Flipkart, Amazon India, Snapdeal and a host of online shopping sites are flooding newspapers and television channels with advertisements, as they lure customers during the festival season in a bid to gain an upper hand in the intensely competitive e-commerce market.
Media observers say e-commerce firms will likely spend Rs 1,800 crore to Rs 2,000 crore on advertising from September through December when a number of festivals are celebrated. Last year, e-commerce companies spent an estimated Rs 1,000 crore on advertising during the festive season.
Overall ad spends by e-commerce players during 2015 are also likely to increase, to an estimated Rs 2,700-3000 crore from Rs 1,500-1,800 crore last year.
Companies typically spend more on advertising during the festive season as the period accounts for a big chunk of sales for companies in a number of consumer-focused sectors including retail, auto and household electronics.
However, e-commerce companies – flush with cash from investors including Japan's SoftBank Corp. and China's Alibaba Group – have emerged as one of the biggest spenders over the past couple of years.
Anita Nayyar, CEO of Havas Media Group India, the media planning division of Havas, said there are two reasons behind the increase in ad spend this year. “While existing e-commerce players have increased their ad budgets, a few companies such as Paytm, which has gathered steam now, are spending heavily on advertising compared to last year,” she said.
E-commerce and mobile wallet company Paytm spent about Rs 12 crore on advertising last festive season. This time, the firm claims to have plans to spend Rs 300-400 crore on advertising across media verticals.
“Besides advertising during the on-going India-South Africa cricket series, various offers are being promoted on Hindi general entertainment channels and news channels, apart from print, radio, outdoor and digital ads,” said Shankar Nath, senior vice president at Paytm.
All major e-commerce players have launched festive season offers to boost sales. Paytm is running its 'Navratri Home and Kitchen' sale and 'Paytm se Stadium' offer while Flipkart has launched its 'Big Billion Day' sale.
The local unit of US e-commerce giant Amazon is running the 'Great Indian Festive Sale'. Snapdeal isn't far behind; it has launched its 'Yeh Diwali Dil ki Deal Wali' campaign, more than a month before the festival of lights will be celebrated in November.
Idi Srinivas Murthy, senior vice president of marketing at Snapdeal, said the e-tailer has increased the range of products on the site manifold compared to last year.
“The festive season does not mean that advertising is all about selling products on the site. There is also a lot of focus on building the brand,” he said. “A strong brand can only be build through efficient services that include on-time delivery and offering an array of products and services.”
Snapdeal claims that it has shipped five million orders during the first three days of its pre-Diwali sale. This included about 70,000 units of large-size products such as TVs and furniture. It says it recorded a 350 per cent increase in new customers.
Rising ad rates
The rise in ad spending by e-commerce companies has led to an increase in advertising rates as well. For example, a jacket ad on the front page of The Times of India now comes for Rs 5-6 crore for all its editions across the country, compared with Rs 2-2.5 crore on a regular day, according to industry estimates.
Similarly, a 10-second ad spot on TV during prime time, that is from 8 pm to 10 pm on a Hindi general entertainment channel such as Zee TV, is being sold at Rs 1.25-1.50 lakh compared with Rs 80,000 to Rs 1 lakh on a regular day.
Media planners believe this is just the beginning of a good festive season. “The festive season is an important period for all marketers in the business of apparel, consumer good, jewelry, etc,” said Vikram Sakhuja, a media veteran and former global CEO of media agency Maxus. “With e-commerce being at the distribution forefront for most categories, the retail sector can surely be expected to make a lot of spending on advertising this festive season.”
However, Arunabh Das Sharma, president, Bennett, Coleman and Co. Ltd., which runs The Times of India Group, points out that its premature to call this festive season a success for the media and entertainment industry.
“The festive season has just started. While e-commerce companies are heavily advertising at the moment, what matters is the ability to sustain this momentum,” said Sharma. “The festive season will be successful only when we have a robust mix of advertisers including FMCG, consumer good, other categories spending on advertising.”