The soaring share of digital advertising
With the increasing spend, India’s digital ad market will likely grow 10x
We have often seen how digitization is taking over the conventional ways of our daily lives. But, while we have often unwrapped on how the various sectors are getting disrupted and booming despite many roadblocks, so far we have not deeply delved into the advertisement space which remains an integral part of digitization and maturity.
While the new age companies have been majorly spending on digital ads over the recent years, traditional companies are also increasingly spending on digital. A key factor for this growing trend is the cohort of millennials and Gen Z who spend most of their time on digital platforms. The trend is only expected to amplify as more people especially in Tier 2+ cities engage more digitally through websites, apps, social media among others. Here are a few insights on the growth of the sector.
1. India crossed the moot point of mobile taking over other mediums
Changing Media Consumption, Use (hrs) per day
A few years back, it was still a question if mobile phones would take over TV and other mediums. India has inevitably crossed that point where mobile has successfully taken over all the other mediums and is the device which witnesses maximum consumption. This means that apps become the most popular destination for consumers to engage and spend most of their time, a key factor for companies while deciding their advertisements.
2. This can also be seen in this comparison of MAU on apps in 2015 vs 2020
Unique MAU – Across Apps, # Mn
The comparison of 2015 vs 2020 shows how significantly Monthly Active Users (MAU) have grown across these popular apps which includes chat messengers, OTT, e-commerce, social media among others. This growth also reflects in user time spent, engagement and other factors.
3. A timeline of increasing digital ad spends from 2016-2020
Digital Ads Spends as % total ads spends, CY 2016-20E
The timeline starting from 2016 shows a steady growth in India’s digital ad spends. However, it is comparatively much lower than countries like China and the USA wherein digital adoption is still higher than India. But, the growth of digital ads is likely to continue and grow stronger as with the wake of Covid, adoption of digital services have grown multifold. This is bound to have a positive impact on advertisement spent by companies and brands as users start spending more additional time on these platforms.
4. With the increasing spend, India’s digital ad market will likely grow 10x
India Ads Market, $ Bn, CY 16 – CY 25F
India’s digital ad market is expected to grow ~10x in the next 10 years and will likely contribute 70-85% of the total ad market which currently stands at 33%. The main growth drivers for this trend are-
- Growth in GDP/ capita (globally strong correlation between ad spend and GDP/ capita)
- Increasing digital consumption – Shift in time spent and eye-balls
- Rise of D2C/ challenger brands which will drive the next phase of growth for digital ads
- Increasing digital penetration in Tier 2+ cities creating new market and opportunities