Alibaba-backed Paytm to open its platform for advertisers in competition for Indian online ad spending

Paytm is taking a leaf out of Alibaba’s playbook.

Photo by Patrik Michalicka on Unsplash

Following the footsteps of e-commerce majors Flipkart and Amazon, Alibaba-backed payments company Paytm has launched a new product ‘Paytm Ads’ to sell advertising space on its platform, Indian local news portal Entrackr first reported.

Citing two industry sources, Entrackr said Paytm had hired Saloni Malhotra a low-profile figure five months ago who is currently working on building Paytm’s ad sales network in the country.

“It has already started onboarding brands to buy advertising space on the web and mobile apps. The company is currently running a pilot with select brands including Redtape,” one of the sources said as quoted in the report.

Even before officially building up a dedicated service to sell ads, Paytm and its e-commerce marketplace Paytm Mall has been earning revenue through ad sales. One of the sources told Entrackr that the company might try to build its own network marketing platform similar to Alibaba’s ad platform Alimama that operates search and digital marketing for Alibaba as well as third party inventory.

According to eMarketer estimates, Alibaba will generate USD 30.5 billion in digital advertising revenue in 2019, making it the world’s third-largest digital ad seller after Google and Facebook.

While the majority of the ad spend in India goes to Facebook and Google, e-commerce companies such as Flipkart and Amazon have also jumped into this space and have begun generating revenue through ad sales. According to an article by Mint, a local financial news outlet, Walmart-owned Flipkart is already raking revenue through digital ads to the tune of USD 1 million monthly.

Flipkart started selling inventory for advertisements to sellers in May 2018 and said 12,000 sellers use the service every day.

“The measurability of the efficacy of our platform gives us an edge over competing solutions. Many solutions create awareness and (purchase) consideration but after that you don’t know if and where the actual purchase happens. That’s not the case with us as commerce actually happens on Flipkart and Myntra,” Ravi Garikipati, head of Flipkart’s ad business told local media Mint.

Similarly, Amazon India opened its ad inventory on the website as well as on mobile apps for brands to advertise starting September this year. Earlier it only allowed its own sellers to run promotional ads on the platform, which has been now cleared for all brands.

India’s digital ad space is poised to reach USD 3.5 billion by 2021 according to a report by Dentsu Aegis Network and digital ad spend contributes 17% to the country’s total ad expenditure.