Daybreak - Groceries were just the beginning. Your 10-min delivery app is now selling your screen time

Episode Date: April 2, 2025

India's biggest quick-commerce apps, Blinkit, Zepto, and Swiggy, have become prime real estate not just for regular FMCG brands but also for financial services, stock-trading apps, and even real-money gaming platforms. The top three players are already making Rs 3 to 3,500 crore rupees  in annual ad revenue. And that, dear listeners, is about half of what Amazon India made from ads in FY24, despite having way more users.In today’s episode, host Snigdha Sharma speaks to The Ken reporter Gaurav Bagur about how quick commerce apps have become the new battleground for India’s ad money and our attention span.Tune in.Question for listeners: Think of the times when you're on your phone everyday and tell us three instances where no one is trying to sell you anything. You can send in your answers to our Whatsapp number 8971108379. Also, if you have any questions for Gaurav, you can send them on the same number as a voice note or a text message.Daybreak is produced from the newsroom of The Ken, India’s first subscriber-only business news platform. Subscribe for more exclusive, deeply-reported, and analytical business stories.

Hi, this is Rohan Dharma Kumar. If you've heard any of the Ken's podcasts, you've probably heard me, my interruptions, my analogies, and my contrarian takes on most topics. And you might rightly be wondering why am I interrupting this episode too. It's for a special announcement. For the last few months, I and Sita Ramon Ganeshan, my colleague and the Ken's deputy editor, have been working on an ambitious new podcast. It's called Intermission.

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I have a question for you, but you have to think of an answer very quickly, okay? So every time you're on your phone on an app that you use daily, can you think of three instances when you are not being pushed to buy something? It is hard, right? As our attention becomes scarcer, companies are going to greater and greater lengths to capture it.

Two and a half seconds. Two and a half seconds is all that it takes for an advertisement to catch your attention. And you know what is the hottest real estate for advertisements in India right now? Quick commerce apps. Blinkets, Swiggy, Zepto, etc., etc. In fact, let me open Blinket on my phone right now and see what's going on. Right. So match time madness powered by Lays and Coca-Cola right on top. Now I'm scrolling down, celebrate Navratri, gift books to your little ones, duwrex, supplements, beat the summer heat, powered by setafil.

Okay, let's go to Swiggy. Right on top, I am seeing mega savings festival powered by Dawat, Dov, HSBC and Beam. H-SBC and Phee? I saw an ad for this dental checkup service when I was ordering, I think, maybe on Instamart or Zepto or one of the apps. And I was just wondering, right, like it's obviously not like I can have a dentist come to my house in 15 minutes or whatever and check my teeth.

So why is this app? That was my colleague, the Kenrapporter, Garev Bauerf Bougar. And he went down a rabbit hole to understand why we are seeing so many ads on these apps, often for things that they can't even sell to us. Turns out, Blinket, Zepto and Swiggy have become prime real estate, not just for your regular FMCG brands, but also for financial services, stock trading apps, and even real money gaming platforms. The top three players are already making three to three thousand five hundred crore rupees in annual ad revenue. And that, dear listeners, is about half of what Amazon

India made from ads in financial year 2024, despite having way more users. So in today's episode, I picked Gora's brain about how quick commerce apps in India have become the new battleground for ad money and your attention span. Welcome to Daybreak, a business podcast from the Ken. I'm your host, Nick Das Sharma, and I don't chase the new cycle. Instead, every day of the week, my colleague Rahal Philipos and I will bring you one business story that is worth understanding and worth your time. Today is Thursday, the third of April. Gaurav, thank you so much for joining us. And I was just thinking it's so interesting what you said earlier, you know, about the ad that you saw for dental checkups.

Because, you know, when anyone sees an advertisement on a quick commerce apps, like you immediately expect, you know, whatever service or product is being offered, it will come to you in 10 or 15 minutes, right? That is the promise. But something else seem to be playing out on these apps right now and that too in quite a big way. And we are seeing what you call what you call non-endemic ads, right, in your story. And these are things that you can't actually buy on the platform. So can you begin by telling us what is the big draw here for these advertisers? Right. So the, interesting thing about quick commerce is that you know there's a lot well first of all there's obviously just a lot of people increasingly using them that it's a high growth space

it's growing hugely like month on month but apart from that it's not just high volume right you also have high frequency you're opening the same apps at door blanket or instramart multiple times a week to you know order groceries order snacks if you're hanging out with your friends on the weekend order a birthday gift if there's a party you have to go to and you forgot and you realize you want to get something at the last minute. So this combination of, you know, high volume, high frequency and high repeat usage, right? There's a lot of users. I'm just using it once or twice.

