Most online selling sites sprouted from home offices and garages on very limited and tight budgets. They relied on customer reviews and the traditional word-of-mouth marketing to grow and establish themselves. This was the scene a couple of years ago.
The past two years, especially the recent months have seen even the biggest of ecommerce players turning to commercial advertising to expand their reach and spread the word about their presence. With the emergence of more players in the market and the ever increasing price wars, and not to mention the never ending deals and promotions on various online stores, advertising has yet again proved to be a pre-requisite to aid in the race for frontrunner.
While in 2010-2011, advertising budgets of most ecommerce firms were in the range of Rs 10 lakh each, the current expenditure amounts to Rs 25-75 crores. This in just 2-3 years. Prominent players like Flipkart, Snapdeal and Jabong are the biggest spenders and they have chosen eminent names from the advertising industry to execute their campaigns.
Though internet penetration is on the rise, television commercials are more effective in reaching out to the Indian population. Ecommerce firms mainly depend on television advertisement to attract the attention of the following people:
- Customers to invoke brand recall and build brand identity
- Potential sellers or vendors who wish to be associated with the online stores/marketplaces
- Talent to be part of the firms
Typically, ecommerce firms spend about 10-15% of annual revenues on advertising and marketing. However, at the current pattern, some of these online spenders seem to be at par, ready to overtake, some of the offline spenders even. For example, the advertising costs of Big Bazaar are expected to exceed Rs 200 crore by 2014-2015. Myntra is already spending more than Rs 60 crore on advertising and marketing.
Many ecommerce brands used a combination of television and print ads to rid the skepticism of customers and convince them to turn to online shopping. When they started off itself, some firms like Myntra and OLX used commercial advertising like television ads to build their brand image. Once they are in a comfortable space, as OLX is now according to its CEO Mr Amarjit Singh Batra, they cut down on their advertising spend.
Why are ecommerce firms turning to offline advertising now?
- Number of players in the ecommerce market has increased and as such competition has increased.
- Visual, audio and print platforms are more powerful in connecting with customers and help to build brand image better.
- Offline advertising like television ads enables wider reach of people.
- Ecommerce firms have more funds now due to more investors and hence more investments in these firms.
Opportunity for Indian online sellers with online marketplaces’ increase in advertising
With fierce competition, online marketplaces will be more aggressive in their advertising campaigns to grab customer attention. More effective the campaign, wider is the impact on people. Hence, more will be the brand retention and brand image. Being associated with a popular marketplace will ensure your brands get noticed too.