Swiggy's ad spend drops 26% to Rs 1850 crore in FY2024; to 'cost-effectively' invest in marketing
Swiggy has proposed to spend up to Rs 1000 crore, over four calendar years on brand marketing services across various channels, including traditional media
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IPO-bound Swiggy's advertisement and sales expenditure decreased by 26% to Rs 1850.79 crore in FY2024 from Rs 2501.16 crore in FY2023. In the quarter ended June 30, 2024, Swiggy spent Rs 445.3 crore on advertising and sales. In contrast, Zomato's advertisement and sales promotion expenses rose 17% YoY to Rs 1,432 crore in FY2024 and Rs 396 crore in Q1 FY2025.
In January 2024, Swiggy entered into an agreement with a marketing agency (Brand Promotion Arrangement). The company proposed to spend up to Rs 1000 crore, over four calendar years on brand marketing services across various channels, including traditional media (including TV, print, and radio media), OTT media, and digital media. According to Swiggy's Draft Red Herring Prospectus (DRHP), the company will use its estimated net proceeds of Rs 929.5 crore for brand marketing and business promotion expenses until FY2028 to enhance brand awareness and visibility. In the fiscal year 2025, Swiggy's estimated utilization of net proceeds stands at Rs 61.5 crore, followed by Rs 239 crore in FY2026, Rs 266 crore in FY2027 and Rs 363 crore in FY2028, respectively.
"We intend to continue to invest in targeted marketing campaigns and other brand-building initiatives, cost-effectively, to create and increase brand recall, attract and retain more users, restaurant partners, merchant partners, brand partners, and delivery partners to our platform," Swiggy mentioned in its DRHP.
"We would want to continue to invest behind marketing mediums (such as digital and brand marketing), while also working on new media opportunities which evolve based on changing consumer media consumption habits," the Bengaluru-headquartered company added.
Advertising expenditure is shifting online, especially in the food and retail industry. According to the Redseer report, the ad expenses contributed to more than 40 percent of the total digital advertising expenditure in India of approximately Rs 73,000 crore (US$9 billion) in 2023.
Swiggy invests in targeted marketing campaigns, through digital media initiatives, sponsorships, endorsements television advertisements, and other brand-building initiatives to attract more users, restaurant partners, merchant partners, brand partners, and delivery partners to the platforms. "We sponsor sporting events, run targeted advertisements and campaigns during festivals and cultural occasions, and run active social media pages". According to Swiggy, the user engagement tactics have translated into customer retention with users onboarded on the platform in fiscal year 2019 increasing their Gross Order Value spend to 2.83x over five years (as of March 31, 2024).
Swiggy emerged as the "most valuable brand in the Consumer Technology & Services Platforms" category and amongst the Top 25 most valuable brands in India, overall on the Kantar BrandZ Most Valuable Indian Brands Report 2024.
On the advertisement revenue, Swiggy said it earns from restaurant partners, merchant partners, and brand partners for availing its marketing services. Advertisement revenue is recognised when a consumer engages with the sponsored listing based on the number of clicks. Additionally, Swiggy sells online advertisements which are usually run over a contracted period of time. Swiggy's advertisement and sales promotion as a percentage of revenue from operation was 16.46 percent of Rs 1,850.7 crore.
Swiggy filed its DRHP with the Securities and Exchange Board of India (SEBI) on 26 September. The fresh issue component is for Rs 3,750 crore while the offer for sale would comprise 18.53 crore shares. The company's losses declined to Rs 2350.2 crore in fiscal 2024 from Rs 4,179.3 crore in FY2023.
