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E-comm players eye critical mass, spend big on TV

12-September-2014
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E-comm players eye critical mass, spend big on TV

Television has been the medium of choice for FMCG and consumer durables. But of late, e-commerce has shown a preference for it too. In a recent report on festive ad spends on exchange4media (TV gears up for more festive ad spends from e-comm, auto, durables) television channels as well as media planners had observed that e-commerce was likely to emerge as a big spender on TV fuelled by the recent round of funds pumped into the category. This was reiterated in the Group M report ‘This Year, Next Year 2014’ . In this backdrop, we spoke to industry experts to find out why e-commerce players are turning to television and how they are planning their spends.

Funds driving mega campaigns   

Recently, Snapdeal, which has received private investments from Ratan Tata and has raised  233.7 million dollars in funds, snapped up the presenting sponsorship rights to one of biggest shows on Colors and presumably on TV, Bigg Boss Season 8, in a deal worth Rs 35 crore.   

This was not an isolated case. A few months ago Flipkart announced that it had raised one billion dollars from new and existing investors, while Amazon too announced that it would invest two billion dollars in the Indian market.

Rohit Gupta, President (Network Sales, Licensing), Multi Screen Media, is of the opinion that the category is spending more than consumer durables. “Consumer durables (ad spends) have been relatively low though it is one of the big categories on television. FMCG is about 40 per cent of the overall television ad revenues. Starting from a low base, e-commerce has turned into a big category for us now. Whether you look at Amazon or Flipkart, every player has been active on IPL and other big properties. As a category they are now important for TV ad revenues and one of the fastest growing ones too,” he said.

According to Sangeetha Aiyer, VP & Head – Marketing, A+E Networks TV18, “There is an infusion of capital in that sector that allows them to scale up their plans and businesses. The category now contributes to a slightly larger portion of our revenues. Overall, if e-commerce was contributing about two-five per cent to TV channel revenues, it has now gone up to seven-ten per cent. That is a big number from that industry.”

Ravi Rao, Leader – South Asia, Mindshare, observed that the ad spends of the category have gone up by as much as seven times year-on-year. According to the Head of the Revenue Department of a TV network, the consumer durables sector ad spends have reduced even as e-commerce ad spends have grown to a higher level on TV. “Most of the e-commerce players that have been spending majorly on television channels are either from the categories of fashion and consumer goods as they sell a lot online too.” He pegged the revenues from e-commerce at anywhere between 10 per cent and 15 per cent. 

Mona Jain, EVP, Cluster Head, ZEEL said, “Right now, in terms of ad spends, they are in the same space where consumer durables used to be. FMCG is a huge pie of ad revenues for television but the pattern of e-commerce spends is very different from that of FMCG.”

Mass medium for delivering the message

Mukesh Bansal, Founder- CEO, Myntra and Head of Fashion, Flipkart, says the main reason for increasing ad spends for TV is that it is a mainstream medium that helps to reach out to people who are not digitally savvy. Besides, the brand perception changes, making it appear more reliable to the consumers. “We are spending a lot on television and will continue to increase our ad spends on TV,” he added. 

Himanka Das, Senior Vice President – West, Carat, says that e-commerce looks towards television in order to scale up and get a critical mass audience to know the brand. He explained: “If you look at the trends, they (e-commerce brands) usually do their brand campaigns through through digital. But digital cannot get you critical mass because you can only get a digitally savvy audience or  natives of the domain. But the moment you want to get  a larger reach, you have to turn to television.”

Citing the example of Flipkart, he said, “The brand could scale up because of advertising on mass media channels like television. E-commerce players are looking at building their brand, getting the mass, driving traffic. And a mass medium helps them achieve all of that.”

As long as the e-commerce sector is flush with funds, the players hungry for more eye balls and keen to build on their brand perception, TV channels have a lot to cheer about.   
 

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