India’s digital advertising spending is expected to surge to $21 billion by 2028 and is growing at a compound annual growth rate(CAGR) of 19-21 per cent, according to a report by Redseer Strategy Consultants.
Digital ad spending will account for 65-70 per cent of overall advertising spend in India. However, in FY23, it will observe a muted growth due to macro factors, the report noted.
It further said that In the last decade, India’s advertisement industry has made giant strides. Covid-led accelerated digitisation formed the major push. A significant surge in the usage of smartphones and internet services has opened many doors for digital advertising.
Under-reporting
“Upon mapping market sizing across media agencies, we observe a significant under-reporting of digital ad spending in India. However, Redseer projection has considered enterprise spending, SMB spending, influencer marketing, affiliate marketing, and gaming,” said Mukesh Kumar, Engagement manager, Redseer Strategy Consultants.
The growth in user-generated content will empower individual creators and influencers to build their digital identity, which brands can leverage for digital ads. This strong ecosystem of 2.5 to 3 million creators is expected to drive marketing spending of $2.8 billion - $3.5 billion by 2028, the report added.
Global Scenario
The report noted that economies that have strong consumer spending can splurge on advertising. The US spends 1.4 per cent of its GDP on advertisements, of which 64 per cent goes to digital ads, and the UK spends 1.3 per cent. India spends 0.5 per cent of its GDP, of which 53 per cent goes to digital ads. However, with India’s PCFE expected to grow 6-7 per cent over the next 5 years, the advertising expenditure is bound to rise.
Global slowdown due to increasing interest rates, energy crisis, etc. has led to new-age companies focusing on profitability and controlling their spending on ads and hence slower growth is expected in FY23, the report said.