How fintech companies generate advertising revenue from D2C brands
Why do brands continue to run offers on these platforms
With higher demand for brands and limited ad inventory, the price of ads on platforms like Google and Meta-owned Facebook has increased. This is one of the main reasons why brands continue to run offers on these fintech and payment platforms.
The price charged for 1,000 ad impressions is stated using a marketing term called average cost per mile. The report claims that this cost for fintech apps including PhonePe and Paytm is in the Rs 70-150 range for clients daily. Also, 60-65% of total ad spend coming to these platforms is through direct brand partnerships. In such cases, no media buying agencies are involved between both the client and the platform. An executive working in the advertising division of these fintech brands has said that almost 75-80% of advertisers on these payment platforms are new D2C brands.
The rewards and coupons that fintech apps offer their users are also actively used by D2C and consumer brands for advertising. Brands can either choose to have a distribution partnership or a performance-based sales conversion model within these rewards and coupons. The distribution partnership model includes the total users the rewards are shown to, while in the performance-based model, fintech companies take a small cut of the amount the user spent on those tokens.
Expand
What do leaders and managers of D2C brands have to say
Co-founder and CEO of personal care brand D2C, Bombay Shaving Company, Deepak Gupta said, “We spend about 8-10% of our total digital advertising budgets on platforms like PhonePe and Paytm. Facebook and Google account for about 80% of the spend, followed by programmatic sites like Criteria and MiQ, which will be another 10-12% and then the fintech apps, which are 8-10%.”
Gupta added, “The conversion rate for Google and Facebook will be around 2.0-2.5%, while that for fintech platforms will be around 4%,”
Disadvantages of using fintech platforms for advertising
Advertising on fintech platforms can grab advertisers’ attention, but D2C brands have a caveat about it. These brands claim that the payment platforms only act as an engine to add incremental sales. Scalability on these platforms for D2C brands remains a challenge.
Bombay Shaving Company’s Deepak Gupta explained: “Advertising through these fintech apps is cheaper, but it doesn’t give you scale. You can get a certain percentage of business from these platforms, you can’t completely rely on them.”
Meanwhile, Renee Cosmetics’ Ashutosh Valani concluded, “You can’t completely trust these because they can’t meet the entire sales target. They can add a percentage to it.”
