The rise and rise of e-comm advertising in India
The emergence of Amazon, Flipkart, Paytm and Snapdeal as key advertising channels signals a shift in consumer behaviour as more shoppers take to online shopping
E-commerce platforms like Amazon, Flipkart, Paytm, and Snapdeal have emerged as key advertising channels for marketers due to the growing online retail sales in India. According to Statista, the Indian e-commerce market is estimated at $64 billion in 2020 and is projected to touch $200 billion by 2027.
The growth in the e-commerce market signals changing consumer behaviour as new shoppers are taking to online shopping while existing shoppers are increasing their online spends. The Covid-19 induced lockdown has only accentuated the e-commerce adoption in India. The pandemic also forced brands to tweak their retail strategy in order to reach out to their end consumers.
The reach of e-commerce platforms has widened due to the adoption of online shopping in Tier II and Tier III cities and beyond. The e-commerce platforms are targeting these customers with initiatives like the use of local language and localised content and offers.
The changing consumer behaviour has had its impact on the Indian digital advertising market as well with advertising spends on e-commerce platforms touching Rs 4,700 crore by the end of 2020, according to the recent Dentsu-exchange4media Digital Advertising in India 2021 report. Based on the current trajectory, the report has predicted that advertising spends on these platforms is expected to grow at a CAGR of 40%.
According to the 2021 FICCI-EY report on the M&E sector, advertising on e-commerce platforms crossed Rs 3500 crore in 2020 to garner 12% of total digital advertising as more brands used online channels to drive sales. The report stated that digital ad spends stood at Rs 28,200 crore during the year.
WATConsult India AVP Consumer Insights Abheek Biswas said that the ad spends on e-commerce platforms is spread across formats like display, video, social media, paid search, and others (incl. classifieds).
"Marketers and e-tailers have identified and adopted the trends to reach out to a larger audience with e-commerce advertising, blending it seamlessly with merchandising and other formats of digital advertising, resulting in a rich customer experience. E-commerce advertising results in greater sales conversions and personalisation helps in avoiding dilution of the marketing messages as it taps in the high customer intent to purchase," Biswas said.
He further stated that the advent of DSPs by e-commerce platforms and higher focus on product search during the pandemic period has driven the evolution of e-commerce advertising in India.
In the Asia Pacific, India is one of the three countries where Amazon DSP is present. The other two countries being Australia and Japan. Amazon DSP is a demand-side platform that enables advertisers to programmatically buy display, video, and audio ads both on and off Amazon.
Recently, Flipkart launched its commerce-focused self-serve DSP in partnership with MediaMath. The partnership will support advertising goals for brands through a self-serve platform with end-to-end campaign management in line with the larger growth strategy for Flipkart’s Ad Tech business.
Noida-based tech company Paytm, which specialises in e-commerce, payment systems, and financial technology, has a thriving digital advertising business. The company offers three ad formats to advertisers. These include on-platform display ads, Paytm DSP, and product listing ads.
On-platform display ads are placed on strategic touchpoints on the homepage, category page, and post-transaction page on the Paytm consumer app, Paytm for Business merchant app, Paytm Insider & Paytm Money. Paytm’s DSP is for running programmatic video ads outside the Paytm App. It helps advertisers reach out to Paytm’s user base by showing ads via Paytm’s own and third-party solutions. The Product Listing Ads are available for brand and merchant partners retailing their inventory on Paytm Mall.
Depending on the requirements of the advertisers, Snapdeal offers a cost per transaction or cost per click. The ability to choose a suitable measurement metric closely aligns the advertising spends with the objectives of the spend.
Xaxis India country head Bharat Khatri said e-commerce advertising in India is quite significant with advertising on the owned and operated properties of e-commerce platforms pegged at Rs 100-200 crore. This, he clarified, is the spending on digital and not on other fulfilment types of advertising concepts that these platforms have.
"Over the last six months, e-commerce platforms have come up with their own DSP on the lines of Google. So now, Amazon and Flipkart have their own DSP. Brands can now activate a campaign and target users outside the e-commerce platform as well. So earlier, they were targeting Amazon guy only inside the Amazon platform when he had decided what products to purchase but you still have the last-mile option to influence and change the product preference. But now you can target the Amazon guy outside Amazon also when he is reading news or listening to music. Whatever everyone is doing on the internet the DSP now has the power to target them. Now you can do a 360-degree funnel," he explained.
Khatri noted that earlier the ads by brands redirected consumers to the Amazon page. However, once the user landed on the Amazon homepage the Google ecosystem and the client did not have any visibility if the user has purchased the product or added it to the cart or is trying competitors' product. That is a thing of the past as the DSPs launched by Amazon and Flipkart allow 360-degree funnel view.
He also revealed that Xaxis is working with e-commerce DSPs and the results have been encouraging. "We are working with them for the last 6-7 months and we have done quite a significant amount of campaigns. We have got a good amount of return on ad spends (ROA) from both the platforms So the currency is ROA. If an FMCG client is investing Rs 3 lakh and the product is listed on the platform we try to measure what is the return on ad spends out of the Rs 3 lakh that was spent. We are seeing 2-3X ROA coming out of both these platforms."
A Paytm spokesperson said that the Paytm Ads platform has been used by over 200 advertisers in the last 18 months. "We enable companies with industry-leading solutions for both performance and brand advertising. We provide advertisers with one of the largest consumer bases in the country who can be targeted based on demographics, transactions & behavior. In the last 18 months itself over 200 advertisers across various segments & categories including BFSI, FMCG, Media, Gaming, Retail, Auto, Mobile handsets, have used Paytm Ads and expanded their reach and messaging," the spokesperson said.
A Snapdeal spokesperson said that the integration of online advertising with the transaction flow is a big driver for e-commerce advertising. Further, the ability to click on the advertisement and know more about the product, gain easy access to product videos & user reviews, etc, and seamless access to a purchase button that offers convenience and value to users also makes e-commerce advertising a viable option for advertisers.
"The other reason for the growing popularity of e-commerce advertising is the rapid rise of value commerce. As India's leading value commerce platform, Snapdeal is home to millions of products, whose USP is their high functional quality & value pricing and not brand awareness. Advertising on the platform drives traffic to their listings and helps drive conversions. The direct & measurable correlation between advertising and sales is far more feasible & effective for small sellers & young brands than expensive brand-building campaigns," the spokesperson noted.
Advertising on Snapdeal is largely directed towards sellers and their products listed on the platforms. It also offers free advertising credits to new sellers who create a listing within 7 days of sign up. "We also run a variety of other promotions from time to time to showcase the benefits of advertising on the platform. More than 80-90% of our users live outside the metro cities and we work closely with brands who wish to target this large segment across Bharat."
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