Digital Ad Costs Surge, Prompting Brands to Reassess E-commerce Growth Roadmap

E-commerce Marketing Shift: Brands Focus on Efficiency Over Reach

The e-commerce landscape is undergoing a significant shift in marketing strategies as digital advertising costs rise and incremental reach diminishes. Consumer brands across categories such as food and personal care are reworking their e-commerce marketing strategies, dispersing spends across platforms, investing more in brand-building, and focusing on retaining customers.

According to Jatan Bawa, co-founder of Sauce VC-backed oral care brand Perfora, at scale, digital advertising becomes very expensive due to limited incremental reach available. As a result, brands are rethinking their efficiency metrics, focusing on channel quality, cohort behavior, and long-term value rather than just top-line acquisition metrics. This approach is evident in the strategies of brands such as The Organic World and iD Fresh.

India's e-commerce market is projected to surge to $300 billion by 2030 from $140 billion currently, according to a February 2026 report by Boston Consulting Group. However, while online shopping continues to grow rapidly, brands are finding it harder to make money from that growth. Returns on advertising have declined nearly 30% in the past few years, as ad costs rise and competition intensifies, according to a report by Shop Culture.

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This decline in returns on advertising has led to a change in marketing strategies, with brands shifting away from scale-at-all-costs growth. Small brands are among the top spenders on e-commerce and quick commerce channels, making it crucial to track their strategies.

"The e-commerce industry is still stuck in the 2022 mindset. Back then, brands could scale by listing aggressively and spending heavily on [e-commerce] ads. By 2025, that playbook is starting to show its cracks," said Subarna Mukherjee, founder and chief executive of Shop Culture.

Rebalancing the marketing mix is a key aspect of this shift. Heavy spending on e-commerce performance marketing is no longer delivering the same returns, pushing companies to diversify beyond marketplaces. Perfora, for instance, has cut its reliance on e-commerce platform advertising from 35–45% of its annual marketing spends to about 20%, redirecting nearly 80% toward channels such as YouTube and Instagram to drive awareness and reach new consumers.

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The shift is also playing out at a broader level, with brands rethinking how they grow and not just where they spend, by expanding across markets and focusing on stronger execution, according to Shop Culture's Mukherjee. "Better execution, not just higher spending, is becoming the key differentiator."

As costs rise, brands are sharpening their focus on efficiency. Customer acquisition costs have increased by 10–15%, while competition has intensified, making both acquisition and retention more expensive. This is prompting a more disciplined approach to marketing, with brands becoming more selective about channels and focusing on improving conversion quality and customer retention.

Efficiency in focus is a key takeaway from the strategies of brands such as The Organic World, Perfora, and iD Fresh. While performance marketing remains a core part of the mix, its share has become more efficient over time as organic demand and brand recall improve. Companies are also investing in first-party data and AI-led optimisation, but with a clearer understanding of their limits.

India's ad market is projected to cross ₹2 trillion by 2026, led by retail media and connected TV, according to a December 2025 report by WPP Media, highlighting a clear mismatch between growth and profitability. The e-commerce industry is at a crossroads, and it remains to be seen how brands will navigate this shift in marketing strategies.