In new-age business, market share may not always mean profitability

economictimes.indiatimes.com:

Digitalisation of business, when companies increasingly use digital tools to create efficiencies, understand the market, and reach out to the customer, is gathering pace even after the pandemic which gave a booster shot to e-commerce. India's fast moving consumer goods (FMCG) companies are increasingly betting on digital advertising to reach customers.

In 2023, about 47% of the FMCG sector's total ad spends flowed to digital media, analysts at Dentsu have told TOI recently. «The digital landscape offers unparalleled opportunities for personalised targeting, real-time interaction and measurable outcomes.

With consumers increasingly turning to online content consumption, investing in digital advertising is imperative to maintain relevance and accessibility to our target demographic,» Somasree Bose Awasthi, chief marketing officer at Marico, has told TOI.

The increasing ad spend on digital media comes in the wake of another digital trend where big legacy FMCG companies have been buying small D2C (direct-to-consumer) and launching their own digital-first brands and omni channels. In the past few years, several large FMCG companies, such as HUL, ITC, Marico, Emami, Reckitt, Wipro Consumer and Colgate Palmolive, have picked up stakes in DTC digital-led startups that garnered popularity among consumers during the Covid-19 pandemic.

Many FMCG companies such as Hindustan Unilever, ITC, Emami and Marico began operating their own micro-sites. Despite low sales on the individual platforms, FMCG companies use their microsites as launch platforms, to collect consumer data, build loyalty and then roll out in other larger channels for volumes, or direct consumers to scale platforms like Amazon or Flipkart.