Ad revenue revolution: Can q-comm challenge e-comm giants for advertising dominance?

As q-commerce firms like Zepto experience significant ad revenue growth, they are reshaping the advertising landscape, with Zepto projected to reach Rs 1,000 crore in ad revenue by 2025.

By  Mansi JaswalNov 29, 2024 8:08 AM
Ad revenue revolution: Can q-comm challenge e-comm giants for advertising dominance?
Quick commerce platforms like Zepto, Blinkit, and Swiggy Instamart have been experiencing a significant surge in their ad revenue. (Image: paolo-candelo via Unsplash)

In a move that underscores the growing influence of quick commerce, Zepto, the Bengaluru-based startup co-founded by Aadit Palicha and Kaivalya Vohra, has launched an ambitious in-house advertising platform, "Jarvis." In just three years, Zepto has evolved into a $5 billion business, and this latest initiative aims to transform the advertising landscape for brands and sellers on the platform.

While Marvel fans will recognize J.A.R.V.I.S. as Tony Stark's AI assistant that powered his Iron Man suits, Zepto's Jarvis is designed with a different purpose: to enhance visibility and boost sales for its platform's merchants. According to Zepto, the new tool is poised to reshape how brands engage with consumers, offering a direct connection between advertisers and users while fostering long-term brand relationships.

This strategic expansion into advertising signals Zepto's recognition of the growing importance of marketing within the rapidly expanding quick commerce space. The company is already seeing impressive results, with triple-digit growth in advertising revenue, and is on track to generate Rs 1,000 crore by 2025.

The rise in ad revenue for quick commerce platforms like Zepto, Blinkit, and Swiggy Instamart reflects a broader trend in the industry, fueled by intense competition for market share. As these platforms expand their urban user bases and refine their targeting strategies, their ability to engage users with highly personalized advertising is paying off.

Kallol Dasgupta, a strategic investor, notes that these platforms' ability to target specific demographics and interests, coupled with innovative yet premium advertising tools, has been a driving force behind the surge in ad revenue.

This growth in ad revenue is also fueled by the efficiency of quick commerce platforms' hyperlocal advertising strategies.

According to Somdutta Singh, founder and CEO of Assiduus, q-commerce platforms leverage data analytics to optimize ad placements in specific geographic areas, yielding returns on ad spend (ROAS) that are often two to three times the investment. This ROAS is leading brands to allocate an increasing portion of their advertising budgets to these platforms.

Zomato-owned Blinkit's CEO Albinder Dhindsa has acknowledged the success of advertising in the quick-commerce space, with the platform reporting more than Rs 400 crore in ad revenue for FY 2024. Similarly, Swiggy Instamart's Draft Red Herring Prospectus (DRHP) revealed that its ad revenue, along with commissions from merchant partners and fees from users and delivery partners, has significantly contributed to its revenue growth.

Brand strategist Aakash Desai points out the innovative approaches to advertising within quick commerce platforms. Desai highlights the use of "sonic branding" — an audio cue played when a product is added to the cart — as an example of how these platforms are creating memorable consumer experiences that drive public relations buzz. He adds that quick commerce apps, which capture user attention for brief moments, are continuously seeking to innovate new ad formats, whether through search ads, product sampling, or post-order screen placements, to maximize engagement.

Despite these advancements, the advertising revenue generated by quick commerce firms still lags behind traditional e-commerce giants.

Currently, ad revenue accounts for roughly 10-12 percent of total revenue for q-commerce firms, with individual platforms like Zomato and Swiggy seeing ad revenues contribute around 3-3.5 percent of their gross merchandise value (GMV). In contrast, established e-commerce players benefit from larger user bases and more diversified product offerings, resulting in more substantial advertising revenue streams.

Nonetheless, as consumer preferences continue to shift toward faster delivery and brands increasingly embrace the targeting capabilities of quick commerce platforms, this share is expected to grow. According to Singh, q-commerce firms currently hold about 4-5 percent of the total e-commerce advertising revenue, but that figure is poised to rise as the industry matures and more brands invest in these emerging platforms.


Tags
First Published on Nov 29, 2024 8:08 AM

More from Storyboard18

Advertising

Misleading ad case: Kerala HC stays order against Baba Ramdev and Acharya Balkrishna

Misleading ad case: Kerala HC stays order against Baba Ramdev and Acharya Balkrishna

Advertising

Global social media ad spend projected to reach $239 billion in 2025, $273 billion by 2026: Report

Global social media ad spend projected to reach $239 billion in 2025, $273 billion by 2026: Report

Advertising

EXCLUSIVE: CCI examines emails of former IBDF President K Madhavan, key officials

EXCLUSIVE: CCI examines emails of former IBDF President K Madhavan, key officials

Advertising

CCI raids: Cloned data from GroupM, Dentsu puts Big Tech under scanner

CCI raids: Cloned data from GroupM, Dentsu puts Big Tech under scanner

How it Works

Creative control or creative caution? What’s really driving content choices on Indian OTTs

Creative control or creative caution? What’s really driving content choices on Indian OTTs

How it Works

CCI raids could accelerate shift from “media muscle” to “strategic agility”, writes indie ad agency Famous Innovations founder

CCI raids could accelerate shift from “media muscle” to “strategic agility”, writes indie ad agency Famous Innovations founder

Advertising

Hypothesis by OML wins Influencer Marketing mandate for Ather Energy

Hypothesis by OML wins Influencer Marketing mandate for Ather Energy

How it Works

SEBI’s ID mandate for intermediary ads welcomed, but industry seeks stronger AI oversight

SEBI’s ID mandate for intermediary ads welcomed, but industry seeks stronger AI oversight