E-commerce companies ramp up advertising spending

The year 2014 was the first year when e-commerce companies started to ramp up spending on advertising and marketing.  

Leading e-commerce players such as Amazon and Flipkart have raised their marketing and advertising spends by over 57 per cent this year, in anticipation of consumer sentiment turning positive.

In the three-month period from September to November alone, these players spent about Rs 500 crore on advertising on account of the festive season compared with their total ad-spend budget of Rs 600 crore for 2014. As per TAM data shared by media buying and planning agency, Xposure, spends by e-commerce advertisers during the ongoing year stands at Rs 944 crore.

The spending by Amazon stood at whopping Rs 224.15 crore for the three-month period of September to November 2015 as against Rs 64.78 crore in the last four months of 2014. Likewise, for Flipkart, the amount spent stood at 68.59 crore, almost double the Rs 32.53 crore it had spent during the four-month period in 2014.

“The year 2014 was the first year when e-commerce companies started to ramp up spending on advertising and marketing. For the full year, their expense stood at Rs 600 crore. This year, that amount has been spent during just the three months of festive season,” Rajul Kulshreshtha, Co-Founder of Xposure Media told The Hindu.

He added that the huge spurt in spending was expected given that the e-commerce market is growing at a tremendous pace and every player is out to acquire more and more customers.

“The demand was also low in 2013 and 2014. This is year the market looks a lot more positive. Consumers are far more optimistic this year,” Mr Kulshreshtha added.

The spending for Myntra during September-November 2015 stood at Rs 28.8 crore, up from Rs 19.47 crore during September-December 2014. For OLX, however, the spending went down to Rs 55.47 crore as compared to Rs 64.98 crore during the periods under review.

E-commerce firms have also left behind the traditional spenders such as the automobile sector, which is witnessing a slow turnaround after two years of slowdown.

Market leader Maruti Suzuki ramped up its spending to 52 crore in the September-November 2015 from 35.8 crore in September-December 2014, mainly due to the new models – S-Cross and Baleno. Likewise, country’s largest market leader, more than doubled spending to 63.2 crore, up from Rs 22.2 crore in the September-December period last year.