Here's how e-commerce advertising rates skyrocket during big sale days

New Delhi: Major e-commerce platforms are gearing up for their respective biggest annual sales and shopping extravaganzas.

The online shopping extravaganza of this festive season begins with the Amazon Prime Day sale on July 20, 2024. Another e-commerce giant Flipkart is set to announce the dates for a GOAT (Greatest of all time) sale while its Big Billion Days will fall in October.

It's not just the e-commerce giants splurging crores on ads, content, celebrity shoutouts, and influencer hype to promote sales. The brands listed on these platforms are also rolling up their sleeves, grabbing every ad slot they can find, and vying to be the top pick for eager shoppers.

As a result, “Brands are spending almost twice on e-commerce advertising for these events compared to regular sales days,” said Vivek Merani, Managing Director, Magnon.

A digital marketing head remarked that although rates are high due to the surge in demand, they are justified as brands see up to 7X growth in just a few impactful days, delivering a reasonable ROI. Ad rates are a function of demand and supply, and with the increasing demand for products in Tier-2 and Tier-3 cities, brands are in no mood to miss this opportunity.

“Ad rates almost double during these peak shopping days when compared to regular days. The rates for sponsored products range somewhere between Rs 5 - Rs 50 cost per click while the rates for brand ads are Rs 10 - 100 cost per click. To advertise on e-commerce platforms during Prime Day, advertisers spend between Rs 100 - 700 per CPM,” said an industry source.

Another source shared, “Ad rates increase by 20% to 30% for regular biddable inventories, and the most impactful inventories are challenging to secure as they are often booked in advance.”

Shashank Rathore, VP of E-Commerce, Interactive Avenues, (digital arm of IPG Mediabrands), said, “During event months, brands can allocate up to 80% of their marketing budget to e-commerce advertising. Advertising during Prime Day or Big Billion Day significantly enhances brand visibility as site traffic increases by 7x compared to a regular month.”

ROAS (Return on Ad Spend) measures the revenue generated per rupee spent on advertising. It gauges ad effectiveness and profitability.

“The ROAS during Prime / Big Billion Day goes very high and the traffic as these e-commerce sites is extremely high. The two days of traffic for Prime/ Big Billion Day could be compared to a midsummer sale that usually lasts between 7-10 days. Thus, it makes a lot of sense for brands to be out there, and get their products shown,” commented Merani.

In terms of ROAS during these peak shopping days, the returns might dip. However, if brands get everything right—narrowing their targeting, contextualising their ad copies, enriching product detail pages, leveraging cognitive biases, securing positive reviews, and maintaining a high social bias on the platform through authority bias—they can definitely boost their ROI in advertising.

Merani added that the attribution of marketing spends is extremely high for online exclusive companies, which end up spending a major chunk of their marketing budget to advertisers on e-commerce.

However, brands with their own D2C websites might reduce performance marketing spends due to less favourable performance, said Rathore.

Electronics and mobile brands, followed by CPG, are the biggest spenders during these events, typically dominated by a few leading brands, he added.

For Amazon India, mobile phones are the biggest driver of sales, accounting for as much as 60%. In other words, if a hundred mobile phones are sold, 60 are sold online, emphasised Merani.

“However, the correlation between visibility and sales is not uniform across all brands. The impact on sales varies by category; high-involvement categories such as home and kitchen appliances, electronics, and mobiles typically see the best sales and ROI. All event days, including Prime Day, attract high traffic and better conversion rates,” Rathore further added.

Shopping events by major e-commerce players are a high-visibility period for brands.

“These events offer advertisers a great opportunity to enhance brand awareness and potentially inspire new-to-brand consumers to become loyal customers. It helps brands introduce highly relevant products to customers, creating reverberations beyond the shopping event itself and helping drive year-round business results and long-term return on investment,” said the spokesperson of Amazon Ads India.

On its website, Amazon said its Prime Day 2023 was the biggest-ever Prime Day in India. It saw strong growth of new members and the highest-ever engagement, with 14% more Prime members shopping during the 2023 edition. A peak of 22,190 orders were clocked in a single minute—the highest ever for a Prime Day event.

In 2023, Flipkart claimed that its flagship festival sales event, The Big Billion Days 2023, recorded over 1.4 billion customer visits. Televisions, audio devices, smartphones and grooming products proved to be among the leading choices. Medicines on Flipkart experienced a 2.5X surge in shoppers, and multivitamins emerged as popular choices, reported Business Standard.

According to Meesho, it recorded 1.2 billion customer visits during its biggest sale in 2023. Categories such as home and kitchen, fashion as well as beauty, and personal care garnered more than 72 orders per second on Meesho.

For the record, GroupM’s TYNY report highlights that retail media in India is driving growth at a CAGR of 41% from 2019 to 2024F. E-retail platform advertising grew at a CAGR of 24.86%, capturing 22.49% of overall digital media spends, amounting to Rs 9,149 crores in 2023, according to Dentsu’s latest Indian Adex report.