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Ads on e-commerce enabled OTT: Why is this a recipe of success?

06 December 2019

E-commerce transcends from ‘transactions only’ to ‘engagement-driven transactions’:

Indian e-commerce has been traditionally viewed as a ‘transaction only’ platform. Hence, the growth strategies typically focus on elevating the end to end experience of completing transactions seamlessly & successfully. A few key strategies followed by e-commerce apps are simplifying user journey by reducing the number of touchpoints, providing good user experience through intuitive widgets and hard-to-say-no-to offers, making lighter apps, reducing the app/webpage load durations, etc.

But fast-changing times demand that the e-commerce industry evolves into a destination for engagement constructs like videos, user feeds, games and much more. Two most important reasons behind this shift are:

1. Indians spend more time on engagement content –

Average Indian internet user spends 78% internet time per day on engagement content like video apps, social media, chat apps and gaming platforms. Studies also indicate that customers who spend more time on e-commerce platform show the higher propensity of making a transaction. Therefore, the need for an engaging e-commerce platform arises.

Source: Omidyar – Next half billion report 2019
2. The next billion Indians will consume entertainment-oriented regional content –

With the internet’s dark areas catching up with first-time internet usage, the next wave of growth in India’s internet population is coming from tier II and tier III cities. Nearly 45% of these users consume only regional content through video and music apps.

Video apps as engagement leaders and their corresponding monetization strategies:

Out of the total mobile-based internet users in India, 95% consume entertainment content like social, video, and music. The video leads the digital media & entertainment consumption and in that, India prefers Ads Video on Demand (AVOD). Studies have shown that 7 out of 10 video viewers watch ads with audio turned on, hence AVOD is a near-ideal monetization strategy. This is followed by other strategies like Subscription Video on Demand (SVOD) and Transaction Video on Demand (TVOD).

The amalgamation of e-commerce & OTT experience as a recipe of success:

If one compares the nature of users visiting an e-commerce platform vs those on OTT, former exhibit high intent (i.e. intent of purchase) whereas the latter exhibit higher engagement. Compared with OTT apps, e-commerce apps typically grapple with low DAU/MAU and low average time spent per visit on the platform, mainly due to the fact that e-commerce content is focused on driving transactions for the high intent user and there is less incentive for the user to spend any extra time after the transaction is complete.

Source: Next web article, Digital trends in 2019

 

E-commerce platforms are hence, foraying in OTT landscape to not only bring those incremental users but also help brands drive higher engagement with these users. If one marries the high intent of purchase of a user on e-commerce with higher engagement and deeper reach of video content, it is win-win for e-commerce, the content provider and most importantly the user. Given that Indian audiences massively consume video content and prefer viewing ads over-paying subscription fee, monetizing video content through ads is a suitable strategy for e-commerce players. But having said this, the market is witnessing a steady uptake in subscription video on demand as well.

At Flipkart, we are leveraging the power of our shopper insights to help brands drive higher engagement with viewers of our video content through suitable ads. To begin with, we have powered Linear ads (instream ads). Advertisers can also opt to target their ads to suitable user cohorts to drive higher engagement with relevant users and eventually measure the efficacy of these ads.

Within a small time after the launch of Flipkart Video, we have witnessed positive metrics, on both engagement and commerce fronts. The first original content on Flipkart Video: Farah Khan’s Backbenchers, has garnered widespread viewer attention, thus, significantly adding to the overall uptake of Flipkart Video.

Undoubtedly, we are looking forward to the good times at Flipkart Ads!

The author is Bhoomika Kumawat, Product Manager at Flipkart.

Citations:

  1. Digital India | Technology to Transform a Connected Nation. McKinsey Global Institute, Mar. 2019.
  2. “India’s digital future – Mass of Niches”, KPMG in India’s Media and Entertainment report 2019
  3. Kudva, Roopa, et al. Innovating for the Next Half Billion. Omidyar Network.