E-commerce space took off spectacularly well last Diwali with small as well big e-commerce players in a no holds barred ad spend spree, and if media reports are to be believed both Flipkart and Snapdeal are looking for 1 billion dollar (Rs 6,300 crore) funding each from their current investors. Negotiations have been going on for more than six months now and as per industry sources; they are expected to close the fund raise typically by mid-August or late August, which will be before Diwali. So, with more money coming into the market, it will fuel ad spends during the festive season.
Also reportedly, most of these e-comm portals, including Flipkart, Snapdeal, Jabong and others, reported poor Q1 sales numbers. As a result of this, there will be immense pressure on the top e-tailers to offer good discounts, so that the e-comm players can make the most of it during the Diwali season.
Media planners and ecommerce players we spoke to said that the ad spends by the e-commerce sector alone could go as high as Rs 1,300 crore in 2015.
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Higher ad spends this festive season is the popular industry opinion
Sam Balsara, Chairman & Managing Director, Madison World said, “Yes I am amazed at the number of dot.com businesses that are coming into the advertising market and they want to advertise with quite decent size budget for start-ups. This is the key and the new phenomenon which kind of began to happen about two years back and is now slightly happening on a wider scale. One of the reasons why most of the growth will happen this year is because of dot.com business. Otherwise there could be de-growth, because last year whatever the growth was, 7-8% was because of the Elections and this year the money is going to go away.”
Nabendu Bhattacharya, MD of Milestone Brandcom highlighted, “I keep on reading reports everyday that the e-comm majors are eyeing for funding. So it is like the flavour of the season and everybody is trying to build their brand and visibility is the key. During Diwali, there is a huge clutter in the market and we have clients, who have started asking us to book the space for the September to the November time frame. Many of these e-comm players work on a weekend module, and all these players would want to move into the Diwali season, when a lot of buying happens for the household. There is a huge demand this time; otherwise, booking space for the festive season from now on is not the typical OOH phenomenon. My belief is that all the advertisers will have a fantastic time this festive season.”
Rajiv Dingra, Founder & CEO, WATConsult feels that the entire 1 billion dollar will go in ad spends alone. He informed that, “In digital, you need a month’s time in advance, so if you need something by Diwali, which is on 11th November, then you should start working by October 11. So in another 15-20 days, when these players will have their funding in place, we will get to see a lot of pitches happening. In many ways, they may not change their creative agencies so much, but there could be a room for a lot of these individual creative agencies to get projects.”
He further added, “Ecommerce will be an always on function, and it may differ from quarter to quarter, I think the reason where they have reached is because investors have the vision that, come what may, we have to grow the pie, in this case, funding actually becomes irrelevant. It is a market making strategy and they want everyone to buy through e-commerce. As the e-comm system, user base and inventory is built up, people will buy from places where it is available. As this attitude becomes more common place, the pie will grow and they will get more investments. Look at it from the investor’s point of view, I am happy putting, a billion more where I have already invested 2 billion, than investing 10 million, where I have not invested.”
Shamsuddin Jasani, MD, Isobar, said “Absolutely, with Diwali approaching there will be a huge spike in terms of all the e-comm players spending, both in terms of mindset of the consumers, when they would like to spend money in buying things, as well as the e-comm guys, who would like to drive home the point that e-commerce is here to stay. And this Diwali is going to be a blockbuster season and you are going to see records being broken, in terms of sales.”
Echoing similar views, Ramanujam Sridhar, Founder and CEO, Brand-comm feels that there will be more ads spends. “Infact many of these e-comm portals hardly did any kind of advertisements, till they got funding. Funding is all about getting eyeballs and customers, so unless you do advertising, you won’t be able to get that. “I have heard from a lot of these brick and mortar brands and the strong ones infact, that they have been quite concerned about the e-comm sites offering discounts. But all these e-comm sites should try and do advertisements differently; right now it is completely discounts and offer led. The merit of advertising is not in bringing the name of the brand across, but in building an affinity towards the brand. Probably there is pressure from the VCs in getting more sales and footfalls, that is the reason the ads are more discounts led.”
Mobile, digital to benefit more?
Bhattacharya stated that, today advertising is all about being in consumer’s mind space and whoever shouts the most, will win the battle. “Also Diwali for brands is no longer those 2 days when the consumers will be at home, it starts much before that. So placements on the way to office, near the malls will be very important, also apps are turning to be a huge rage. Today, investors don’t mind spending money, but they will like to know, what will be the return of their investments- in terms of the sales and the leads.”
Dingra is of the opinion that, since today it is all about creating the buzz, so lot of mobile impact innovations will get leverage, brands like InMobi and Vserv could get business, because mobile is where these e-comm players are all going. Since Diwali communication is mostly about being visual, ad spends will happen over a lot of mobile-led ad networks and video led ad networks.
According to Sridhar, a lot of these e-commerce brands are now using YouTube for their promotions. The recent one was Myntra’s Anouk ‘Bold is Beautiful’ and since they chose the topic of homosexuality, it helped them to grab eyeballs and the video became viral. So I think we will see more brands using YouTube now on for their advertising.