E-commerce as an advertising vehicle is becoming a strong vertical within the Indian digital advertising ecosystem. Advertising revenue from Amazon, Flipkart and Myntra saw strong increases in FY22 due to their growing user base and resulting increase in online sales.
According to financial data viewed by business intelligence platform Tofler, the combined advertising revenue of these three companies soared 60% to hit Rs 6,600 crore in FY22 from Rs 4,135 crore in FY22. ‘Previous exercice.
Amazon India’s marketplace arm, Amazon Seller Services, recorded a 63% growth in advertising revenue to Rs 4,171.4 crore in FY22 from Rs 2,554.2 crore. Walmart-owned Flipkart India’s market arm Flipkart Internet saw its advertising zoom by 50.35% to Rs 2,083.5 crore from Rs 1,385.7 crore. Myntra Designs, owned by Flipkart, garnered Rs 344.6 crore in advertising revenue, recording a growth of 77% from Rs 194.9 crore in FY21.
E-commerce platforms usually count advertising revenue based on the number of clicks or impressions. Clicks are generated when users click on the ad, which directs them to an advertiser’s designated website. Impressions refer to the number of times an advertisement appears on the pages viewed by users.
Mirum India co-CEO Hareesh Tibrewala said the continued growth in e-commerce platforms’ advertising revenue comes as no surprise as their customer base continues to grow. He also said these platforms are closest to “converting” into the traditional marketing funnel. The fact that brands are becoming more and more compatible with e-commerce is also contributing to the growth of advertising revenue from e-commerce platforms, he noted.
Tibrewala added that e-commerce has become a category in its own right within the digital advertising ecosystem: “I think overall digital spend across the brand portfolio continues to grow (perhaps at the expense of And within digital, other channels continue to grow even as e-comm ad-ex emerges as a category in its own right,” he said.
While noting that a substantial share of AdEx e-commerce will go to larger players, Tibrewala added that niche players will also continue to get their slice of the pie. “I see a new marketing funnel where social channels are used for brand building, Google is used to understand intent, and electronic communication platform ads become the place to drive conversions.”
Kiaos Marketing Managing Director Sajal Gupta said digital retail media is a strong intent-driven medium, which comes second only to search. He added that digital retail media also attracts the highest quality audiences who have self-declared their interest.
“Additionally, digital retail media sites also have the most authentic data about your buying behavior and signals of what you are buying. This becomes invaluable for any marketer to reach accurately. Today now that data is available on Amazon and Flipkart DSPs,” he said.
Continuing to elaborate, Gupta said that digital retail media is the marketplace and media allows brands to control their expense-to-revenue ratio, which is an essential metric for all e-commerce customers. This, he said, also sets it apart from Google and Facebook which are pure advertising platforms: “All of this has positioned Amazon to be the third largest digital advertising platform across the globe and growing even when the first and second largest platforms (Google and Meta) are facing headwinds with their growth. revenue or in some cases down. As we saw in their Third Quarter Results.”
Gupta claimed that retail digital media accounts for about 15% of the digital ad pie. “This market is growing with Amazon and Flipkart, which control nearly 70% of the digital retail market, being the major players.”
Uday Sodhi, senior partner at Kurate Digital Consulting, said the growth in advertising revenue from e-commerce platforms is in line with the growth of D2C brands. “D2C brands have a digital first strategy and e-commerce platforms are the best way to reach users and also generate revenue. E-commerce platforms are a good alternative to social media and search because customer intent is very clear. so is purchase intent. Leads to better conversions across platforms.”
ProfitWheel co-founder Gautam Mehra noted that there are several reasons why e-commerce ad revenue continues to rise. He said FMCG companies are finally looking at digital as a distribution channel rather than a purely engaged channel. “Think back, just a few years ago the only ads were for contests and giveaways. Today it’s sales promotions, upselling of premium products (I’m sure we’re have all sold a Cadbury Celebration Pack in one form or another in the past month),” Mehra said.
Mehra concluded by saying that peripheral industries such as automotive, finance and travel are now using digital as their primary mode of communication. “It’s about ‘big deals’ and therefore love for horizontal e-com players. I think the pace of revenue growth for these platforms will increase more and more over the next two years (of course, unless we hit a global recession),” he said. said.