E-commerce festive ad spends to grow by 20-30%; expected to reach Rs 1300 crore mark
Television slated to be the biggest gainer in e-commerce festive ad spend pie
The festive season, which begins from Onam and ends with New Year’s, has been seen as a time when brand categories spend the most in terms of advertising and marketing. Last year the festive period saw a windfall of ecommerce advertising. Their ad spends during this period were expected to touch Rs.1,000 crore. This year the festive ad spends of ecommerce companies are expected to go up by 20-30% suggest some media reports, and for some cash-rich companies it might go as high as 30-40%. Festive ecommerce ad spends could be expected to cross over Rs.1,300 crore this year.
Ecommerce festive ad spends to grow by 20-30%
We recently reported (report on exchange4media) that big ecommerce players such as Flipkart and Snapdeal were expected to bring in $1 billion (Rs.6,300 crore) each through funding from their current investors before the Diwali period and would be used to fuel ad sales after poor Q1 sales numbers. With poor previous quarter sales many of these companies will be looking to make the most during the festive season when consumer spending is the most.
While some media planners have pegged ad spends during the festive season to increase by 20-30%, there are others that suggest that we could see a 30-40% growth in ad spends. Ashish Bhasin, Chairman, Dentsu Aegis Network said, “I think it will be 30-40% more than last year, because ecommerce as a category has been one of the fastest growing parts of advertising. So it is quite likely that it will be between 30-40% this year. This is because a lot of their business models are fairly sales oriented and a lot of categories such as durables see their sales peak during the festive season, so it is likely that ecommerce spends will grow substantially higher during this period.”
Another senior media planner who is handling a few large ecommerce clients says that ecommerce spends could grow by as much as 30-40% during the festive season. “The ecommerce companies which spend last year would be spending much more this year in order sustain their growth. Added to this you will also see spends coming from new ecommerce companies which have received a first round of funding and will look to make their mark.”
P.M. Balakrishna, CEO, Allied Media said, “I think it should be in double-digits for sure. The entire ecommerce category is going to focus on the festive season.” He however did not think it would be as high as 30-40% and said that could grow by around 15-17% during this festive season.
Some brands could even see their ad spends during this period several fold. Paytm, which had announced a marketing budget of Rs.500 crore, for instance is kept aside Rs.300-400 crore this year during this time of the year according to a media report. This is a significant increase from the Rs.60 crore spent last year. The company recently received $350 million in funding.
Ecommerce giant Amazon, which had spent close to Rs.200 crore during the festive period last year, could be expected to increase it spends this year too. Similarly, Flipkart had spent more than Rs.175 crore during the same time last year and could be looking to push its sales numbers during this period.
Policybazaar.com too will be increasing its spends by 30-35% over last year during the festive period. “Our overall media spends have doubled over the last year and during the festive season we will be spending over 30 – 35% over last year. Moreover, the clutter in TV also increases during this time and brands have only 2 options, either to stay clear of this season or significantly increase the spends in order to stand out,” said Naveen Kukreja, CMO, Policybazaar.com. The ecommerce company had a marketing budget of Rs.80-100 crore during this year.
TV to continue to receive a large share of the revenue pie
Television was the top earning medium during the festive season. In the last festive season, it received close to Rs.450 crore of the ad revenues say some media reports. It was followed by print which received Rs.370 crore and radio received a little more than Rs.20 crore.
“Not just for us but for any e-commerce player TV will continue to be the primary medium. For us it will be TV and Digital, while TV gives us the required reach, digital provides us sustenance. Moreover, we are clearly able to measure the ROI of both TV and Digital and are very comfortable in backing these mediums. Digital, across the industry is known as a performance driven medium. But for us TV is nothing short of performance marketing, so approx 85% of the spends will be on TV,” Kukreja said.
“The lead mediums where a maximum amount of money will go will be towards television, outdoor and print and of course digital,” said Bhasin. Similarly, Balakrishna said that TV, print and outdoor will get a major portion of the ad spends of ecommerce companies during the festive period.
One of the major reasons for the increase in ad spends is the increase in ad rates across the various mediums. According a media report ad rates on mediums such as print, television and radio are expected to see a 10-15% rise in ad rates during the period.
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