India’s leading D2C brands have started curtailing their marketing budgets and television advertising has become the biggest casualty, if TAM data has any indications.
Leading D2C startups like DunZo, Nykaa, Zepto and Blinkit haven’t advertised on TV for about six months now, according to the statistics on TV ad volumes up to Nov 22, 2022 procured from TAM.
Dunzo digital, for instance, didn’t advertise at all on TV from January till November 22, barring the month of May which coincided with Indian Premier League (IPL).
Similarly, Nykaa fashion, Blinkit and SnapDeal haven’t advertised on TV after May. Zepto advertised only in February and March with no TV ads in the rest of the months this year.
BookMyShow and Plum opened their TV ad account in November only (coinciding with Diwali) after drawing a blank for the entire year.
In contrast, Amazon India, Reliance (Ajio and Jiomart), Flipkart, Meesho and Mamaearth have been steady advertisers on the visual medium this year.
Interestingly, most of these etailers continued to advertise consistently on digital and other platforms during this year, the TAM data suggests.
IPL is one of the most popular live cricket tournaments that is followed by millions of consumers across the country. It attracts a large number of advertisers, including D2C, edtech, fintech brands, as sponsors of the game, teams or media partners.
How D2C brands are distancing themselves from TV except for IPL is remarkable especially since the e-commerce sector was the second-largest contributor to India’s advertising expenditure in 2021.
According to the Pitch Madison Annual Report (PMAR), it has doubled in size from Rs 3,000 crore to Rs 6,000 crore between 2020 and 2021.
Besides, e-commerce retailers are expected to garner sales of $11.8 billion in gross merchandise value (GMV) during this festive season which kickstarted in August, up 28% year-on-year, according to another report by Redseer.
The e-commerce sector, which is currently valued over USD 100 billion, is expected to reach USD 350 billion by 2030, consultancy firm RedSeer said in its 2021 report.
e4m sent a questionnaire to D2C brands seeking their side of the story.
Amritansu Nanda, CMO, Zepto, defended the move. “We have strategically not been heavily invested in TV as a medium given our extensive focus on geo-targeting,” Nanda said.
Nanda explained, “We tactically run campaigns on regional channels where the spillover is lower. However, overall, advertising spends on TV will continue to be limited to strategic interventions that we plan in future like our IPL campaign.”
Tanveer Khan, GM, Brand Marketing, Dunzo, says their decision to cut down on TV advertising is driven by evaluating some key factors.
“In India, there are only a few big occasions where brands spend money to push their ads. The IPL tops the list, which is why we decided to advertise on TV during that time. While we did consider other opportunities to advertise on TV across the year, we decided to stick to IPL for TV ads,” explained Khan, adding that the strategy has worked well for the company from an outcome perspective.
Khan further noted, “We have grown exponentially in the April – May period on the back of our TV advertising. With the festive season in the second half of the year, we factored that there would be an organically high demand for shopping among consumers, hence TV was not part of our strategy.”
An official from Blinkit said that marketing strategies couldn’t be shared as the company was a listed-one. Others have not responded till the time of filing this story.
Digital for Digital-First brands
TV is trusted by advertisers due to the reach and recall value that it offers. However, exponential growth of digital advertising and its emerging formats such as influencer marketing, short videos, social media and OTT have shadowed TV advertising to some extent.
Digital advertising’s market share in the India’s advertising spend has reached 48% in 2022 as against 38 percent of TV advertising, as per the year-end report of GroupM.
Besides, for digital first brands, digital advertising is the key.
Tanveer Khan, Dunzo is a digital-first brand, where performance and digital marketing have always been our priority, because our primary consumer base is most easily reachable through these mediums. However, we have always believed in experimenting with platforms and putting our best work across on all of them, including TV spots, newspaper advertising (such as our much-applauded board games print ads) and outdoor hoardings, which have been key drivers in our media mix.
Echoing the sentiments, Nanda said, “As a digital-first hyperlocal platform, the digital channels naturally enjoy a higher preference given the flexibility they offer with both communication and audience targeting. This also helps the brand maintain consistent dominance in the region and media of focus.”
Rationalization of ad spends
Ecom and D2C brands’ absence on TV is also being viewed as a measure of rationalisation amid profitability pressure and slowed down demand over the past two quarters.
Rajiv Dubey, media head, Dabur India calls it a rationalization exercise. “It is slowdown/rationalisation of ad spends in the ‘App-Based’ businesses of Ecommerce brands in midst of pressure of delivering profits as the free flow of money from the venture capital investors gradually dwindled.”
The challenges of surviving a high cash burn segment such as quick commerce have forced several players to scale back. For isntance, Reliance-backed Dunzo is in the process of shutting down it’s 120 dark stores across Delhi NCR and Hyderabad.
Snapdeal has just pulled the plug on its $152 million IPO. It has filed its IPO regulatory papers for approval in December 2021.
That’s not the case with all D2C brands though. Meesho and Zepto raised $135 million and $200 million respectively this year. Plum too managed to raise $35 million.
“Each player has its own reasons for choosing its marketing platform. However funding winters in startup ecosystem has had an impact on their marketing budgets. TV advertising budgets are usually the first casualty, when brands decide to rationalise their spend to cut the cost”, says Sajal Gupta, Chief Executive, Kioas Marketing.
Funding in Indian start-ups dropped 35% to $24.7 billion in 2022 YTD from $37.2 billion in the same period last year, according to a report by market intelligence platform Tracxn. Funding in Q3 2022 dropped 58% compared to Q2 2022 and dropped by 79% compared to the peak of Q3 2021.
“Although last month has emerged as a ray of hope, it is still too early to assume that the bottom is behind us. We need to wait one or two quarters to see if the momentum continues,” said Neha Singh, co-founder and CEO, Tracxn, in her statement.
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