Losses don’t deter ecom ad spending

Even as e-commerce businesses are piling up losses, they aren’t stopping from splurging on advertising, whether on television or radio. Their spend in 2016 is a 26 per cent jump over the amount spent in 2015. Large companies such as Flipkart, Amazon and Snapdeal have upped their ad spends. Amazon India upped its ad budget by about a fourth in 2016.

Paytm which in early 2016 cut back on advertising spends, especially on traditional media, started to spend post-demonetisation. The wallet firm’s bill jumped to Rs 239 crores in November and December, from just Rs 92 crores between January and October.

The Indian advertising industry has increased by Rs 6,586 crores to reach Rs 43,991 crores in 2015. The categories which contributed most to the overall growth in 2015 were FMCG, e-commerce, auto and telecom. FMCG remained the most dominant sector, with a 28 per cent share of the total Indian advertising industry pie, followed by e-commerce at 10 per cent and auto at nine per cent.

Demonetisation has hit order volumes of Indian e-commerce companies. The ongoing cash crunch has impacted online shopping. Typically, about 70 per cent of overall e-commerce orders in the country are paid for in cash. This has changed drastically after demonetisation, and will impact the e-commerce business in India where a large portion of the population is still un-banked.