Why advertising on e-commerce platforms is picking up pace in India

Advertising spends on e-commerce platforms crossed Rs 2,100 crore in 2019; spend pool expected to grow at CAGR of 44% to reach Rs 18,700 crore by 2025, say industry experts

e4m by Shikha Paliwal
Updated: Feb 7, 2020 10:01 AM

11k

e-commerce

The internet is increasingly helping brands to engage with consumers, through various digital touch points. However, as studies have pointed out, the rush to grab consumer attention is often viewed as intrusive. Advertisers are, therefore, presented with the additional challenge of not being perceived as annoying yet omnipresent. The answer, say the experts, lies in e-commerce - the one platform that consumers are actually happy to be spoilt for choice.

It is no wonder then that e-commerce is fast rising up the popularity charts for brands and advertisers alike. According to the recently released DAN-e4m digital advertising report 2020, advertising spends on e-commerce platforms at the end of 2019 was estimated to be Rs 2,100 crore, with Flipkart taking the dominant share followed by other e-commerce players. The report further states that based on its current trajectory of growth, this spend pool is expected to grow at a CAGR of 44 per cent to reach Rs 18,700 crore by 2025.

Presenting interesting insights into the immense potential of e-commerce within the digital advertising landscape, the report states that: “Globally e-commerce has already begun creating a significant dent into the ad revenue share of search, video and social advertising companies. E-commerce players in the US and China form some of the top digital companies in those economies and this trend is replaying in India too where e-commerce is now amongst the top digital advertising touch-points for brands.”

Also Read: Netflix uses Google Trends to measure global popularity of The Witcher

So how are e-commerce platforms placed vis-a-vis popular advertising destinations like Search and Social?

Lucky Saini, VP, Digital & Marketing Solutions, Dentsu India Slingshot, says: “The intent of the audience and behaviour differs on different destinations. Google Search for shopping and search on e-commerce portals is, for example, a similar type of behaviour but browsing social media platforms for entertainment and content is different kind. Brands need to talk to people at different touch points in a native way so as to not come across as pushy or salesy but more contextual and relevant.”

He elaborated on how e-commerce portal marketing and media strategy is now a key part of the planning strategy for many brands today. “Lots of brands are only getting built online first and then going omnichannel later. Likes of Xiaomi, VU and Boat are great examples of brands that used e-commerce as a key part of their brand and business building efforts,” Saini added.

The recently released GroupM ‘This Year, Next Year’ report says the growth in digital will be driven by video, voice, vernacular content and advertising on e-commerce platforms. Says, Ashwin Padmanabhan, President - Partnership & Trading, GroupM India: “E-commerce is growing because consumers and brands are both seeing value. Social will continue to grow and be relevant because consumers are exchanging views there. A brand will use social as well but the reason why they will connect and the way they will connect will be different. The way they connect with a consumer on the e-commerce site will be different too. I would want to create conversations with a consumer on a social site, I would want them to explore me as a brand and what I stand for. I will use social to probably create a culture but I will use e-commerce to probably drive an action.”

There are three clear reasons, according to Saini, for the growing popularity of advertising on e-commerce platforms - 

Reach: The reach of ecommerce portals is now upwards of 100 million and this reach is across all town classes like tier 1, 2 and 3. With increasing penetration of mobile internet, and 4G and 5G becoming the norm due to low data prices, e-commerce will further increase its penetration.

Audience intent: People come to e-commerce portals with the intent to shop and this is a very important set of audience for brands. High intent purchase is what most brands are seeking to target and e-commerce portals provide just that.

Audience insight: With a rich array of data sources like browse behaviour and category affinity, e-commerce portals now provide rich information to brands on targeting and this helps improve the relevance of the communication, and in turn return over advertising spends.

The ad ecosystem of e-commerce platforms has almost everything that an advertiser looks for, believes Harikrishnan Pillai, CEO and Co-founder, TheSmallBigIdea. He sees e-commerce platforms as enablers to the end result. “AI driving e-commerce platforms is also a strong reason for advertisers to choose them over other platforms. The behavioural understanding is stronger, the reminder and recommendation ecosystem is inbuilt and it also takes care of activities beyond advertising. Advertising on these platforms is yet another aspect of a full-fledged supply chain. This makes it appealing for advertisers.”

