Industry POV

Even as e-commerce majors Flipkart, Snapdeal, Amazon log losses, ad spends soar; burn through Rs 7,252 cr in 2016

09 Jan 2017

Even as e-commerce businesses are piling up losses, they aren’t stopping from splurging on advertising, whether on television or radio, reports Anushree Bhattacharya in New Delhi.

Even as e-commerce businesses are piling up losses, they aren’t stopping from splurging on advertising, whether on television or radio, reports Anushree Bhattacharya in New Delhi. E-tailers spent R7,252 crore in 2016, which is a 26% jump over the amount spent in 2015, data released by MAP (TAM Adex) shows. By and large, it’s the bigger players that are advertising, the smaller lot is quiet.

“While large companies such as FlipkartAmazon and Snapdeal have upped their advertising spends, several smaller companies appear to have disappeared,” Ashish Bhasin, chairman and CEO, Dentsu Aegis Network (DAN), observed.

Last year, for instance, companies such as LocalBanya and PepperTap, which were active advertisers, shut down. In contrast, Paytm which in early 2016 cut back on advertising spends, especially on traditional media, started to spend post-demonetisation. The wallet firm’s bill jumped to Rs 239 crore in November and December, from just Rs 92 crore between January and October.

Meanwhile, the bigger e-commerce firms continued to splurge. For example, Amazon India upped its ad budget by about a fourth in 2016, spending Rs 946.4 compared to Rs 766.3 crore in 2015.

However, according to Sam Balsara, chairman of Madison World, spends could come off since investors are cautious about infusing money into e-retailers.

As per the Pitch-Madison 2016 Ad report, the Indian advertising industry has increased by Rs 6,586 crore to reach Rs 43,991 crore in 2015. The categories which contributed most to the overall growth in 2015 were FMCG, e-commerce, auto and telecom. FMCG remained the most dominant sector with a 28% share of the total Indian advertising industry pie followed by e-commerce at 10% and auto at 9%.

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