With consumer internet firms chasing profitability, the spends on marketing for online food delivery platforms like Zomato and Swiggy were lower compared to previous editions of the IPL.
The Redseer report noted that rather than relying on “extravagant and attention-grabbing” advertisements, food-delivery companies implemented subtle and low-key strategies resulting in a 7% spike in business.“
“During the IPL seasons from 2017 to 2020, online food-delivery giants made a significant presence on prime-time television through their advertisements. They brought in users with attractive discounts ranging from 50% to 60% at a wide array of restaurants. These efforts led to a more than 50% spike in the IPL 2020 season. However, in the 2023 IPL season, there was a noticeable change in approach,” said Kushal Bhatnagar, associate partner, Redseer Strategy Consultants.
ET reported on March 26, that many consumer internet companies and startups, which had been heavy advertisers and sponsors during the IPL over the last few years, such as Byju’s, Unacademy, PhonePe, and Amazon Prime, among others, were planning to stay away from this year’s edition in the backdrop of a funding crunch.
Food-delivery platforms integrated their offerings with over-the-top (OTT) platforms and created customised advertisements for maximum impact during the previous seasons, contributing to the uptick in business.
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For IPL 2023, Viacom18’s JioCinema was the digital broadcaster of the tournament. Disney Hotstar was the broadcaster for previous editions.According to the report, food-delivery companies saw a steady rise in their business between 2018 and 2020, rising from 43% to 52%, respectively, however, a major dip was witnessed in 2020 when the IPL was postponed due to the Covid-19 pandemic.
Though the numbers picked up in 2021 and 2022 at 6% and 7% growth, respectively, they are nowhere close to the pre-pandemic levels.
Further, among customers from tier-2 cities and beyond, food-delivery registered a growth of almost 2.5 times compared to mature markets.
Hunt for profitability
Swiggy and Zomato are chasing profitability as market conditions continue to be volatile and investors stay away from writing hefty cheques.
Swiggy’s cofounder, Sriharsha Majety said the company’s food-delivery business was in the black in March, excluding employee stock option plans (Esops).
“As of March 2023, Swiggy’s food-delivery business has turned profitable (after factoring in all corporate costs; excluding employee stock option costs),” Majety wrote in a blog post.
“This is a milestone for food delivery globally, not just for us, as Swiggy has become one of the very few global food delivery platforms to achieve profitability in less than nine years since its inception.”
The announcement of the business turning profitable came amid a series of valuation markdowns by Swiggy’s investors Baron Capital and Invesco.
Swiggy’s rival Zomato said in its Q4FY23 earnings that the company had turned Ebitda (Earnings before interest, taxes, depreciation, and amortisation) positive at Rs 28 crore, excluding the quick commerce business and aims to achieve net profit on a consolidated level in the next four quarters.
“How are we aiming to get there? By increasing profits from the food delivery business and reducing losses in the quick commerce (Blinkit) business,” said Zomato founder and CEO Deepinder Goyal.