Ecommerce giants Amazon and Flipkart saw a notable 39% surge in their combined advertising revenue, amounting to INR 8,705 crore for the fiscal year concluding in March 2023. This upswing is attributed to advertisers across diverse categories actively utilizing these platforms and tapping into the expanding user base, as per data filed by the companies with the Registrar of Companies (RoC).
During the fiscal year 2023, Amazon Seller Services, the marketplace division of Amazon, reported a 29% increase in advertising revenue, reaching INR 5,380 crore, as per information sourced from RoC filings on the business intelligence platform Tofler. In a parallel trend, Flipkart Internet, the marketplace division of Flipkart, witnessed a robust 60% growth in revenue from this segment, reaching INR 3,325 crore.
In FY22, the two companies collectively generated INR 6,256 crore in ad revenue, with INR 4,171 crore attributed to Amazon Seller Services and INR 2,085 crore to Flipkart Internet.
As per a report by Bain & Co, India is projected to have approximately 230–250 million online shoppers engaging in transactions annually, and the ecommerce market is anticipated to reach $57–60 billion by 2023. Additionally, a report from Magna Global indicated an expected 13.8% growth in digital ad revenue in India, reaching INR 56,703 crore in 2024.
Experts state that both Amazon and Flipkart possess ad-tech platforms—Amazon Ads and Flipkart Ads—facilitating brands in reaching their target audiences in a cost-effective manner.
According to Uday Sodhi, Senior Partner at Kurate Digital Consulting, brands are allocating more of their advertising budget to ecommerce platforms due to their ability to enable highly effective targeting based on categories, brands, and user behavior.
“Ecommerce is growing at a healthy pace, and a lot of digital-first and traditional advertisers are spending heavily on these platforms. Both Amazon and Flipkart have become great platforms to convert users into buyers. The return on investment for brands is comparatively better than other platforms,” he said.
An Amazon spokesperson highlighted the complexity of the digital landscape, noting that customers fluidly move between browsing, streaming, researching, and making purchases across channels and devices.
“With hundreds of millions of worldwide active customer accounts, Amazon has a deep understanding of how shoppers engage with products and brands as they discover, browse, and purchase online. Advertising with Amazon Ads is helping businesses of all sizes and from all industries, regardless of whether they sell directly on Amazon or not, reach customers at every stage of their journey,” the spokesperson added.
Flipkart had not responded to queries as of the time of press.
According to Shashank Rathore, Vice-President of Ecommerce at Interactive Avenues, the digital arm of IPG Mediabrands India, ecommerce, as an advertising platform, is now on par with performance marketing giants such as Google and Facebook.
“Looking ahead to 2024, a significant disruption is expected with FMCG, dairy, grocery and F&B investments shifting from Amazon and Flipkart to quick-commerce platforms. This strategic realignment reflects the industry’s adaptability to evolving consumer trends,” he added.
Hareesh Tibrewala, Joint Chief Executive at Mirum India, pointed out that marketplaces such as Flipkart and Amazon also provide comprehensive media solutions from a brand-building standpoint.
“Finally, in consumers’ lifecycle, an ecommerce portal represents a point of conversion and, hence, a valuable touch point for a brand. All this is contributing to increased media spend on ecommerce platforms,” he added.
Tibrewala anticipates a migration of advertising expenditure from social channels to alternative platforms such as OTT and ecommerce.
Madison Digital CEO Vishal Chinchankar said, “Ecommerce advertising significantly levels the playing field compared to giants (Google and Meta), and the growth of ecommerce is not only on the back of giants but there is a huge headroom as the overall digital pie is increasing. A sophisticated mix of creativity and data works extremely well for brands on ecommerce platforms. In my mind, performance marketing is like a drip to the brands and their businesses; it’ll only increase.”
