E-commerce sites to grab bigger chunk of digital ads | Mumbai news - Hindustan Times

E-commerce sites to grab bigger chunk of digital ads

ByShuchi Bansal
Feb 16, 2024 07:52 AM IST

India's digital advertising is set to reach ₹88,502 crore in 2024, accounting for 57% of total ad revenue, according to GroupM's annual report.

India’s digital media landscape is evolving with the emergence of newer, stronger contenders for the advertising money that brands spend online. In its annual report This Year Next Year released on Tuesday, leading media investment firm GroupM said digital advertising will touch a staggering 88,502 crore in 2024, making up 57% of the total advertising revenue. Overall advertising will grow 10.2% this year with digital media leading the pack at 13%.

laptop and shopping bags, online shopping concept. PREMIUM
laptop and shopping bags, online shopping concept.

The report puts the spotlight on the rise of advertising in Retail Media. “We define retail media as e-commerce platforms that include not just the traditional marketplaces like Amazon and Flipkart, but all commerce platforms such as Swiggy, Nykaa, Blinkit and Big Basket, among others,” Ashwin Padmanabhan, president (Investments, Trading, and Partnerships) at GroupM, India, told HT.

Traditionally, platforms and services owned by technology giants like Google (Google Search and YouTube) and Meta (Facebook and Instagram) have been snapping up the majority of digital ad spends. The Economic Times earlier reported that Google and Meta had clocked more than 46,000 crore in ad revenue in the financial year 2023.

Padmanabhan feels Google and Meta will be increasingly under pressure. “We are seeing significant ad growth on all commerce platforms and not just on Amazon and Flipkart. Between 2019 and 2024, the compounded annual growth rate of advertising on e-commerce platforms is 41% albeit on a smaller base. These platforms are new compared to the traditional digital mix we have always invested in,” he said. Currently, e-commerce or retail media has 18% share of digital advertising.

E-commerce sites are attracting advertisers as these marketplaces and websites are a point of sale which enhances their importance at a time when brands are worried about their bottom lines. “Brands are focusing on return on investment and looking for advertising that drives sales,” Padmanabhan said.

Besides, today ‘search’ isn’t exclusive to Google. “Search is a multi-environment opportunity for brands because when a consumer needs to buy a product she goes to, say, a Flipkart or an Amazon to search. So, brands are paying money to the likes of Amazon, Flipkart, Nykaa to be on top of their search results,” Padmanabhan said. “As a consumer, your search destination is getting fragmented. So, the money that gets invested in search is also getting fragmented,” he added. E-commerce sites also offer advertisers ownership of category pages and branding opportunities.

Interestingly, e-commerce platforms are monetizing their first party data too by offering it to advertisers. Armed with the knowledge of the intent of the consumers who come to these platforms and an understanding of their search behaviour, brands who advertise on them can also serve ads to such consumers elsewhere on the internet.

For instance, if Mondelez, that makes Cadbury Dairy Milk, has a tie up with Blinkit to study purchase behaviour of consumers on the app, it can use the data to serve its ad to consumers on Facebook or Instagram. “This ad has a link which when clicked takes you to Blinkit where you can order a chocolate and have it delivered in 10 minutes,” Padmanabhan explained. More and more brands are entering such tie-ups that give better returns on ad spends, he said.

On digital media, smaller online-only brands are advertising and driving up both volume and value. Their ad budget may be minuscule but millions of sellers advertising on e-commerce platforms is leading to a substantial jump in total ad spends on these sites.

Over-the-top (OTT) video streaming platforms, those that are advertising-driven or AVoD, have been termed as digital extensions of TV by GroupM in its report. And now OTT is also competing with traditional digital media platforms as its advertising is growing at 33%. This year, advertising on OTT services is projected to touch 5,750 crore. Padmanabhan foresees an increase in ads on AVoD platforms too as they offer a TV-like environment. The content is premium and the engagement of the consumer with content is significantly higher.

Despite healthy growth, digital advertising comes with its own set of challenges. Brand safety is a niggling issue as often you are not sure of the environment in which you showcase your ad. Two, there is no unified measurement system and every platform is an island, said Padmanabhan.

Lastly, he believes that the increasing use of Generative AI for creating content is bound to pose ethical challenges.

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