Zomato’s parent entity (Eternal Limited) reported that its advertising and sales promotion (A&P) expenses amounted to Rs 1,477 crore in the first half of fiscal year 2026 (H1 FY26), up from Rs 817 crore in the same period last year (H1 FY25).
In Q2 of FY26 alone the spend was Rs 806 crore.
Why the Surge in Ad Spend?
- Zomato is aggressively pushing its quick-commerce business (via its subsidiary/segment) and user-acquisition efforts. According to the company, marketing for the quick-commerce arm has grown about 4× YoY.
- The rise in advertising spend is part of a broader strategy to increase frequency of users, brand visibility, and market share in a competitive food-delivery + quick-commerce segment.
- Despite revenue growth (for example, Q1 FY26 revenue was Rs 7,167 crore) the company’s profit in Q1 was very low (Rs 25 crore) largely due to elevated spending including marketing.
What It Means for Zomato
- Growth vs Profit Trade-off: The high ad spend underscores Zomato’s willingness to trade short-term profitability for longer-term market penetration and user growth.
- Margin Pressure: Such a large marketing outlay — especially when combined with other cost pressures — compresses margins and raises questions about scalability and return on investment.
- Quick Commerce Focus: The strategic shift toward quick-commerce is a key driver of the ad spend; the company appears prioritising building that vertical.
- Investor Signals: For investors, the spend signals ambition but also risk — the increased cost base means the company must deliver higher growth or improved monetisation to justify it.
Context & Comparisons
- By way of comparison, in H1 FY25 Zomato’s A&P spend was Rs 817 crore. So the H1 FY26 spend represents roughly an 80% + increase.
- The company’s Q1 FY26 ad spend was Rs 671 crore (up ~69% YoY).
- In Q2 FY26 it reached Rs 806 crore. BMI
Key Risks & Considerations
- ROI: Will the elevated marketing spend translate into sustained growth, higher order frequency, better monetisation or improved profitability?
- Sustainability: High ad spend may be acceptable during growth phases, but the question is whether such levels are sustainable long-term, especially if growth slows.
- Competitive pressure: As competitors also invest, cost of acquisition may rise, making the marketing game more expensive.
- Dependency on quick commerce: If quick-commerce growth falters or profitability remains weak, the high ad spend may weigh on overall performance.
- Macro & consumer environment: Marketing spend works best in a favourable demand environment; any slowdown in consumer spending or food-delivery usage could reduce effectiveness.
Implications for Indian Market & Consumers
- For restaurants and delivery-partners on Zomato’s platform, the increased brand marketing may mean stronger order flows, but also possibly more competition, more offers/promotions, which may affect margins for those partners.
- For consumers, higher marketing may translate to more offers, bigger visibility of the platform, possibly more aggressive customer acquisition expenses (which could mean offers or promotions).
- For the broader food-delivery ecosystem, Zomato’s high ad spend sets a benchmark — competing platforms may need to match scale, which could lead to a marketing arms-race.
Outlook
- Investors and analysts will closely watch how Zomato manages this elevated base of ad spend: particularly whether growth of key metrics (gross order value, user frequency, monetisation per order) accelerate meaningfully.
- The company may seek to improve efficiency of marketing (better targeting, higher lifetime value users) to ensure spend converts into value rather than just cost.
- As quick-commerce becomes a larger part of Zomato’s business mix, marketing may remain a major lever for expansion — but profitability in that vertical will be a crucial test.
- Given the high spend in H1, future quarters (H2 FY26) will need to show either moderating cost growth or accelerating revenue growth to maintain investor confidence.
Summary
Zomato’s ad spend of Rs 1,477 crore in H1 FY26 is a clear signal of the company’s aggressive growth-orientation, especially in quick-commerce, but it also brings into focus the challenge of converting such spending into sustained profitability. How well Zomato executes on its monetisation, market share defence and cost efficiencies will determine whether this heavy marketing investment pays off.
