | Published: July 29, 2016 6:29 AM

With the flow of funds into e-commerce companies slowing down, advertising spends appear to have been reined in, reports Anushree Bhattacharyya in New Delhi.

flipkart, flipkart mobile, flipkart app, flipkart seller, flipkart costumer care, flipkart app download, e-commerce, e-commerce in India, e-commerce flipkartGroupM South Asia CEO CVL Srinivas believes a a combination of factors has led to a drop in ad spends this year. “The new government regulation on discounting, the pressure to turn profitable and businesses shutting down are some of the reasons,” Srinivas said.

With the flow of funds into e-commerce companies slowing down, advertising spends appear to have been reined in, reports Anushree Bhattacharyya in New Delhi. Data released by MAP (TAM Adex) show that for the period January-June 2016, e-tailers spent R3,038 crore on advertising via traditional channels including television, print and radio. In the corresponding period of 2015, they spent close to R3,767 crore.

GroupM South Asia CEO CVL Srinivas believes a a combination of factors has led to a drop in ad spends this year. “The new government regulation on discounting, the pressure to turn profitable and businesses shutting down are some of the reasons,” Srinivas said.

Companies such as LocalBanya and PepperTap, which were active advertisers until last year, have shut shop. Others such as Paytm appear to have pruned their budgets for traditional channels; the company, which spent R160 crore between January and June last year, has so far spent only R60 crore in the same period this year. Similarly, classified sites such as OLX have spent far less this time around.

However, the larger e-retailers continue to advertise. Amazon India has seen a near 70% year-on-year jump in spends to R685 crore in the six months to June. Flipkart too has upped spends by about a third.

n this context, Balakrishna PM, CEO, Allied Media Network, the media planning and buying arm of Percept, said that by and large, bigger players tend to dominate spends much as they dominate the marketplace.

ShopClues has nearly trebled spends this year to Rs 176 crore. “Television has always played an important role in our communication strategy and we advertise on radio too,” said Nitin Agarwal, assistant vice-president, marketing, ShopClues.

E-commerce players prefer to associate with marquee reality television shows such as Bigg Boss or The Kapil Sharma Show and popular sports tournaments such as Indian Premier League (IPL) and Indian Super League (ISL), according to Rajni Menon, executive vice-president, Carat India, a media planning and buying company of Dentsu Aegis Group. Currently a 10-second spot on a Hindi GEC during prime time costs Rs 70,000 to Rs 1 lakh, while a10-second spot on an English news channel is priced at Rs 5,000-10,000 and on Hindi news channels at Rs 15,000-20,000.

Niche players such as Myntra or Jabong typically advertise on English channels including HBO and Star Sports, apart from using social platforms such as Snapchat and YouTube. A 10-second spot during prime time on English movie channels such Star Movies and HBO costs Rs 4,500-5,000.

 

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