They're using it repeatedly. So that's, that's something, which is a huge job for advertisers. And the other aspect is also the kind of user profile, right? These are, you know, us who are based in metros, they're comfortable spending, you know, a certain amount of their disposable income on. convenience, right? The convenience seekers. Very familiar with online transactions. These are

these are all like, you know, indicators of affluence that an advertiser would love to see because, you know, these guys are spending real money. They're not, they're not just searching for something. They're not just engaging, right? They're spending money. Right. That makes sense. But,

you know, what about e-commerce websites like Amazon or for that matter, even Google? Because we also use, these apps quite often, right? What is QuickCommerce offering to advertisers that is so different? Right. So when you order on Amazon or FlipCard, right, you don't really keep the app open or keep the website open after you place your order.

You just close the app and go on with your day. But the thing with QuickCommerce, something that these platforms noticed is that, you know, your order is coming in like 15 minutes, right? What are you going to do in that space of time? You don't really, it's not really enough for you to, you know, go and watch TV or something. So generally what happens with QuickCommerce apps is that they saw that users are just looking at the order tracking screen, right? You're watching the little delivery guy's icon. Darkstore, go from the dark store towards your house.

Okay, he's 500 meters away. Now he's 100 meters away. So that spending that extra time on the order tracking screen actually makes a lot of difference. it's extra attention that you're giving the app, right? And that's something which these platforms realized, hey, we can monetize this, right? We can carve out some space on the screen and sell that space to advertisers.

And they know that the user is going to be looking at that auto-tracking screen and look at their ads. Got it. So now if we can flip this around a little bit, you know, we know that these apps or Blinkets Zepto, Swiggy, while they're doing really well, they're also burning a huge amount of,

money. So can you tell us why ad revenue is turning out to be this big ray of hope almost for these platforms? So ad revenue is hugely profitable. Like the margins are more than 90, 95% something like that. That's because there's no operational or logistical cost associated with showing more ads, right? It's clean jail estate. There's no limit on that resource. it doesn't cost anything for a company to show you something extra on your screen. It's practically free. Of course, there's a little bit of tech costs involved, but it's largely, it's nearly zero incremental cost. Right.

Now, you know, going back to these brands, you know, this feels like this huge change that is happening in the nature of advertising itself, right? And you explained this even in your story about the marketing funnel, how it's, starts with billboards and TV ads at the top, you know, to build brand awareness. And then it kind of ends with sponsored listings at the bottom targeting customers who are ready to buy. So traditionally, brands, you know, have shaped their ad strategies around this model, right? But QuickCommerce is kind of changing the game.

And even though it currently, you mentioned this in your story, I think it accounts for less than 5% of ad budgets, brands are allocating money for QuickComers. commerce advertising. So can you tell us how brands are adapting their strategies to this new opportunity that has kind of opened up? Yeah. So I think quick commerce is a very interesting experimental channel for a lot of for a lot of brands. Right. Earlier if you're spending like a huge chunk of your digital marketing budget, you're probably spending that on channels like Google and meta and that takes up like the huge bulk of your marketing budget. Quick commerce is and that's changed now, right?

Quick commerce is now, uh, it's not huge, but it's given that it's only been like maybe one and a half to two years since quick commerce really took off. The share that it has taken is something like two to three percent. If I'm not wrong, that's quite significant. Right. Because these are in the companies that spend these, this kind of money. have huge, huge budgets, right? That's going to be in like hundreds of four each.

Right. Also, you know, you spoke about how often we use these apps and what these brands and these apps are actually looking at in our usage patterns, right? Can you talk a little bit more about trackability? And, you know, also the kind of engagement metrics that these quick commerce apps use and they use to sell also to brands. Right, right. So with QuickCommerce, right, you're seeing users who actually spend money on something.

