The gap between the revenues earned by social media companies and traditional media firms has widened as consumers shift to online streaming platforms.

For FY24, Google India and Facebook India ad revenues grew to ₹31,221 crore cent and ₹22,731 crore respectively while ad revenue of HT Media stood at ₹ 1,070 crore, Star India was at ₹10,737 crore and Zee had a flat growth at ₹4,058 crore. 

According to research analysts, the trends prove that platform surfing may be the pivotal factor in this widening online versus offline ad revenue gap.

Subhendu Pattnaik, Principal Analyst at Forrester Advisory, told businessline that the widening ad gapis largely due to customer interaction.

Younger buyers driving trends

“Online advertising also allows for more active interaction as opposed to a TV ad or a paper ad. Forrester’s data says that younger buyers, millennials and beyond, are now getting into more buying and decision-making process. In fact, in every buying B2B buying decision-making, we are seeing more younger buyers who are pushing some of the providers to non-conventional channels of engagement and that includes marketplaces, app stores,” said Pattnaik.

He added that younger buyers appear more habituated to expressing themselves naturally and spontaneously when sharing information, pushing some providers to non-conventional channels of engagement, including marketplaces and app stores. 

“That is one of the key reasons which I perceive strongly as to be driving some of the ad revenue increases for those channels which are predominantly online versus those predominantly traditional,” he said.

On the other hand, Sanchit Vir Gogia, Chief Analyst and CEO at Greyhound Research, said the ad figures show how the platform story has completely changed with customer journey-driving ads. “These places have also become discovery platforms, where we end up finding brands which we’ve never head about. So it’s all about discovery for customers. So, any new ad strategy does not focus on traditional versus new media alone. It’s about 360 degree ad strategies,” he said. It may be mentioned here that during Google I/O Connect in July, the company said it planned to collaborate with the Open Network for Digital Commerce (ONDC). Similarly, Amazon India has aired plans to enter the quick commerce race with its new service, Tez. Amazon India and Zomato have reported ₹4,691 crore and ₹1,432 crore ad revenues, respectively, for FY24.

Regulatory impact

Despite the positive growth, it has not been smooth sailing for some online companies. For example, last week, the Competition Commission of India (CCI) banned Facebook’s parent company, Meta, from using WhatsApp user data for targeted ads. When asked whether this would impact Facebook India’s ad revenue looking forward, Pattnaik said “If you have channels which are getting stopped, then there will be an impact because people have been used to a certain way of consuming information. However, if it is just about changes in the way you are reporting information, I don’t think that will have an impact on the ad revenues.”

Similarly, the analyst was sceptical about the widening ad revenue gap between the two forms of media over the coming years.

“A few years back, every software was on-premise, and then people started moving to cloud. Looking at that migration, people said that cloud is going to go through the roof and on-premise will die down. But now cloud is kind of declining and on-premise is again going up due to security concerns. Similarly, here too there will always be a balance as long as we continue to watch television,” he said.

Star India-Reliance Jio joint venture

Meanwhile, Gogia pointed out that traditional media’s fate also depends on acquisitions, such as Star India’s recent joint venture with Reliance Jio.

“I think cross-branding content and cross journeys are likely to increase. Sony and Zee either acquire or partner with other digital platforms and that is where the game lies. You have to be able to compete with those brands who have completeness of the journey perspective. The more eyeballs that they have defined by content they have, that defines their ad revenue,” he said.

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