Indian Advertising Surges, Emerges as Global Fast-Growing Market

The Indian advertising market has experienced an impressive upswing, surpassing expectations and establishing itself as one of the world's fastest-growing industries. It secured the 8th spot in the  global ad spend, emerging as the fastest-growing market among the top 10 in 2023. Initially projected to grow at a moderate rate of 8–10% in the fiscal year 2022-23, the digital advertising sector defied expectations. Fueled by Economic Tailwinds in 2023-24, digital ad expenditure is forecasted to more than double, reaching US$ 21 billion by 2027-28.

Currently, India's advertising sector has shifted digitally with the rise in smartphone and internet users. According to IBEF, this has fueled a thriving digital ad market, projected to reach US$ 7.9 billion by 2027 with a 12.3% CAGR. While TV and traditional marketing holds their ground, the internet and digital platforms dominate. Social media leads with 30% of ad expenditure (Rs. 8,757 crore or US$ 1.05 billion), followed by online video at 28% (Rs. 8,319 crore or US$ 1 billion). Paid search constitutes 23% (Rs. 6,895 crore or US$ 892.23 million) and display banners make up 16% (Rs. 4,816 crore or US$ 579.2 million).

What to expect in 2024?

The dynamic landscape of digital marketing in India demands constant awareness of evolving trends for sustained business growth. Projections indicate that advertising revenue in India is set to hit Rs. 394 billion (US$ 5.42 billion) by 2024. Vaasu Gavarasana, COO at RMT (Red Matter Technologies), Mentor & Marketing Coach at T-Hub and IIT Madras, “Anticipate significant shifts in marketing approaches, notably a surge in TV advertising expected to reach Rs. 394 billion (US$ 4.89 billion) in 2024. Outperforming global counterparts, Out-of-Home (OOH) advertising is poised for growth at a remarkable CAGR of 9.9%. The digital industry is gearing up to contribute 38% to India's overall advertising sector, matching television's impact. Expect a substantial uptick in spending on social media marketing, fueled by the ascent of short videos and internet advertising”.

Moreover, in anticipation of the upcoming February 1st, 2024, interim budget announcement, Srikant Rajasekharuni, CEO and Co-founder of RMT (Red Matter Technologies), highlights, 'A potential game-changer lies in the proposed tax reduction for digital platform advertising from 18% to a lower rate. Currently, digital ads bear an 18% tax, in stark contrast to the 5% tax imposed on print media ads. Recognizing the explosive growth of the digital market in India, it becomes crucial for the Indian budget to reevaluate and alleviate the tax burden on digital media, fostering advertising and future revenue expansion.'

Factors contributing to Digital Marketing and Advertising

In 2024, various factors will shape the landscape of digital marketing and advertising. Television is poised to dominate the Indian media market, capturing 40%, closely trailed by print media at 13%, and the burgeoning OTT and gaming industries at 8%. This landscape creates a ripe environment for digital advertisements on these platforms including the advertising-based video on demand (AVoD) segment which is projected to experience significant growth, with a Compound Annual Growth Rate (CAGR) of 24%, reaching a substantial US$ 2.6 billion by 2025.

As we look ahead, an estimated 600-650 million Indians will actively engage with short-form videos, dedicating 55 to 60 minutes of their day to this content, as reported by IBEF. By 2027, India is poised to become the fourth-largest TV advertising market globally, trailing only behind the United States, Japan, and China. Additionally, mobile internet advertising is set to claim a significant share, constituting 73% of internet advertising income in India by the same year, shaping the ever-changing digital advertising terrain.

These developments signal a transformative period for digital advertising, impacting businesses across all levels and ushering in a new era of interactive marketing and innovation. The future promises a dynamic landscape, where strategic adaptation to emerging trends will be pivotal for businesses seeking to thrive in this evolving digital marketing environment.