So the platform has data on where and how these users are transacting, right? And that has a lot more. That's a tighter link to what the user's interest are, which means that advertisers can target users better with the kind of ads they run. Right. So if you are an advertiser and you're running ads on Google, right, you're trying to guess what a user is interested based on what they're searching for. If you're running ads on Instagram, you're trying to guess, okay,

if this user follows, you know, these profiles of like influencers or brands, right? They're probably interested in this, but you don't know if they're, you know, if they're well positioned to spend money on those things, right?

With quick office, that's different, right? You have a much clearer idea of what kind of user a person is because you know what they're spending money on, right? Just because someone is following, a beauty influencer, that doesn't necessarily mean that they're going to spend a lot of money on

beauty products, right? But Blinkett knows who's buying makeup, who's buying lipstick. Yeah, true. But, you know, despite this, not all advertisers are entirely satisfied, right? I remember you quoted this marketing guy in your story who said, you know, their company has run ads on two big quick commerce platforms, but there is still this issue of attribution that keeps coming up. And And then the Zepter executive told you that this attribution problem is probably not going to be solved any time in the near future. So tell me more about this attribution problem. And what is the incentive for quick commerce platforms to actually try and solve this problem? Because I'm assuming this would involve them spending money.

And that is something that will affect their profit margins. And obviously they don't want that, right? So the problem of attribution is like, so if you're an advertiser, right, and say you have a personal loaner, right, and you want to measure engagement, you look at, you know, how many users have downloaded my app, how many have, you know, signed up and are trying to take a loan, things like that, right? But the issue is how you trace that back to this user saw my ad that I was running on Blinket or Zetto. That's a really difficult problem to solve. It's difficult for any platform. The reason quick-commerce apps have been struggling with this is largely because they are new to this game, right?

Like we talked about that this has only really been a business for a very short period of time, right? Compared to Amazon and Google, they've been doing this for years and years, right? But it's, in a sense, this is something that is really difficult for any platform to fall to solve but if quick commerce apps really want to ramp up their ad revenue and that's something they need right because they're they're burning money like crazy but as we talked about ads are a huge a high margin source of revenue right so if you want to give advertisers more confidence in scaling up the amount of money that they're spending on your platform you have to work towards fixing this right

And as you have more advertisers coming in and being more willing to spend money on this, they'll have to start working on solving these, building the kind of solutions that enables advertisers to have more confidence in spending money on the platform. Right. Okay, so one last question, Gordov. I want to know about how all of this is going to impact the user experience of using these apps. you know, we are already seeing so many ads pop up. You know, when you look for something on Blinkato Zepter or Swiggy, there's already so much sponsored stuff that keeps coming up.

You know, you almost have to pay extra attention sometimes to sift through and find what you're actually looking for. So, yeah. Right. I think that's a little bit of a difficult question to ask because obviously there are a lot of smart product people working at these companies, right? They're hugely attractive to talent. And I'm sure they also know that, you know, customer experience is something that really

matters if you want to keep growing as a product. Right. So, but right, there is a trade off between showing more ads and earning more revenue and also, you know, worsening the experience of the customer. That's the tight job that these platforms have to walk. Right. And I think, you know, that's why you might end up seeing more ads, but maybe a way to sort of write that

tight job is to get better at show you more relevant ads right? If you don't show like a hundred more ads but instead you keep the number of ads, get better showing more relevant ads that your users are more likely to find useful. It's going to nourish them to make more purchases

or they're going to engage with those ads more. That's a win-win for the user, the advertiser and the platform. That's all for today, dear listeners. tell me the answer to the question that I asked you at the beginning of this episode. I'll repeat it again. Think of times when you're on your phone every day and give me three instances when no one is trying to sell you anything. You can send your answers to our WhatsApp number at 89711.

08379. I'll repeat that again. 89711. 08379. Also, if you have questions for Gorov, you can send them on the same number as a voice note or as a text message, I'll have him answer them for you in next Tuesday's episode. Just write quick commerce ads at the beginning of your message so I can tell that it is about this episode. Also, thanks for tuning in and if you like this episode, please send it to your

friends and family who you think will find this interesting. Daybreak is produced from the newsroom of the Ken, India's first subscriber-focused business news platform. What you're listening to is just a small sample of our support. subscriber-undi offerings. A full subscription unlocks daily long-form feature stories, newsletters and podcast extras. To subscribe, head to the ken.com and click on the red subscribe button on top of the Ken website. Today's episode was hosted by Snigda Sharma and edited by Rajiv Siyah.