Will e-commerce TV ad spends continue to rise beyond the festive season?
Senior media planners estimate e-commerce ad spends in October alone to reach Rs 200 crore. We find out if it's just the festive season bubble or a trend likely to carry on in the future
Turn on the TV and all you can see during the commercial breaks are ads after ads of e-commerce sites. In a recent article on exchange4media we took a look at some of the aggressive ad campaigns of e-commerce sites on television (Are e-commerce players edging out traditional advertisers?). Numerous TV ads are evidence of the amount of spends being invested in advertising. ASSOCHAM report had stated that ad spends during the festive season have grown by 25-30% and which is chiefly driven by e-commerce companies that are vying for a larger share of consumer festive spends. SureWaves Media, an audience aggregation platform for television, has seen an increase in festive ad spend on TV of online retail increase by 257% since last year.
There is a 20-25% expected growth in this month’s ad spends over September as per a latest media report. E-commerce ad spends in October alone are expected to reach Rs 200 crore according to senior media planners, who wished to remain anonymous. This comes as a phenomenal jump when compared to the Rs 200-300 crore that e-commerce companies contributed to ad sales during the entire last year. This category has more than tripled its ad spends during this year as its expected ad spends are to be Rs.1000 crore by the end of the current year and is expected to double in the forthcoming year. From a roughly Rs 9,000 crore industry, it has grown to Rs.18,000 crore and is expected to touch Rs 2.1 lakh crore by 2020 according to Technopak as quoted in a media report.
Snapdeal has created 50 commercials with 28 celebrity endorsements for their Diwali Bumper Sale campaign. On the other hand, Flipkart’s ‘The Big Billion Day’ ad campaign could be seen regularly played across all television network channels during the previous month.
Balakrishna P.M., COO, Allied Media, said, “From a pure play TV point of view at least, the festive is all about shopping so the e-commerce sites are spending substantial sums. Currently they are the hero category for most media firms. They have definitely increased their TV ad spends more than consumer durables. Automobiles are for very specific project launches for instance a car launch will be advertised on TV. That has been happening at a certain level but e-commerce (ad spends) has certainly been more. But one will have to wait and watch beyond the festive period to really see how much they are able to sustain and create that noise. But the sales have to happen. So they have faced some loss of business by giving huge discounts, which are definitely picking up customers, but how profitable is their business has been is a different calculation altogether. Giving you discounts is a huge cost and a burden too. Now whether that converts into profitable business subsequently down the line is waiting to be seen. If that happens than advertising will go up otherwise it will be yet another bubble that is waiting to sink.”
Naveen Kukreja, CMO, PolicyBazaar.com said that they have significantly increased their ad spends on TV and have doubled them from last year. “Till 2013, our media strategy was to dominate news and infotainment space. This segment has a higher affinity to the male audience, which is our core target group. In order to leverage our investment on TV, we have now moved beyond just building “affinity” to building “reach”. This is the reason we are now spending on GECs as well,” he said. He further added, “TV has definitely helped us in getting more traffic and leads for the business more than any other medium. Our traffic this financial year has increased by almost 40% driven by regular TV campaigns. While we are looking at exploring other mediums to build the brand, our share of spends on TV will continue to be higher.”
According to Radhika Aggarwal, Co-founder & CMO, ShopClues, “TV will continue to play a pivotal role in our mass-media effort because of the kind of reach it has. ShopClues is the largest horizontal marketplace for unstructured categories and the Indian mass-market is our prime customer base. And television is the ideal medium to communicate with this audience. Since ecommerce doesn’t have constraints of geography, television gives us the required mass-reach – also we can handpick the channels or programmes for targeted viewership or outreach. We expect our TV campaign to help us in tapping new customers and exciting them to try the online shopping option. E-commerce adoption is also a function of internet penetration in the country, but mass-media can help greatly in creating awareness and acceptance for this new way of shopping.”
Ganesh Subramanian, COO, Myntra said, “We have invested significantly in this medium over the past couple of years and will continue to use television to communicate Myntra's vision to help people look good. For us, television is a key channel of marketing, as it helps us connect with our audience and convey our message in an extremely comprehensive yet engaging manner. All our brand campaigns have received phenomenal response so far.”
Mehul Agarwal, Co-founder of Fabfurnish.com said, “We have been totally satisfied with the response that TV has provided so far. The current campaign has been a great success and we have found the results to be better than Radio or any other offline campaigns we have done so far. We have seen a 2-3x jump in traffic due to our marketing campaigns. Targeting HD channel audiences as a strategy has paid off handsomely too. Given our focus on strengthening our brand further and taking it to the next level, we are surely going to have a significant increase in TV and other offline marketing budgets for next year,” he said.
However, according to Dinesh Vyas, GM, India at MEC, “If you look at the distribution of spends in our country even today e-commerce forms a very miniscule part of the AdEx. Of course there are projections and people are expecting e-commerce (TV ad spends) to grow further, that has been going on because the base has been practically very small. So if you look at the way it has grown over the last five years it certainly is accelerating faster in print and television.” He further explains that television as a medium is cheaper than compared to print in terms of the frequency it gives for the same amount spent and is one of the reasons for e-commerce brands to spend on television. “For example a full page ad in an all edition Times of India would probably cost about Rs.1 crore or maybe if you negotiate it might come down to Rs.85-90 lakh. Now for a Rs.90 lakh budget on television even if I go completely niche and if I don’t use GECs I will be able to do a substantial two to three weeks of good campaign. So the point is they are certainly spending more money on print but you are seeing them a lot on television because comparatively television is less expensive than print you see them more often there. The frequency is very high,” he added.
Has aggressive spending of e-commerce brands during the festive season eclipsed that of other brand categories?
According to Atul Sharma, GM, Starcom MediaVest says that though they are yet to review the data in terms of absolute numbers it is not difficult to assume this with the intensity that e-commerce companies are advertising on TV during this period. “Obviously when there is that level of intensity then somebody’s inventory is going to get cut. Implementation is likely to suffer for other brands. I am sure to some extent it must have (ad of e-commerce companies increasing over other brand categories). Their campaigns are running all across all television channels.”
However, TV channels do not feel that ecommerce companies have overtaken the spends of categories such as FMCG. Ashish Sehgal, Chief Sales Officer of ZEEL said, “I don’t think they could have crossed the ad spends of FMCG. Put together they be equal to one FMCG brand (in terms of the ad spends) but overall if you look at it I don’t think they could cross the ad spends of FMCG. FMCG takes 60% of the inventory of TV channels and this continues”. Hindustan Unilever Ltd (HUL)’s, which is one of largest advertiser in India, is estimated to have an ad budget of around Rs 2,200 crore.
Similarly, Amogh Dusad, VP & Head – Programming, Sony PIX and AXN said, “There have been other brands (apart from e-commerce) also that have been part of our premieres and festive program offerings in terms of sponsors. But definitely this year has seen an upsurge from e-commerce during the festive period and also this is a big buying period for retail. But it is not that other categories (of brands) have reduced, there are other categories that are present on the channel. The share of voice has seen a substantive increase in the e-commerce advertising this time around.”
Albeit e-commerce companies have increased their ad spends with their aggressive promotions on TV during the festive season, it remains to be seen how the ad spends will progress in the coming months.
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