Bengaluru: Online marketplace Shopclues, run by Clues Network Pvt. Ltd, has launched an advertisement platform for the 500,000 merchants in its marketplace, following in the footsteps of larger rivals Flipkart Ltd and Snapdeal (Jasper Infotech Pvt. Ltd) that have stepped up the drive to generate ad revenue in the past 12 months.
Shopclues, which claims to focus on smaller towns and cities, said the new product called AdZone, a self-service solution that helps merchants promote products using native and custom ads, was developed in partnership with ad tech firm C1X.
This is unlike Flipkart and Snapdeal, which acquired AdIQuity Technologies Pvt. Ltd and Reduce Data, respectively, to strengthen their presence in the digital ads space.
Shopclues claims to have run a pilot with 300 merchants for the ad product and launched 1,000 ad campaigns over a 10-day period earlier this month.
“This platform will immensely boost the visibility of products and maximize product views, thereby helping vendors to increase their business with us. The bidding system ensures transparency, while our differential bidding mechanism for products is essential for retailers advertising varied products,” said Radhika Aggarwal, co-founder and chief business officer at Shopclues.
The move by Shopclues, which has so far raised at least $200 million from the likes of Nexus Venture Partners, Tiger Global Management Llc and Singapore’s sovereign wealth fund GIC Pte Ltd, among others, comes at a time when e-commerce companies are exploring avenues beyond pure-play selling to generate revenue.
Sales by e-commerce companies are still largely driven by discounts, which in turn burn a deep hole in their pockets, thus prompting them to explore ancillary revenue streams such as advertisements.
For instance, in China, another market where smartphones are the popular medium of shopping, some e-commerce companies have built large ads businesses. Alibaba Group, which is China’s dominant e-commerce firm, generates larger mobile ad sales than even Baidu, China’s local search engine, according to eMarketer, a market researcher. Alibaba generates more than half its sales from ads, according to data by iResearch Consulting Group.
Closer home, both Flipkart and Snapdeal have launched ad products for merchants.
Flipkart generates nearly $1 million in monthly advertisement sales, making the company one of the largest digital ad platforms in India less than a year after it launched its ads business, Mint reported on 3 March.
The company launched the digital ad product in May last year, after acquiring AdIQuity in March.
To be sure, Flipkart has rolled out the advertisement platform for merchants as well as brands.
SoftBank-backed Snapdeal launched a new version of its advertising platform Snapdeal Ads, which aims to help sellers target shoppers on the site based on behavioural data collated by Snapdeal.
The company’s foray into the segment came after it acquired Reduce Data in September last year.
Digital ad spending in India is expected to increase by 40% to Rs.6,525 crore this year, according to a January report by media agency GroupM, which is owned by WPP Plc., an international advertising and public relations firm.
A majority of digital ad spending currently goes to Google Inc. and Facebook Inc.
Over the next five years, digital ad spending is expected to shift to mobile from desktop sites as sales of smartphones boom, and the likes of Flipkart, Snapdeal and Shopclues are planning to capitalize on this shift and generate large ad revenues.