Around 190 million (nearly 35 per cent of India’s total internet user population of 550 million recorded in 2019) are already online buyers and an even larger number browse products online, says the DAN-e4m report.

 Top e-commerce players too understand the draw they hold for brands and, therefore, constantly endeavour to lure advertisers with their impressive ad suites. Big players like Amazon and Flipkart are equally serious about their revenue from advertising as they are about their retail business.

Sankalp Mehrotra, Senior Director - Monetisation at Flipkart, points out that commerce advertising has many unique differentiators over digital advertising.

 "At Flipkart, we understand that consumer journeys are now becoming non-linear. Thus, it is important for our platform to evolve in a manner that caters to the evolving needs of both customers and sellers. The purchase funnels are being redefined and several solutions are offered to advertisers to help them in their journey - from creating awareness to building loyalty. Commerce advertising has many unique differentiators which set it apart from other forms of digital advertising. It is also a 100 per cent brand-safe environment that is built on the back of deterministic consumer intent, with an ability to port this intent off the platform too.” 

 On the Flipkart marketplace, advertisers have the opportunity to explore multiple ad experiences in the form of display and video ads, feeds and search to increase consideration and purchase, and drive retention and loyalty through the SuperCoins offering, says Mehrotra.

 This ensures that there's a suitable format available for any type of advertiser, irrespective of scale. “Another disproportionate advantage of commerce advertising are the robust attribution metrics, which allows advertisers to measure not just the near-term impact of their campaigns, but also understand how their awareness and consideration scores are moving with respect to their categories and competition both. Unlike 'mind measures', these are real brand health measures based on aspects such as search increases and cart additions,” Mehrotra added.

 A strong supporter of the e-commerce growth story, Shradha Agarwal, COO, Grapes Digital, explains what is making these platforms tick. E-commerce is the last leg of the consumer journey where the brand is looking forward to convert it into a sale. What e-commerce has done for digital advertising is that it has made a readymade platform available for targeting customers. There are over a million people coming onto e-commerce platforms daily and transacting. These customers are looking for a product and are in the mood to spend. E-commerce platforms are not only offering a consumer brand/promotion awareness but are also helping in getting the transactions then and there. Brands can literally play up their product on the site when a purchase is being made and also calculate how much the cost per order was. It is primarily the reason why in media plans now digital budgets have been clubbed into brand and performance budgets, and big e-commerce players are consuming a large chunk of that pie.”

 Agrees Tushar Khakhar, First Executive, AGENCY09, “India is witnessing an ever-increasing number of active users on e-commerce. Advertisers get programmatic ad placements with focussed, specific and personalised communication that leaves a deeper impact on the consumers. Today, it is a more effective sales conversion medium in digital and can be labelled as a digital below the line (eBTL) activity.”

Given that in the digital advertising universe, e-commerce is still in its nascent stages in India, it comes with its own set of challenges. Saini explains that reporting dashboards are not as evolved compared to what Google or Facebook have, the cost per reach is still on a higher side compared to say Google, but he explains that’s also because the quality of reach is better. Lastly, there are not many rich media options or advertising format innovations available as yet, he added.

According to Pillai, “While the ecosystem is well targeted, it’s still a smaller base compared to the larger digital ecosystem. Also with brands launching their own web stores, when it comes to premium products, much is left in the limbo. There is a possibility that the multi-brand e-commerce ecosystem might become a destination only for price conscious customers. Price-consciousness and its impact is already seen as users who search for specific products can be attracted by better deals or brands with similar orientation, simply basis the manner in which competition is placed next to each other.”

For more updates, be socially connected with us on
WhatsApp, Instagram, LinkedIn, Twitter, Facebook & Youtube

Stay updated with the latest news in the Marketing & Advertising sector with our daily newsletter

By clicking Sign Up, I agree to the Terms of Use and Privacy Policy.