Amazon, Flipkart rising as advertising platforms to challenge Google, Meta

The reasons are not hard to find. "Searches (for purchase) originate on Amazon, therefore advertising leads to sales," says Mehta

It seems like an advertiser's dream come true. Imagine you are a mobile phone marketer, advertising on, for example, Amazon.com. According to Gopa Menon, head of digital, South Asia at media buying agency Mindshare, every rupee you spend could yield an eight-fold return on the advertising money spent. This return is due to a higher likelihood of conversion to buyers, as they are exactly at the point of purchase. "On average, getting a four times return on ad spend is considered decent," says Menon.

Not surprisingly, advertising spends on Amazon are surging. "A client that used to spend Rs 2-3 crore on Amazon is now spending more than Rs 10 crore on it," says Rohan Mehta, CEO of FCB Kinnect, a Mumbai-based digital marketing agency. This trend is affirmed by a FICCI-EY report. In 2022, online retail brands like Amazon and Flipkart captured Rs 7,000 crore (or 14 per cent) of the Rs 49,900 crore spent online by advertisers. This amount is twice the Rs 3,400 crore (or 12 per cent) of total online ad spend in 2020. "Retail media is the biggest growth story in advertising," declares Marija Masalskis, senior principal analyst for TV, video, and advertising at London-based Omdia.

The reasons are clear. As Mehta points out, "Searches (for purchase) originate on Amazon, therefore advertising leads to sales." Menon adds, "Spends on Amazon are increasing because of the sharpness of targeting. Amazon is for conversions, Google and Meta for reach." Meanwhile, Shrenik Gandhi, co-founder and CEO of White Rivers Media, notes the effectiveness of other platforms: "Meta (including Facebook, Instagram, Reels, WhatsApp) is great with innovations on Reels. Google ads work best on YouTube, after search. New platforms lead to better click-through rates and better conversions."

According to data from Omdia, Amazon's global advertising revenue is about $38 billion, which is less than Google's $166 billion or Meta's $112 billion. However, Amazon has doubled its share of global online ad revenues from 2019 to now. Google and Meta have not lost share, but they haven't grown as quickly. "Retail media is absorbing a lot of search dollars. It is bringing growth to Google and taking a part of that market," says Masalskis. Search advertising is a vital part of Google's ad revenue stream.



 

This trend is mirrored in India, where brands in sectors like mobile phones, consumer goods, and automobiles are increasingly turning to online retail platforms. The Cost Per Thousand (CPM) on Amazon and retail media is roughly 30 per cent higher than on Google and Meta. Although this isn't solely about conversions: "On Fire TV, it is about pure reach," says Menon.

When you combine Amazon.com, Prime Video, Amazon Music, its Fire TV stick, and everything else Amazon offers, it reached 345 million unique visitors in June this year, according to Comscore data. That's about three-fourths the reach of Google and Meta sites. The duo captured over 80 per cent of all online advertising spends in India in 2022, leaving around Rs 9,000 odd crore for various publishers, streaming services, short video platforms, and others. Amazon seems to be securing a bulk of this remaining share.



The emergence of online retail as a potent platform is being hailed as a way to challenge the existing duopoly. Other entrants, like Netflix, which is committed to introducing an advertising tier, are expected to join the fray. The landscape of online advertising is set to become more diverse, and the cosy duopoly that once dominated the scene may not last much longer.