India’s digital ad spending to hit $21 billion in the next five years


Despite muted growth in the current fiscal (FY23), owing to global macroeconomic headwinds, India’s digital ad spends are expected to reach $21 billion by FY28, according to a new report by Redseer Strategy Consultants. Over the next five years, digital, which is already the fastest-growing distribution channel for brand marketers, would account for an overwhelming 65-70 per cent of overall ad spends in the country.  

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

With consumers spending nearly seven hours daily on their smartphones, digital platforms are witnessing high engagement rates, making it imperative for marketers to be present where their audiences are. Even small and medium businesses (SMBs) are expected to increase their spends, accounting for 40 per cent of India’s overall digital ad expenditure by FY28. 

“Some of the most popular performances driving digital advertising platforms include ecommerce, short videos, OTT, social media, long-form videos, and news outlets,” according to Redseer. 

At present, ​​India spends just 0.5 per cent of its GDP on advertising, of which 53 per cent goes to digital ads. In comparison, developed economies like the US and the UK direct 1.3-1.4 per cent of their GDP to ads. 

However, with India’s private final consumption expenditure (PCFE) expected to grow ~ 6-7 per cent over the next five years, the advertising expenditure is bound to rise. “We expect macroeconomic engines to pick up momentum again by FY24 since, after every economic downturn, eventually, consumer morale returns,” the report added.

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