Digital ad spends in India to touch $21 bn in next five years: Redseer

Study says SMBs had 30-35% share of the $8 bn digital ad spend in FY22 and could to raise this to 40% by FY28

Digital ad spends in India are expected to rise 2.5x to $21 billion within the next five years, growing at a CAGR of 19-21 per cent, says a recent report by Redseer Strategy Consultants. The report points out that Covid-led accelerated digitisation has fueled the major push. The significant surge in the use of smartphones and internet services has opened many doors for digital advertising.

“Upon mapping market sizing across media agencies, we observe significant under-reporting of digital ad spend in India. However, the Redseer projection has considered enterprise spends, SMB spends, influencer marketing, affiliate marketing and gaming,” said Mukesh Kumar, Engagement manager, Redseer Strategy Consultants.

Growth in user generated content (UGC) will empower individual creators and influencers to build their digital identity, which brands can leverage for digital ads. This strong ecosystem of 2.5-3 million creators is expected to drive marketing spending of $2.8-3.5 billion by 2028, the report added.

India spends 0.5 per cent of its GDP on ads, of which 53 per cent goes to digital ads. However, with India’s PCFE expected to grow 6-7 per cent over the next five years, the advertising expenditure is bound to rise.

With users spending about seven hours daily on their smartphones, digital platforms have a good engagement rate. Marketers are increasingly advertising on these to reach precise target audiences.

Some of the most popular performances driving digital advertising platforms include e-commerce, short videos, OTT, social media, long-form videos and news outlets.

Incumbent market players such as Alphabet and Meta will maintain their market share to alternate digital content platforms like OTT video, OTT audio, short-form video, and e-commerce.

Moreover, content and gaming platforms are emerging as the fastest-growing digital ad platforms.

SMBs embracing digital ads

Since digital platforms allow marketers to reach out to target groups across various categories, many small and midsize businesses (SMBs) have opted for digital advertising owing to its democratised access. Digital enablers such as e-payments, e-discovery, and e-commerce have enabled traders, service providers, Kirana owners, and small shopkeepers to have an online presence.

According to Redseer, SMBs spent 30-35 per cent of the total $8 billion on digital ads in FY22 and are expected to increase their share to about 40 per cent by FY28.

Empowerment of individual creators

The Indian digital economy has over 2.5-3 million sizeable content creators who have emerged into four archetypes: micro, macro, mega, and elite creators. Micro/macro influencers have given better RoI to bigger brands and enabled smaller D2C brands. It is projected that influencer-led live commerce in India will grow to $8 billion by 2030, and marketing spending on influencers will grow to $3.5 billion by 2028.

As the creator economy grows, it is essential to bridge the gap between brands and influencers through a centralised platform such as the creator marketplace. Such a platform can become a single point for brands to discover and engage with creators. The user-generated content and influencer ecosystems have the capacity to drive highly targeted advertising. Since the UGC platforms already possess content creating communities, they are better positioned for setting up the creator marketplace.