Flip­kart's monthly ad sales rev­enue reaches $1m

The Pak Banker - - COM­PA­NIES/BOSS -

Flip­kart Ltd, In­dia's largest e-com­merce firm, is cur­rently gen­er­at­ing nearly $1 mil­lion in monthly ad­ver­tise­ment sales, mak­ing the com­pany one of the largest dig­i­tal ads plat­forms in In­dia less than a year af­ter it launched its ads busi­ness, two peo­ple fa­mil­iar with the mat­ter said. Ravi Garikipati, head of Flip­kart's ads busi­ness, said the com­pany aimed to be the largest dig­i­tal ad­ver­tis­ing plat­form in In­dia over the next 3-5 years. He de­clined to com­ment on the rev­enue num­bers.

"Ad­ver­tis­ers care most about three as­pects: reach, shap­ing the busi­ness out­come, and mea­sur­ing the ef­fi­cacy of the ads plat­form. If you ad­dress all these three in an un­am­bigu­ous way, you will be a clear win­ner. In par­tic­u­lar, the mea­sur­a­bil­ity of the ef­fi­cacy of our plat­form gives us an edge over com­pet­ing so­lu­tions. Many so­lu­tions cre­ate aware­ness and (pur­chase) con­sid­er­a­tion but af­ter that you don't know if and where the ac­tual pur­chase hap­pens. That's not the case with us as com­merce ac­tu­ally hap­pens on Flip­kart and Myn­tra," Garikipati said in an in­ter­view.

Dig­i­tal ad spend­ing in In­dia is ex­pected to in­crease by 40% to Rs.6,525 crore this year, ac­cord­ing to a Jan­uary re­port by me­dia agency GroupM, which is owned by WPP Plc., an in­ter­na­tional ad­ver­tis­ing and pub­lic re­la­tions firm.

A ma­jor­ity of dig­i­tal ad spend­ing cur­rently goes to Google Inc. and Face­book Inc. The oth­ers such as The Times of In­dia and Ya­hoo Inc. com­pete for the rest. Over the next five years, dig­i­tal ad spend­ing is ex­pected to shift to mo­bile from desk­top sites as sales of smart­phones boom. Flip­kart and other large e-com­merce firms such as Ama­zon In­dia and Snapdeal are plan­ning to cap­i­tal­ize on this shift and gen­er­ate large ad rev­enues.

In China, an­other mar­ket where smart­phones are the pop­u­lar medium of shop­ping, some e-com­merce com­pa­nies have built large ads busi­nesses. Alibaba Group, which is China's dom­i­nant e-com­merce firm, gen­er­ates larger mo­bile ad sales than even Baidu, China's lo­cal search en­gine, ac­cord­ing to eMar­keter, a mar­ket re­searcher. Alibaba gen­er­ates more than half its sales from ads, ac­cord­ing to data by iRe­search Con­sult­ing Group. Flip­kart hopes to em­u­late Alibaba's suc­cess in In­dia.

The Ben­galuru-based com­pany has more than 50 mil­lion reg­is­tered users, a ma­jor­ity of whom shop on the com­pany's app.

Flip­kart launched dig­i­tal ads in May last year by get­ting third-party sell­ers on its plat­form to pay for pro­mot­ing their prod­ucts. For in­stance, a seller can have its prod­ucts shown first when a shop­per uses cer­tain key­words to search for goods on Flip­kart; if a user searches for "ca­sual shoes", a seller can have its prod­ucts shown promi­nently by pay­ing ex­tra.

Al­ready, some 24,500 sell­ers out of 100,000 third-party sell­ers on Flip­kart have used its ads ser­vice. And about 12,000 sell­ers use the ser­vice ev­ery day, Garikipati said.

Apart from seller ads, Flip­kart gen­er­ates ad rev­enue in two other ways: by serv­ing con­tent on its plat­form paid for by brands; and, by con­nect­ing ad­ver­tis­ers with its so-called Flip­kart shop­pers au­di­ence, which com­prises an ex­ter­nal net­work of news, gam­ing and other apps.

This week, Flip­kart will launch its brand story ads for­mat on its mo­bile app and it has signed up more than 50 brands in­clud­ing L'Oréal, Mi­cro­max, Gil­lette and Sony. Story ads or na­tive ads is a newer for­mat of dig­i­tal ads that many pub­lish­ers are of­fer­ing as a re­place­ment for ban­ner ads, which are seen as in­ef­fec­tive. Story ads tend to be more in­ter­ac­tive in na­ture and show video, im­ages and other forms of con­tent to en­gage with users. Along with brands that sell on its plat­form, Flip­kart will also show con­tent from ex­ter­nal ad­ver­tis­ers in real es­tate, tele­com and other sec­tors.

"Story ads give a very im­mer­sive and in­ter­ac­tive ex­pe­ri­ence. It's more of an ed­u­ca­tional, story-telling for­mat where you're con­stantly com­mu­ni­cat­ing with con­sumers us­ing im­agery and video. We've done it in a way that is na­tive and not clunky like ban­ner ads. It's also very tar­geted so brands can show ads based on the rel­e­vant users," Garikipati said.

Flip­kart is also ex­pand­ing its net­work of third-party apps on which ad­ver­tis­ers can show ads to users. By next March, Flip­kart plans to sign up with a net­work of news, shop­ping and gam­ing apps to in­crease the reach of its ads busi­ness to 100 mil­lion users, he said.

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