Flipkart and Snapdeal are taking the battle directly to Google Inc (NASDAQ:GOOGL) and Facebook Inc (NASDAQ:FB) on the advertisement front; having deployed large advertisement teams and revamping their technology all in the race for more ads revenue. The two Indian companies have in the recent past seen their investments on advertising campaigns on Google and Facebook start to pay up in terms of growing ad revenue. Focus now shifts to building large monetization teams for growing the business even further.
Flipkart co-founder, Sachin Bansal, is spearheading efforts on the advertisement front as one of the ways of fending off competition from Google Inc (NASDAQ:GOOGL) and Facebook Inc (NASDAQ:FB). Flipkart has been restructuring its efforts in the ad segment having bought mobile advertising firm AdIQuity Technologies as it looks to face off with the likes of Google and Facebook for online ad market share.
Snapdeal and Flipkart generate most of their ad revenue from selling banner ads online, getting brand partners like Xiaomi to spend on marketing as well as charging fees for promoting third party sellers. The two advertising –platforms hope that increased competition in the segment in India, will prompt lucrative rates in the space, sure to have an impact on total returns. The two companies also hope that local retail brands and electronic brands will opt to use their platforms at the expense of Google Inc (NASDAQ:GOOGL) and Facebook Inc (NASDAQ:FB).
Increased spending by retail brands is expected to boost FlipKart’s and Snapdeal margins consequently provide another reliable revenue stream. Both companies are borrowing a leaf out of Chinese online sensation Alibaba Group Holding Ltd (NYSE:BABA), which generates more than half of its sales from ads. Competition in the ad segment is only expected to get stiff going forward with Amazon.com, Inc. (NASDAQ:AMZN) also believed to be working to bring to realization its ad platform.
Amazon generated nearly $1 billion from online ad sales in 2014 margins it would wish to improve on having seen Google Inc (NASDAQ:GOOGL) generate a whopping $55 billion from the same. Investors remain confident that Flipkart and Snapdeal have the potential to rival Facebook and Google on the ad front seen by the pumping of $3 billion in investments. Although it will take some time for Snapdeal and Flipkart to start generating profits, there is hope that with consistent growth the barrier could be broken soon.
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