Google’s e-commerce entry in India is predicted to cause a paradigm shift in the current flow of advertising. Experts believe Walmart-controlled Flipkart and Amazon, the current giants in the e-commerce game, would be compelled to reduce their advertising spend on Google. Flipkart and Amazon would be followed by a host of other e-commerce brands that would also look towards cutting down on their Google ad spends, and instead move towards other emerging advertising options to reach their target audience at competitive prices. The e-commerce market in India was estimated at $18 billion in 2017, as per RedSeer Consulting.
Up until last year, experts say the two e-commerce giants would spend in hundreds of crores for buying ad spots on Google. But with Google’s supposed e-commerce entry, both Amazon and Flipkart have cut their Google ad spends by almost 30%.
E-commerce players will now start looking at other avenues, programmatic advertising being a crucial option, says Ashish Shah, founder and CEO of programmatic company Vertoz.
"It is still unclear as to how Google is shaping its e-commerce strategy. But there seems to be a strong trend of digital budgets gaining more share in programmatic advertising across all industries,’’ says Arvind Jain, CEO, NetBiz Systems.
Programmatic advertising, say experts, is a technique of buying and selling digital ads through the use of algorithms. Programmatic automates the digital media buying and selling process, requiring minimal or zero human intervention, thereby enhancing efficiency and bringing in greater precision. Shah says most programmatic platforms have integrated Data Management Platforms that enable advertisers to have highly precise and niche targeting according to the user’s online behaviour. “Such targeted options enable advertisers to reach the right customers at the right time, which increases their return on ad spends considerably.”
Shah says another major advantage of programmatic advertising is that it allows advertisers to measure the performance of their campaign, optimise campaigns and to generate great returns. Also, advanced techniques like dynamic creative optimisation enable brands to serve personalised ad creative, optimised dynamically during run-time as per user preference affinity and browsing history, says Shah.
Globally, programmatic ad spends are expected to reach $210 billion by 2020. In the USA, a major market for programmatic advertising, over 80% of the display ads are now served programmatically.
Experts argue that going ahead, prudent investment in programmatic advertising will be inevitable in the e-commerce sphere in India. Jain says the digital ad segment in India is touted to reach Rs 18,000 crore by 2020, and programmatic advertising will contribute to over one-fourth of all digital ad transactions.
“While we may argue that nothing may actually replace the human evaluation of real-life emotive responses, for everything that’s dependent on statistical trends and numerical understanding of spends versus sales/engagements, automation could come easy and handy,” says Prateek N Kumar, CEO and MD, NeoNiche Integrated Solutions.
Brands across industries like real estate, BFSI, hospitality, travel, FMCG, retail, etc. are realising the importance of boarding the digital wagon and are exploring the far-sighted possibilities it could render, says Sahil Chopra, CEO and founder, iCubesWire. "Netflix is one brand that has invested significantly in its in-house programmatic platform since 2013,’’ says Jain.
Satanik Roy, co-founder, HyperXchange, says brands that successfully use this platform are witnessing exceptional results across quality inventory, channels and devices. Roy says textbook rental brand Chegg used programmatic buying to perform extensive audience testing to compared types of students. ‘’ The company’s data-management platform optimizes around groups that are responsive to various campaigns, taking advantage of one of the programmatic’s chief selling points — the ability to target highly specific audiences. The result was a new understanding of Chegg’s most valuable audiences. With a 22% reduction in cost per acquisition and a 100% increase in lifetime value per customer, Chegg’s decision to automate enabled them to reach a higher-value audience at a lower cost,” explains Roy.
CREATION DECODED
- Amazon, Flipkart have cut their Google ad spends by almost 30%
- E-comm players will go for programmatic advertising
- It is a technique of buying and selling digital ads using algorithms
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