E-commerce ad spends to beat HUL's in a year

At Rs 1,000 cr already, e-commerce players together spend half of what the country's largest advertiser Hindustan Unilever does

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A handful of e-commerce players will likely upset the pecking order of the country's largest advertisers in a year. Thanks to the media blitzkrieg by players such as Jabong, Myntra, Snapdeal, Flipkart, Amazon, OLX and Quikr, e-commerce as a category has seen an over three to fourfold jump in ad spends in a year. From Rs 200-300 crore last year, spends by e-commerce players have now touched Rs 1,000 crore, according to Anupriya Acharya, Group CEO, ZenithOptimedia, India. Her assessment is based on the frenetic pace at which these companies have been placing television, digital and outdoor ads in the past few months.

"In a year's time," she says, "spends by these players will cross the Rs 2,000-crore-mark." ZenithOptimedia, part of the Publicis Groupe, handles the media duties of companies such as Jabong and OLX in India.

Acharya, incidentally, is not the only senior media agency professional to be feeling this way. Senior executives such as P M Balakrishna, chief operating officer, Allied Media, part of the Percept Group, and Suresh Balakrishna, CEO, BPN India, a media agency part of IPG Mediabrands, feel the same way.

"Yes, it is true that e-commerce is a Rs 1,000-crore category in terms of advertising at the moment," says Balakrishna of Allied Media. This point is endorsed by Balakrishna of BPN India.

"In many respects, it is e-commerce which is holding up (in terms of advertising) at a time when other categories, most notably fast-moving consumer goods, are actually cutting back on spends thanks to the consumer slowdown. This pace of growth clocked by e-commerce is only expected to grow for the next three to four years," says Balakrishna of Allied Media.

At Rs 1,000 crore, e-commerce players together are spending half of what the country's largest advertiser Hindustan Unilever (HUL) is. HUL's ad budget is estimated to be in the region of Rs 2,200 crore. In a year's time then, the category will cross the ad budget of the country's largest advertiser.

Already, e-commerce has surpassed bulge-bracket spenders such as Coca-Cola, LG , Samsung and Nestle, whose ad budgets, according to media industry estimates, are in the region of Rs 600-800 crore. Spenders such as Panasonic, Amul, Karbonn, Micromax and Sony, that fall in the Rs s 200-300 crore bracket, according to media planners, were left behind months ago by the e-commerce juggernaut.

Why the rush to advertise?
"The reason is growth. What we are seeing is like the beginning of a film," says Arvind Singhal, chairman, Technopak Advisors, a Gurgaon-based retail consultancy tracking the e-commerce industry closely. "E-commerce is the future and this channel is only estimated to grow because there are constraints in terms of growth of organised retail in India. FDI in multi-brand retail has not taken off. Rentals and space are a limiting factor there. That leaves traditional trade, which will grow by default, but it is not aspirational in nature. So increasingly, it is the online medium that will fuel growth. There are no constraints in terms of space or time as far as the online medium goes," says Singhal.

From $1.5 billion (roughly Rs 9,000 crore) last year, e-commerce as an industry now stands at $3 billion (Rs 18,000 crore) in size and is slated to touch $35 billion (Rs 2.1 lakh crore) by 2020, according to Technopak. Categories expected to drive traffic will be fashion, accessories, lifestyle products, electronics, mobiles and groceries, says Singhal. The likelihood of new players stepping into the fray will only increase the ad pie, experts say. "Most of the big e-commerce players in the world are eyeing the Indian market. Alibaba (of China) and Rakuten (of Japan) have already expressed interest to step into the Indian market, which will not only raise the profile of this category but could also trigger a new ad war for eyeballs," says Balakrishna of Percept Media.

E-COMMERCE AD-VANTAGE

• E-commerce as a category has seen an over three to fourfold jump in ad spends in a year
• From $1.5 billion last year, e-commerce as an industry stands at $3 billion in size and is slated to touch $35 billion by 2020
• At Rs 1,000 crore already, e-commerce players together spend half of what the country’s largest advertiser Hindustan Unilever does.
• E-commerce has already surpassed bulge-bracket spenders such as Coca-Cola, LG, Samsung and Nestle, whose ad budgets are in the Rs 600-800-crore bracket
• Spenders such as Panasonic, Amul, Karbonn, Micromax and Sony, in  the Rs 200-300-crore bracket, were left behind months ago