Ecommerce firms to spend $200 m on ads for 5 days

Ecommerce firms to spend $200 m on ads for 5 days

India's top three ecommerce companies Flipkart, Amazon and Paytm Mall are spending a whopping $200 million (over Rs 1,400 crore) on advertisements for the five days of festival season.

According to a report by RedSeer Consulting, this is the biggest ever spend by ecommerce companies for a five-day festival season. 

"We have seen a marked difference in ecommerce platforms this time as they increased Above The Line advertisement (ATL), covering newspapers and TV ads in the country," said RedSeer Consulting Strategy Consultant Mrigank Gutgutia.

Gutgutia said this advertisement strategy is in line with the strategy to on-board next million from the Tier-2 and Tier-3 cities in the country. 

"Last year, ecommerce companies primarily depended on social media and other digital medium to reach out to customers. Now the online festival season has matured over a five day period and companies are looking at more advertisement spend," he said. 

The report states that the e-retailers' high spend on newspaper and TV promotion resulted in growth in awareness among customers from 19% in 2017 to 38% customers in 2018.

"During the whole of September, ecommerce companies spent around $400 million," he said. 

The primary reason for the advertisement spend is massive funds raised by these players.  Walmart announced acquisition of 77% controlling stake in Flipkart by investing $16 billion.  Flipkart Marketplace Singapore infused Rs 3,463 crore into the Indian entity Flipkart Internet. 

In November 2017, Amazon infused Rs 2,900 crore in Amazon India. Amazon Seller Services Pvt Ltd received a massive capital infusion of Rs 2,600 crore from its parent Amazon Inc during May this year. Amazon India already infused more than $5 billion committed by its CEO Jeff Bezos.

Paytm, which owns Paytm Mall, recently raised close to $356 million from Warren Buffett’s Berkshire Hathaway at a valuation of $12 billion.

The consulting company states that 70% customer awareness this year has been contributed by social media platforms and there is more expectation on price front.

"We expect this festival season will have a participation of 20 million people coming to purchase compared with 13 million who participated during the last year," said Gutgutia.

Besides Flipkart's Big Billion Day sale, Amazon India is banking on the Great Indian Festival and Paytm on the Mall Maha Cash Back Sale to improve their sales during the period.