Flipkart To Capitalise On Digital Advertising To Reach $200 Mn Sales By March 2019

With nearly 100 Mn registered users, Flipkart generated the third-highest revenue (after Google and Facebook) from online ads in India in 2017. It now plans to double its annualised sales from digital advertising to roughly $200 Mn by March 2019.
 
The annualised sales figure implies that Flipkart will generate sales of $16-17 Mn in March 2019.
 
Prakash Sikaria, senior director and head of monetization and growth at Flipkart, said that to achieve this, the company plans to woo advertisers from sectors such as banking and financial services, areas where the online retailer does not have a presence.
 
“Over the next few months, we will be forging some interesting partnerships with a number of brands from different sectors, as we start opening up our platform,” said Sikaria.
 
For FY17, Flipkart’s ad business reached $100 Mn in annualised revenue. The company plans to double down on video ads, the fastest growing sector in the overall digital ads business, which is expected to drive its growth in the near future.
 
Flipkart’s focus on ad sales started in 2015 when then CEO Sachin Bansal tried to restructure the company to make it an online marketplace that would generate billions of dollars in ad revenues from sellers and brands. The plan failed and Sachin Bansal was also soon removed as CEO of the company.
Apart from ads from sellers on its platform, Flipkart also generates revenue through paid content from brands and by connecting advertisers with its shoppers.
 
Digital Advertising: The Way To Growth
The overall advertising business is expected to grow at an annual average rate of 32% to touch (INR 18,986 Cr) by 2020, according to an earlier report.
 
Digital advertising spend is estimated to grow at a compound annual growth rate (CAGR) of 30% to touch $1.75 Bn (INR 12,046 Cr) by 2018, on the back of increased consumer trust in online ads, said a report jointly published by the Internet and Mobile Association of India (IAMAI) and Kantar IMRB.
 
The report revealed that the spend on mobile (which includes both SMS and in-app ads) recorded 34% year-on-year growth from $190.98 Mn (INR 1,314 Cr) in 2016 to around $255.94 Mn (INR 1,761 Cr) in 2017.
 
In terms of brand categories, banking, financial services and insurance (BFSI) is the biggest spender on digital media with 46% of its overall spends on digital followed by ecommerce (29%), telecom (28%), and travel (28%).
 
In August 2017, a report by the IAMAI and IMRB Kantar estimated that India’s digital advertising expenses will likely reach $1.5 Bn (INR 9,700 Cr) by the end of 2017. At the time, ecommerce topped the list with over $212 Mn (INR 1,361 Cr) in digital advertising expenses.
 
With an increasing focus on digital advertising, Flipkart’s deal with Walmart is bound to make its game stronger in the Indian ecommerce market.
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