Flipkart Connect 2020: 'Commerce advertising growing 3X the rate of digital advertising'
Rajan Anandan, MD, Surge and Sequoia Capital India LLP shared his thoughts on the evolution of commerce advertising at Flipkart Connect 2020
Flipkart’s day-long virtual conference, Flipkart Connect 2020 saw the participation of Indian and international thought leaders presenting their views on various subjects from e-commerce to the disruptive field of commerce advertising.
The virtual event was graced by industry leaders - Kalyan Krishnamurthy, CEO, Flipkart Group; JeyandranVenugopal, CPTO, Flipkart; Manu Kumar Jain, MD, Xiaomi India; ArpanSheth, Senior Partner, Bain & Co; Varun Alagh, Co-founder and CEO, Mamaearth; Sankalp Mehrotra, Senior Director of Monetization, Flipkart; Rajan Anandan, MD, Surge and Sequoia Capital India LLP, and Seth Godin, Bestselling Author and Entrepreneur.
Anandan shared his perspective on the topic - “The next wave: Commerce advertising is mainstream now”. Starting off the session, Anandan recalled how far India has come over the last decade and also highlighted the growth of active internet users from 2011 to 2019.
“I recall when I joined Google in 2011, which was nine years ago, India had just crossed 100 million internet users but India only had about 10 million of active smartphone users. Fast forward from then in 2019, India had over 450 million internet users and over 350 million connected smartphone users. So our country has gone from 10 million active smartphone users to 350 million connected smartphone users and the overall user base has increased by 4.5 times, which is quite spectacular and outside of China, it is unprecedented anywhere in the world. And in 2020, it is truly spectacular to see the scale at which the internet is operating right now in India.
"Today, we have over 500 million connected internet users and 450 million of them access the internet every single day. The most amazing thing is that on average, a connected internet user is consuming 16GB a user per month of data. This mobile data consumption is twice compared to the data consumption in a country like the USA. So, by far, we are the largest mobile data consumption ecosystem. Over the next 5 years, except for very young children and a very aged population, everybody else in India is going to be connected to the internet and will spend 4-6 hours a day on the internet.”
According to Anandan, digital advertising spends will cover 40% of the overall ad spends in India in the next five years. “Given the scale that the internet is going to have as well as the targeting capabilities if you are a brand, it doesn’t matter what size you are, for brands of all sizes, the internet is going to become central for all brand objectives.
"In 2011, the entire digital industry was about 140 million pounds and in 2019, the digital advertising industry was about 3.5 billion dollars. Contrary to what a lot of people think, Google and Facebook are much a part of that but 500 million dollar digital advertising revenues are outside of the top two platforms. Surprisingly, a significant part of the advertising was commerce advertising, so Flipkart was in particular. We believe that by 2025, over 40% of overall advertising spends in India will move to digital advertising.”
Speaking about commerce advertising and what makes it so powerful, he shared, “As we know commerce advertising did not exist in India even 3 or 4 years ago. Whether it’s Flipkart or other commerce platforms, they did not exist earlier but last year in India, commerce advertising was over 300mn dollars. Commerce advertising is growing three times the rate of digital advertising. So why is commerce advertising so powerful? Because it is the best ROI medium and from a performance standpoint, if you want to actually focus on driving sales, driving ROI from your digital media spends, there is no other platform that comes post-delivering the ROI but commerce advertising can. And many would agree that the most important thing when it comes to commerce advertising is ROI. Commerce advertising offers the best ROI for digital advertising because it allows reaching users at the right place, at the right time when they actually have the purchasing intent.
Citing examples of popular brands like Mamaearth and Boat, he further stated how commerce advertising is not just an ROI medium but also helps in building brands, creating engagement and gaining acquisition. “I think what has also changed is the scale of the platforms now, like Flipkart, it has a reach of over 100mn monthly active users and this kind of reach not just enables performance advertising but also brand advertising, you can now actually build brands on commerce platforms. And what is most exciting to me is that now it is possible to build and scale new brands entirely using commerce advertising. If you look at incredible companies like Mamaearth and Boat, they are built in India entirely from scratch in 3-5 years and these have become multi-hundred crore brands with over 1000 crore revenues and entirely built on commerce platforms. And what this actually shows is, commercial advertising is not just about giving extraordinary ROI but it is also about building brands right from awareness, engagement to acquisition and that’s what makes commerce advertising interesting. All of a sudden a platform maybe a year and two old that you thought about as performance advertising medium that can give you ROI, it now can create brand awareness and can actually drive engagement and the reason is this extraordinary scale and reach of 100mn. Commerce advertising also allows you to use innovative ad formats across branding, engagement and acquisition.”
Concluding the session, Anandan said, “I would end with this that it really doesn’t matter whether you are a small brand or a new startup or largest consumer company, Commerce advertising caters to all sizes. Digital advertising and particularly Commerce advertising has achieved scale and it’s here and now."
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