With ad rates tipped to rise by 10-15% this festive season, the funds-rich e-commerce fraternity is looking to spend at least 20-30% more wooing consumers than it did last year when it forked out Rs 1,000 crore.
With $350 million in the bank, Paytm founder Vijay Shekhar Sharma has lined up some Rs 300-400 crore. That’s a fivefold jump for Paytm, which spent just about Rs 60 crore last year. Sharma has a justification, though. “The frequency of promotions increases during the festive season since that’s when consumer spending goes up,” he told FE.
Raj Nayak, CEO of Colors, the general entertainment channel from Viacom18, is convinced e-commerce companies will advertise much more this time, in particular wallet companies. “They are already advertising heavily and will look to top up their spends,” Nayak explained.
Arun Anant, director revenue and strategy, HT Media, told FE he expects a 50% jump in advertising spends this year given there are more advertisers and the fact that rates are going up. Anant confirmed ad rates were likely to be raised by 10%. “Preparations have begun and companies are buying space in our newspapers. Compared to last year, we expect more e-commerce companies to advertise,” he said.
An industry observer says a 10-15% increase in ad rates is par for the course. So, for instance, a prime-time 10-second spot that now costs Rs 80,000-1,00,000 on a Hindi GEC will fetch Rs 90,000-1,20,000. Similarly, a 10-second prime-time radio spot priced at R800-1,000 could set the advertiser back by Rs 1,000-1,200 once the festive season gets going.
Flipkart is betting on categories like fashion and lifestyle, home and large appliances that tend to do well. “Products like TVs, refrigerators, washing machines are among the best selling products and last year, we saw a significant jump in the sales of these products,” said Ankit Nagori, chief business officer at the e-commerce company.
This year too, e-commerce companies hope to gain from higher spending during the festive season that begins with Onam on Friday and extends until New Year’s Day.
Buying through e-commerce portals is catching up as they offer huge discounts as some of them don’t incur inventory and real estate costs, unlike traditional retail firms. This augurs well for a large majority of middle-class consumers whose discretionary spends have come down due to rising inflation and high interest rates in recent years.
The festive season is significant for makers of consumer products as most Indians consider this period to be auspicious to make their purchases starting from cellphones to cars and condominiums. Moreover, the festive season is the time when most of the working population gets a one-time cash bonus that leaves them with extra money to splurge on.