Ecommerce leader Flipkart’s CEO Binny Bansal had disclosed that ‘advertising’ would be one of four main aspects to drive their business forward. The company has been focusing on ad income ever since it acquired Adiquity. The focus paid off as its monthly revenue from ads reached $1 million this year. However, they are struggling to get paid.
The firms that used the online marketplace’s advertising platform aren’t paying up. This has compelled Flipkart to file a case against the defaulters.
20 companies in the non-payment defaulters list
A source revealed,
“There are about 20 Indian and foreign companies which haven’t paid and the dues are in the range of Rs 90,000 to crores of rupees each.”
The etailer filed its first complaint against Western Digital in Delhi High Court last month. The US-based data storage company owes more than Rs. 1 crore to Flipkart. Gradually, the online player plans to take the remaining 19, which includes Tikona Digital & My-Popcorn, to court too.
Need for pre-payment system
Media buyers shared that Flipkart doesn’t follow a pre-payment system for its advertising business. The etailer bills digital advertisers later instead of asking them to pay in advance.
This seems to be the core issue. Industry experts feel that the digital advertising sector in India is notorious for non-payment or delayed payment.
Amardeep Singh, CEO at Interactive Avenues reiterated the above point,
“The digital industry is suffering because there have been several cases where advertisers default on payment. We do not have a strong industry body in terms of payment collection yet. Payments for digital are cleared much after the payments of print and television.”
To solve this issue, Internet and Mobile Association of India (IAMAI) is building a committee, which will look after the payment system of digital advertising industry. Until that happens, maybe the homegrown etailer Flipkart should take a cue from Amazon that asks small companies to pre-pay while buying advertising space.
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