Heavy spending by e-comm firms may . 6k cr help co clock ` in year to March '15
In the great Indian ecommerce race, the real winner is a company which isn't even on the race track -Google, the US-based search giant. The California-based company, sources said, is on its way to clocking over $1 billion (Rs 6,000 crore) in revenue from India in the year to March 2015, helped along by heavy spending by ecommerce firms.
According to company filings, Google crossed Rs 3,000 crore in revenue for the year ending March 2014, up 47% from the year before. Globally, the Google's revenue in 2013 was $58 billion. "Marketing budgets have gone through the roof. It's highly competitive these days and whoever pays the most for a keyword wins the race," said Vasudevan T, a former head of digital marketing at Myntra who is now the CEO of online coaching company Coatom.
For companies like Google, Facebook and Twitter, India has been a paradox. While their largest user base outside of the United States lives in India, making money in the market has been tough.
However, with cash-rich ecommerce companies like Flipkart and Amazon looking to acquire more customers, online advertising has seen a significant increase. “There will be a surge in the digital ad spends by these companies, and we are already seeing this,“ said Nilotpal Chakravarti, who heads media and research at the Internet and Mobile Association of India.
Ecommerce companies are already one of the top spenders in the digital advertising market. Of the total digital advertising spend, nearly 18% came from ecommerce, according to IAMAI.
"When I saw our online spends the first time, I almost fell off my chair," said Ruksh Chatterji, who ran the apparel business for Jabong until February 2014. “Google is a large player in display and search engine marketing that are the key pillars of ecommerce advertising,“ said Chatterji, who is now vice-president of India operations at digital media network Komli Media.
For ecommerce companies, search is the biggest marketing channel along with social media. Typically, online businesses spend close to 25% of their top line on marketing.However, in the case of ecommerce, it could go up to 50%, said Vasudevan.
Google, which considers India as one of its fastest-growing markets, is also making large investments to the country. Recently, under an ambitious Android One initiative, Google brought local manufacturers together to bring down cost of mobile phones. Google declined to comment on its revenue from India.