How fintech companies generate advertising revenue from D2C brands

by James · March 3, 2023

Direct-to-consumer (D2C) brands are now focusing more on fintech and payment platforms for their business. These platforms included PaytmWalmart-owned PhonePe and Google Salaries are rising sharply among D2C brands as they are reportedly seen as advertising destinations and customer acquisition engines. According to a report by The Economic Times, D2C brands are now more interested in advertising on these fintech apps as these platforms have been successful in capturing a large user base. These apps are also witnessing higher daily user engagement for common use cases like digital payments. For example, Paytm was one of the first payment platforms to provide large-scale advertising revenue from various brands. Paytm claims that it has 89 million monthly transaction users on its platform. Meanwhile, other rival players like PhonePe claim to have 440 million customers in total.

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.

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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%,”

Ashutosh Valani, who is the co-founder of Renee Cosmetics, has said that about 15-20% of the total digital advertising budgets for a D2C brand now goes to affiliate platforms including fintech apps. Other advertising platforms include Alphabet (including Google and YouTube), social media and content platforms, which take a large part of the budgets.

Valani also mentioned that rewards and coupons on these associated fintech platforms contribute to a brand’s direct sales promotion to customers. These ads even exclude revenue from marketplaces like Flipkart or Amazon India. Also, brands are getting more help to advertise on fintech platforms as they properly target digital users based on payment and consumption data, several executives at D2C brands.

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.”