Disclaimer: I am in no way associated with either Snapdeal or Flipkart.
I could not help but watch the moves by Snapdeal & Flipkart in the Indian advertising space. With acquisitions and more investments promised, it looks like both these eCommerce contenders are poised to follow Alibaba in building out a massive advertising revenue Alibaba is poised to make $4.75 billion in advertising dollars in China, surpassing Baidu (source ).
What’s at stake?
Google recently crossed $1B in annual revenues in India. That’s not all, the pie is about to get a lot larger in the coming years.
Why are these platforms setting up advertising offerings?
I assume that the initial goals for these platforms are to help their sellers succeed. The long term goals are of course to take a chunk of the advertising pie.
Given that I know a thing or two about advertising, I thought I’d put together a brief playbook for them to look at before they start firing on all cylinders.
So here is my list of suggestions / advice on what should be a part of their strategy.
Data about their users is more valuable than data on Google & Facebook.
Users searching for data on eCommerce sites means only one thing. They’re interested in buying the product. This intent data, combined with recency information as well as other behavioral information is the goldmine that the eCommerce retailers are sitting on. This information needs to be structured as a first party Data Management Platform (DMP) which advertisers can use to select and advertise their products on. In my opinion, the DMP is the most important part of an advertising offering that anyone has to offer.
Identify users across multiple devices and build user profiles: There are two approaches towards identifying users across multiple devices. One a shared login approach (used by Facebook) and the other is a statistical inference method. I think it is important to identify users using both method and to help market products across multiple devices.
The other important thing is to profile the users. The, who, is interested in what conundrum is solved by building user profiles.
Build out a self-service advertising platform
Both Snapdeal and Flipkart will have to quickly build out an advertising platform that is self service and one that that leverages the first party Data (about users, their preference in type of goods etc).
A self-service platform will helps advertisers get started without having to be hand helpd and helps the business scale.
Focus on Mobile & Video
I don’t think I need to reemphasize the obvious with mobile focus. Advertisements on mobile should lead to deep links within apps, offer quick checkouts etc.
The other important thing to deliver is Video ads both on desktop as well as mobile. Video is a higher engagement ad unit that drives impressive results and there is no reason why platforms should not adopt video. This should be an important part in the execution towards advertising dominance for both Snapdeal and Flipkart.
Set up support / service teams – It is no secret that top of funnel advertising is cumbersome to execute, manage and only certain channels / kinds of advertising works well. It is for this very reason that even Google maintains massive teams to help customers succeed on adwords. It makes perfect sense for both such teams to be setup that focus on customer success
It is important for anyone who wants to dominate advertising in India to help the publishers make more money. Why? Simply because the publishers are the worst affected bunch in the advertising system.
Consider this: When was the last time you’ve heard of a runaway media success from India? A service such as buzzfeed, Youtube or a platform dependent on digital ad revenue. I have heard of none. Most of the up and coming media companies or artists are sub platforms within Youtube, where they are at the mercy of Google and their absurd terms.
Build a captive publisher base
While all of the exchanges offer ample inventory in India, it is not an open secret that these exchanges can account for a large amount of margin pilferage. Once the ad platforms and technologies are mature enough, it makes sense to tie up directly with publishers for inventory. This would not only reduce costs, but improve the quality of data collected.
Open newer monetization methods – Advertising does not sustain most publishers focused on content and to boost this, Affiliate advertising, search bars within other sites, monetizing their data as a service etc are interesting models that can be offered to publishers to boost their monetization as well as giving access to their invaluable data.
Offer Backend as a service, Analytics and other tools. It is important that there be a publisher ecosystem that comes to depend on either of these players and the best way to do that is to focus on the developer tools. Backend as a service, analytics and other tools could be long term approaches to sign up more publishers and to help get more data. This is no different than what Google / FB does today.
Qualifying features – advertising platforms these days need a slew of features to succeed – data driven optimization, machine learning, look alike modeling, retargeting and various other standard features that are come to be expected from a modern advertising platform.
It might be important to look in the direction of Facebook and its Dynamic Product Ads (https://developers.facebook.com/docs/marketing-api/dynamic-product-ads/v2.3) to understand what kind of ad products work best for eCommerce players.
There needs to be the right mix of features behind the scenes to help their sellers succeed.
The Masterstroke would be to move from their own seller only ecosystem to an external advertiser ecosystem that can help marketers from the outside to leverage the wealth of data within these platforms, to promote their products. What this would mean is in the future, a smaller ecommerce player would be able to place an ad on a Snapdeal / Flipkart ad platform and attract buyers into his own online store.
I think both these platforms have a daunting challenge ahead and years of work to succeed. But in my opinion, if both or either of them play their cards right, they can easily out maneuver Google and Facebook to be the number one advertising platform in the country.
It is encouraging to read in the news that ecommerce players are willing to acquire / invest and scouting even silicon valley for talent. Just a word of caution there that they must be willing to pay the (right) price for talent especially if they’re looking to attract talent from the valley back into the country.
I posted a similar blog with a slightly different perspective here.
[Asif Ali is the Founder and CEO of Reduce Data , a programmatic advertising platform based in the valley and in Chennai, India. For more information visit the author’s linkedin profile at https://www.linkedin.com/in/asifalis]