Hyperlocal companies scurrying to advertise on TV; experts advise caution

The lure of the small screen has snared hyperlocal companies. Small online hyperlocal companies are increasingly resorting to placing advertisements on television. However, analysts are cautioning small companies to proceed with care. While larger fish can easily afford the high costs of prime time ads, the smaller fry with a lesser budget might find it expensive.

TV ads low on recall value

Popular brand expert and business analyst Harish Bijoor says that for a 30 second prime time TV ad, the rates range from Rs. 80,000 to Rs. 6,00,000. He says, “There is a herd mentality today. Everybody wants to be seen and heard about. The focus seems to be more on valuations and catching eyeballs than the reality of getting the business moving. The clutter factor is very high.”

Sandeep Ladda, partner and national leader of the ecommerce wing of PricewaterhouseCoopers India agrees with Bijoor’s views. He says, “Television quickly eats up money. A customer will typically download the app the same day he sees the advertisement. The recall value of television commercial is frankly a day or two.”

However, the hyperlocals are set on their choices. Nuvo Logistics (mother ship of company PepperTap) has launched its ad campaign on YouTube, radio, print, and social media. The company is also heading towards television with the campaign titled, ‘Bahut Aasan Hain’. Grofers India has also launched an ad campaign valued at roughly $ 2 to 3 million.

Will the cash outflow exceed the income?

Hyperlocal companies have raised a combined figure of close to $50 million. The sector will be spending an estimated Rs. 2,000 to 4,000 crores on television ads alone, say the forecasts.

Experts are unified in their opinion that hyperlocal ecommerce companies ought to think carefully before investing in expensive ad campaigns. Perhaps waiting for more fund inflow will be a prudent choice. However, it appears to be a Catch 22 situation. Business will grow only with more visibility and publicity. In this case, hyperlocals ought to look at less expensive yet more effective means.