From Shah Rukh Khan becoming a teacher in Byju’s new ad highlighting after-school learning to Pankaj Tripathi showing Kirana store owners ease of doing business on Udaan app, Indian start-ups have been all in with their advertising spend.
Be it Indian Premier League (IPL) on a TV Channel, an episode of your favourite show on an over-the-top (OTT) platform, a fitness video on Youtube or casual Instagram scrolling, you cannot ignore the growing number of ads by start-ups that are ruling the break time.
Nothing New, Yet Unusual: What Changed?
It is not new for start-ups to go aggressive with advertisements in attracting and retaining customers in their growth stage. Back in 2015, we saw a huge surge in ad spends by e-commerce start-ups like Myntra, Flipkart and Snapdeal as the industry boomed. This trend picked up pace over the years with start-ups riding a particular industry boom (e-commerce, e-retail, edtech) each year, putting in big cheques in advertisement.
This number was expected to rise in future. However, something has been unusual in the past one or two years, especially post pandemic. According to media buyers’ estimates, start-ups now account for 10% in India’s advertising expenses. The overall ad spend may hit Rs 80,000 crore in 2021. This means 8,000-8,500 crore (10%) has come from new-age companies. No doubt, the surge was expected, but not to the level of 10%.
Besides developing a big advertising appetite, the start-ups have gone a step further and overshadowed big brands across many platforms. What happened in the past one year? Let’s find out.
Byju’s spent Rs 400-500 crore in advertising in 2020 while gaming firm Dream11 spent Rs 350-400 crore and My11Circle spent Rs 150-250 crore.
A Strong Backing: Funding Galore
The lockdown threw a curve ball at a lot of industries. Start-up industry was one of them with fewer deals and comparative less funding. Having said that, investors poured in $9.3 Billion into the Indian start-ups in year 2020 alone with some of the largest venture capital firms doubling on Seed and Series A deals. Big funding deals were seen for start-ups such as Byju’s, Unacademy, Zomato, CRED, Delhivery, Razorpay, Vedantu and Cars24 along with ballooning valuations.
This momentum refuses to slow down. Barely four months into the current calendar year and the sector has already birthed 10 unicorns (11 in 2020) with $4.4 billion funding in the January-March quarter of 2021.
This spells one major change. The curve ball thrown across sectors by pandemic was caught well by the new-age tech/digital start-ups, who are today in demand more than ever. This is their opportunity to grow.
Strike While the Iron is Hot!
Now what happens when you have large investment, fast- growing revenue potential and an addressable base? You look to invest in brand equity and go all in to capture the user base and create a brand recall, especially when the space becomes extremely competitive and digital (Lockdown).
This is in complete tune with flush of funds from venture capitalists. Following the pandemic, outdoor/below-the-line advertisement has become extremely limited, leaving the choice limited to digital mediums. Now, since the choice is limited with everyone flocking to the same medium to capture the screen time, companies are looking to associate with high-profile (expensive) properties for aggressive marketing and advertising.
Who will step up? The one who needs to (growing stage, competition, user base) and very well could (deep-pocketed investors) during these times i.e. start-ups.
Sports Leagues + Festive Season: Cherry on the Cake
Apart from usual ad mediums like television, OTT platforms, social media and websites, start-ups splashed cash like never before on sports league-IPL, Indian Super league (ISL) and Pro Kabaddi League (PKL)- which come as a one time opportunity in a year for companies to create a recall. This is especially significant during Covid times. The IPL also coincided with festive times.
Looking at the advertising budget of some of the top start-up- Byju’s spent Rs 400-500 crore in advertising in 2020 while gaming firm Dream11 spent Rs 350-400 crore and My11Circle spent Rs 150-250 crore, as per a Pitch Madison Advertising report. Other new breed of sponsors include PhonePe, CRED, Paytm, Dailyhunt and Khatabook, Acko, WhiteHat Jr, Policybazaar, Netmeds and Upstox.
Given the thriving revenue, funding and valuation numbers of start-ups (digital, edtech platforms, payment gateways, gaming platforms, OTT players) amidst the current state of affairs, the 10% ad spend figure will continue to jump further.