In 2015, broadcasters and publishers made a killing, thanks to e-commerce companies keen to build market share at any cost that spent hundreds of crores on advertising.
That’s changed this year, with most e-commerce firms—including Snapdeal (Jasper Infotech Pvt. Ltd), Jabong (Jade Eservices Pvt. Ltd) and Flipkart Ltd—now focusing on profitable growth, and funds becoming scarce (and investors conservative).
Data from AdEx India, a division of TAM Media Research, for the first half of 2016 bears this out. According to this, the overall share of business-to-consumer or B2C e-commerce firms in TV advertising (by volume) declined to 2.49% this year (as of 18 June) from 3.18% in the first half of 2015 (January-June). In print, it has reduced to 1.25% from 1.29%. Some e-commerce firms have also struck smart ad-for-equity deals with media companies.
The trend is most evident in the advertising activity of large e-commerce firms. In the first half of 2015, Flipkart, Snapdeal, and Jabong were all among the top 10 advertisers by volume (among e-commerce companies) across TV and print. Flipkart was at No. 2, Snapdeal No. 3 and Jabong No. 8. This year, Flipkart is at No. 3, Snapdeal No. 10 and Jabong has fallen out of the top 10.
The only company to buck the trend is US-based Amazon.com Inc.’s Indian arm. It is the top e-commerce advertiser by volume so far this year, with a 18% share of TV advertising and a 21% share of print among e-commerce firms. Last month, the firm said it would invest an additional $3 billion in India on top of the $2 billion it has invested since July 2014.
Interestingly, Flipkart would appear to be betting big on its fashion business. Myntra, owned by Flipkart, is now the fourth largest advertiser in the e-commerce segment by volume (it was 15th last year).
Gunjan Soni, chief marketing officer and head, international brands business, Myntra, said TV remains the preferred medium of advertising, but declined details on actual spends. A Flipkart spokesperson said advertising volume is not the best measure of advertising effectiveness.
“Media strategies are framed in line with the company’s business goals and the target audience. What we focus on is the access and relevance of ads and communication to our consumers and the media mix is formulated accordingly,” this person added, without disclosing details of actual media spending.
Amazon and Snapdeal did not respond to emails seeking comment.
According to executives in the advertising and e-commerce business, the top 15 e-commerce brands spent close to Rs.2,100 crore on ads in 2015.
Apart from “a change in strategy” and “scarce funding”, a move to “digital” could explain the change, said a media buyer who asked not to be named.
According to a report released earlier this month by the Internet and Mobile Association of India, digital advertising currently accounts for 12% of overall advertising.
“We continue investing behind both offline as well as digital channels. We are just coming off of a large 360-degree brand campaign in June. Our approach clearly is to drive sustainable scale,” Sanjeev Mohanty, CEO and MD, Jabong, said in an email, declining to comment on specific numbers.