Content on this page requires a newer version of Adobe Flash Player.

Get Adobe Flash player


Ecomm ad-spends to drop in 2016?

Ecomm ad-spends to drop in 2016?

Author | exchange4media News Service | Friday, May 06,2016 8:20 AM

Ecomm ad-spends to drop in 2016?

With the big three of Indian e-commerce companies, Amazon, Flipkart and Snapdeal, struggling with losses and valuation struggles (at least for Flipkart and Jabong), agency heads and analysts expect them to tighten the purse strings in 2016. This, of course, does not mean that they will not be spending ad money, but, in the words of one industry observer, we are not likely to see the same astronomic spends anymore.

A large part of revenues and investments received by the majority of the e-commerce players in India are spent on customer acquisition, which is achieved via discounts as well as massive marketing campaigns. To take an example, in its most recent revenue figures, Snapdeal revealed a loss of Rs 1,328 crore and a revenue of Rs 937 crore. The company’s losses are roughly 5 times what it reported last fiscal. The majority of the expenditure has been attributed to Advertising and Promotions, to the tune of just over Rs 1,000 crore (Source:

Flipkart, the largest e-retailer in the country, reported losses just shy of Rs 2,000 crore for the year ended March 2015, according to a filing with the Ministry of Corporate Affairs (MCA). International heavyweight, Amazon, reported net loss of Rs 1,724 crore for the year ended March 2015. Other e-commerce platforms are yet to break even though their losses are lesser, not surprising, considering the wide difference in investments and expenses.

This widening gap between loss and revenue is not going unnoticed. Recently, Flipkart saw two more investors mark down their valuation of the company. Over the past few months, a total of 4 investors have lowered the company’s valuation. This means that Flipkart, which peaked at $15 billion just an year ago is now valued at $10 billion. The valuation game is hitting other players too. Snapdeal, which is currently valued at around $6.5 billion post its fresh round of funding in February, was involved in long drawn negotiations with Alibaba, from which it sought investments and it was rumoured that one of the major stumbling blocks was that Alibaba did not agree with the high valuation of Snapdeal.

It is a similar case at Jabong, which has been going through a somewhat rough patch over the last few months. The founding team has mostly exited the company and it is being led by an interim CEO directly sent over by parent company Rocket Internet. Rocket Internet has been trying hard to find a buyer for Jabong, which not so long ago, was one of the strongest players in the online fashion retail space. The buzz is that buyers are not seeing eye-to-eye with Rocket Internet when it comes to how much should Jabong be valued at. The turn of events is surprising; Jabong was once considered, by Rocket Internet’s own admission, one of its top 6 most valuable properties globally. But, perhaps, this is a reflection of the high stakes in e-commerce ecosystem in the country.

How does this affect ad spending?
The general consensus seems to be that we will see a reduction in ad spends by the major e-commerce players to a more sensible amount rather than the blitz of big money campaigns that have been the staple over the past couple of years. Analysts we spoke to have also predicted that this would apply to discounts being offered during shopping season. To get an idea of the spends that e-commerce players engage in; Flipkart, Amazon and Snapdeal are collectively thought to have spent around Rs 1,500 crore on marketing during the 2015 festive season.

However, the spending by the big 3 (or 4) might be expected to reduce, overall the e-commerce industry is still expected to be the biggest contributor to ad spends this year. The reason for this is that analysts expect the smaller, and newer, players to step up brand campaigns. is another internet company that spent in excess of Rs 150-200 crore on advertising in 2015. This year, it launched its first ever TV campaign and the company says it will splurge around $5-7 million on advertising this year.

CouponDunia is also looking to spend money this year as it looks to push its new identity and business direction. Talking to exchange4media recently, Ankita Tandon, COO at CouponDunia, informed us that the company would spend around Rs 12-15 crore in Q2 followed by a larger 360 degree campaign during the festive season.

Meanwhile, the likes of Amazon and Flipkart took advantage of the IPL to launch fresh campaigns but it will be interesting to see how long, and intensely, they continue the momentum.

GroupM TYNY report predicts that e-commerce will constitute 8.1 per cent of the ad revenue pie in 2016.  

Write A Comment