How e-commerce conquered television
- Sushma Swaraj meets Wang Yi to discuss India-China ties
- Brouhaha should not be created over rape cases in big country like India: Santosh Gangwar
- Sitaram Yechury re-elected as CPI(M) general secretary
- 31 killed in suicide attack on Kabul voter registration centre
- Air India flight faces turbulence, leaves 3 passengers injured, window panel comes off
The e-commerce boom isn’t just happening online. It is also happening on television. And broadcasters are laughing all the way to the bank.
About Rs.2,000-4,000 crore is likely to be spent by 56 e-commerce brands on television this year, estimates from television channels, e-commerce advertisers and media buyers show.
In the three months ended 30 June, they spent Rs.450 crore.
Some believe the number could be towards the higher end of the range.
Last year, e-commerce companies spent Rs.1,240 crore on TV ads, accounting for 8% of the overall TV advertising of Rs.15,500 crore, according to a top executive at a TV channel who did not want to be identified.
According to GroupM, TV advertising was worth around Rs.19,000 crore last year.
The media agency expects TV advertising to be worth Rs.22,000 crore this year.
Most Indian TV channels are privately held and do not disclose revenue.
This year, e-commerce companies will account for one-fifth of all TV ad spends, according to Ashish Bhasin, chief executive at media buying firm Aegis Media.
“E-commerce is the fastest-growing sector in terms of media and advertising spends right now, and will continue to be the fastest growing for the next few years,” he said.
Many venture capital investors have completely bought into the Indian e-commerce story.
Since January 2014, more than $6 billion of investment has gone into e-commerce firms, according to Mint research.
The advertising and marketing war between Flipkart, Snapdeal, and the Indian arm of Amazon is the 2010s equivalent of the telecom war of the 2000s, the cola wars of the 1990s and the soap wars of the 1980s in India.
Armed with venture capital funds, most e-commerce companies have embarked on a campaign to build market share at any cost, offering steep discounts and advertising heavily.
Consumers and media executives aren’t complaining.
“Historically, the media industry has thrived on ad budgets of consumer product companies, telecom firms and mobile phone manufacturers. In the last few years, e-commerce has come to belong in the same rung, if not more,” said Nitin Agarwal, senior director (marketing) at ShopClues, an online marketplace.
ShopClues’ latest campaign, titled Ghar Wapsi (return home), encourages people to shop online on the commute home.
TV is a very effective and influential medium, Agarwal explained.
The company spends 80% of its marketing budget of Rs.40 crore on television.
Advertising agency head Ashish Khazanchi said television has been hijacked by e-commerce brands.
“... especially weekend prime time because there is a higher probability of customer traffic that could result in app downloads or even transactions as we move towards a multi-screen consumption ecosystem,” said Khazanchi, managing partner at advertising agency Enormous.
Advertisers say there are several reasons why TV makes sense.
One is to go where the customers are.
“Our choice for any media outlet or media property is based on the simple premise of going wherever our customers are,” Amazon said in an emailed response.
Another is to achieve top of the mind recall.
“Between e-commerce and m-commerce companies, the kind of products being sold largely remains the same. So how does the consumer decide which platform to buy from? Television plays a big role in top of the mind recall,” said Nitin Gupta, chief executive at PayUMoney, an online payment services firm.
A media buyer said the company plans to spend around Rs.60 crore on advertising this year.
And the third is to build trust and salience—quickly.
“Television reduces the time to build trust. Any start-up that needs to scale fast and has sales targets to be met will need to advertise on television,” added Gupta.
“To create impact and salience, there is no substitute to TV. To create a brand at a mass level and sustain it, companies like us are investing heavily on television,” said Shankar Nath, senior vice-president at Paytm.
Paytm’s association with television started with a Rs.20 crore campaign for the World Cup which resulted in a surge in the company’s traffic and number of transactions, according to the company.
Paytm was also associate sponsor for the Indian Premier League, or IPL. “We are focused on time-sensitive content on television—sports and news. We are in discussions for the upcoming sports properties lined up for this year,” added Nath.
Paytm has budgeted Rs.150 crore for TV advertising this year.
While the cricket World Cup held earlier this year was a big draw for e-commerce advertisers, niche channels would also appear to be significant beneficiaries of their largesse.
“Ad inventory share for e-commerce in a channel differs by genre. While in general entertainment channels the share is 3-5%, on niche it could be 40-50%. Niche channels include English movies, English entertainment, music, etc,” said Prasanth Kumar, chief executive officer, Mindshare South Asia.
While media companies have reason to cheer, the market could turn, warns Bhasin.
Some e-commerce companies could go out of business.
“Consumer product companies are far more dependable and reliable in terms of spends because it is linked to consumption which is an established growth story for many years to come,” Bhasin added.