E-commerce advertising claims lion’s share in FMCG's digital adex

New Delhi: India's leading FMCG brands are redefining their media strategies by allocating a significant portion of their digital ad spends to e-commerce and quick commerce platforms. 

The largest contributor to the Indian adex, the FMCG sector is now allocating between 20-30% of their digital budgets to e-commerce and quick commerce platforms, with some brands directing up to 70% of their digital marketing and advertising spend to these avenues. 

Mayank Shah, Vice-President of Parle Products, disclosed to BestMediaInfo.com that their company dedicates one-third of its digital investment to e-commerce and quick commerce platforms.  

He emphasised, “Previously, digital budgets primarily focused on content creation and distribution across various digital platforms. Today, the focus is on consumer purchase decision points. This shift has driven traction towards performance marketing, particularly in the e-commerce space."

Speaking anonymously, a senior executive from one of India’s top 10 FMCG companies revealed their plan to allocate “70% of digital adex to e-commerce” starting this fiscal year. 

Nikhil Rao, Chief Marketing Officer of Mars Wrigley India, highlighted their brands' active investment in the growing e-commerce channel, especially in paid search and banner advertising. 

He explained, “This approach helps in driving shopper conversion and brand building when executed effectively.”

Rao emphasised the rapid growth of e-commerce in India, providing opportunities for brand building and performance marketing. 

He commented, “Advertising on e-commerce platforms offers distinct advantages such as targeted reach to potential customers actively seeking products, precise audience segmentation, and measurable ROI, making it a compelling channel compared to other digital avenues.”

However, he cautioned, “While we anticipate continued investment in e-commerce platforms to match sustained online shopping trends, we are mindful of avoiding overspending and ensuring sustainability.”

Highlighting the growth of FMCG adex on e-commerce platforms, Gaurav Soni, Head of Media at Perfetti Van Melle, remarked that expenditure on these platforms by FMCG brands has significantly increased over the past two years. 

He said, “Several factors have influenced this trend, including shifts in consumer behaviour towards online shopping even before the pandemic. With e-commerce platforms continually evolving and offering new advertising formats, targeting options, and analytics capabilities, FMCG brands are increasing their spending on these platforms to enhance advertising effectiveness.”

India’s major FMCG players, including Adani Wilmar, Dabur, and Marico, have observed their e-commerce sales surge to as high as 35% in FY2024.

A 2023 report indicated that HUL derived 10% of its ice cream sales from quick commerce platforms.

Recent trends show FMCG brands adopting e-commerce-first product launch strategies. A media strategist noted, "FMCG brands are launching new products on e-commerce platforms initially, targeting mass segments at lower price points." 

Additionally, legacy brands such as ITC, Marico, HUL, and others are embracing direct-to-consumer (D2C) models, following in the footsteps of digital startups. HUL introduced U-Shop, ITC launched the ITC Store, Nestle created MyNestle, and Dabur introduced DaburShop.

According to dentsu’s estimates, the FMCG category held the largest share, contributing 34% (Rs 31,428 crore) to the Indian advertising market in 2023. 

GroupM’s TYNY report highlights that retail media 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.

Joining the dots between FMCG’s contribution to the Indian adex and the growth of e-retail in India, Soni concluded, “With platform expansion, innovation, and data-driven marketing capabilities, the trend suggests continued growth in expenditure on e-commerce platforms by FMCG brands in the coming year.”