Swiggy's Ad Spend Down By 26% To Rs 1850 Cr In FY2024

BW Online Bureau Sep 29, 2024

Swiggy has proposed to spend up to Rs 1000 crore, over four calendar years on brand marketing services across various channels, including traditional media

Swiggy saw its advertising and sales expenses drop by 26 per cent to ₹1,850.79 crore in FY2024, down from ₹2,501.16 crore in FY2023. In the quarter ending June 30, 2024, the company allocated ₹445.3 crore for advertising and sales. Meanwhile, Zomato's advertising and promotional costs increased by 17 per cent year-on-year to ₹1,432 crore in FY2024, with ₹396 crore spent in Q1 FY2025.

In January 2024, Swiggy signed a Brand Promotion Agreement with a marketing agency, planning to invest up to ₹1,000 crore over four years in brand marketing across various channels, including traditional media, OTT platforms, and digital media. As outlined in Swiggy's Draft Red Herring Prospectus (DRHP), the company intends to use estimated net proceeds of ₹929.5 crore for brand marketing and promotional activities through FY2028 to boost brand awareness. The projected allocation of these proceeds is ₹61.5 crore for FY2025, ₹239 crore for FY2026, ₹266 crore for FY2027, and ₹363 crore for FY2028.

Swiggy stated in its DRHP, "We aim to continue investing in targeted marketing campaigns and brand-building initiatives in a cost-effective manner to enhance brand recall and attract more users, restaurant partners, merchant partners, brand partners, and delivery partners to our platform."

The company also emphasised its commitment to digital marketing while exploring new media opportunities that align with evolving consumer media consumption trends. The Redseer report notes a significant shift towards online advertising in the food and retail sectors, with ad expenses accounting for over 40 per cent of India's total digital advertising expenditure, estimated at approximately ₹73,000 crore (about $9 billion) in 2023.

Swiggy employs targeted marketing strategies, including digital media initiatives, sponsorships, endorsements, television ads, and various brand-building efforts to draw in users and partners. They engage in sponsoring sports events, conducting targeted campaigns during festivals, and maintaining an active social media presence. According to Swiggy, these engagement strategies have led to increased customer retention, with users acquired in FY2019 boosting their Gross Order Value spend by 2.83 times over five years (as of March 31, 2024).

In the Kantar BrandZ Most Valuable Indian Brands Report 2024, Swiggy was recognised as the "most valuable brand in the Consumer Technology & Services Platforms" category and ranked among the top 25 most valuable brands in India overall.

On the revenue side, Swiggy generates advertising income from restaurants, merchants, and brand partners using its marketing services, recognising this revenue when consumers interact with sponsored listings based on clicks. Additionally, Swiggy offers online ads typically for a contracted duration. Advertising and sales promotion expenses represented 16.46 per cent of its operational revenue of ₹1,850.7 crore.

Swiggy filed its DRHP with the Securities and Exchange Board of India (SEBI) on September 26, with a fresh issue component of ₹3,750 crore, alongside an offer for sale comprising 18.53 crore shares. The company's losses narrowed to ₹2,350.2 crore in FY2024, down from ₹4,179.3 crore in FY2023.