After two years of Covid and 2022 as the recovery year, 2023 was heralded as the ‘return to normalcy’ year. The advertising industry embraced the digital path as the way forward. This led to big changes in the way the business of creativity used to work.

While there was a fair share of hurdles, industry watchers also saw reason to cheer.

e4m reached out to top ad business executives to understand how has 2023 been for the industry business-wise.

The year was dominated by an array of geopolitical disturbances, start-up money drying up and the economy slowing down but experts say the ad business industry wasn’t affected much. While it was a good year for some players, some had a flat year with minuscule growth.

According to Amit Wadhwa, CEO of Dentsu Creative India, the first half of the year was slow but it was covered up gracefully by the second half. “Compared to the rest of the world, this year for the Indian market was fantastic as we are a growing economy. Has it been challenging, yes. It was a challenging year as there was a bit of a slowdown globally, but we were less impacted. Business-wise, we have won a lot of business, the second half has been good as the first half had a few economic issues. In the second half, the economy was more stabilized.”

Echoing the positive sentiments, Abhik Santara, CEO, of Atom Network said, “The year 2023 has been a correction year. Post-COVID, in 2022, brands and the overall market went into a vengeance where old brands and a huge influx of D2C brands increased their ad spends significantly, mostly on the back of digital AdEx. Only a handful, 0.02% of brands contributed 50% of the overall ad spends, so a new breed of brands fuelled the unprecedented growth in 2022. But those trends stood corrected and 2023 has normalised the balance of power.”

Speaking of the hurdles, Santara noted, “Slowdown in capital inputs to start-ups, global economic uncertainty, high inflation - especially in rural markets - have negatively impacted the ad growth in 2023. Consequently, the growth of the advertising business has been flat, and in many cases, it has gone down. 2023 has been a tough year for the industry. As an agency, we grew by low double digits and that is way below our expectations or our benchmark of 2022.”

Meanwhile, Prem Narayan, Chief Strategy Officer at Ogilvy India said, that 2023 was a great year for them at the agency. He said, “For us, it has been a good year. A few things that stood out to us for us, we had great client relationships for a long time and it helped us to get more businesses from them. I also feel it has been a year of creative technology that helped to drive more business. We had a lot of clients reaching out to us and many pitches going on.”

As to what didn’t work for the industry, Narayan said: “I do agree that start-up business being slow did impact at an industry level, especially the media platforms. It didn’t impact our business though. It was a good year but I can say that it wasn’t a stupendous year.”

Similarly, Shikha Davessar, Senior Vice President and Head of Client Business, 22feet Tribal Worldwide, said, “We've had a good year at 22Feet, with an overall growth of about 18% in 2023. We are treating this year as the year of building some solid foundations post-Covid, and we expect far stronger growth from here on. Our confidence comes from the fact that the momentum in digital advertising shows no signs of slowing down; in fact, it's projected to grow at a CAGR of 30.3% from 2024 to 2032.”

Sector Watch

While the start-up money was tight, this year many industries increased their influx of spending on advertising and marketing to capitalize on the ever-enthusiast and now digitally savvy Indian audiences. According to experts, auto, BFSI and E-commerce had the maximum ad engagement this year.

According to Siddhartha Singh-Chief Operating Officer, Infectious Advertising, local brands were easy to pour money in while multi-national companies were a little tough. He said, “From our point of view, and from the businesses that we handle, a few multinational clients have been a little cautious on their spends, whereas it’s been quite the opposite when it comes to local brands. Take for instance a confectionary brand that we work with where the spends have been healthy as the category itself has been pushing on novelty. This has tilted the bar on the need to communicate and therefore spends.”

Santara further said, “Most sectors remained flat, even within the usual top spenders like FMCG, Auto and Real estate. But there is a significant drop from categories like education, gaming and D2C brands. There is also a large-scale correction in the pattern of spends. While performance marketing garnered upwards of 60% of overall ad spends by new brands, that trend reversed in 2023 with the focus going back on building mid-long term equity for sustained growth.”

As for Davessar some categories didn’t see much significant growth. “Despite some categories, such as household and personal care, not experiencing a significant surge, they maintained their presence through strategic spending on Search and Performance Marketing. Experiential categories like travel, automotive, and entertainment continued to capture consumer interest, ensuring that brands remained relevant through influencer partnerships.”

‘Double digit growth in 2024’

While 2023 had been a fairly good year for the ad business, experts predict that 2024 will be a year of double-digit growth for the industry with many pieces coming in place and many opportunities to explore. Creative and technology coming together has helped the industry to grow in folds this year, and this will continue to grow more in the next year as many people will be more aware of the possibilities.

Wadhwa said he was seeing double-digit growth and that he was going to be bullish of the year ahead and the opportunities 2024 had to offer.

As for Narayan, 2024 is expected to be great with consolidation coming in place.

Sharing more insights, Sanjeev Jasani, COO, Cheil India, said: “I don’t see any kind of dip in the A&M market next year. There is enough and more business to be won in the market. As long as we can cater to the new emerging needs of the clients, things should be good. Our biggest challenge is that not many clients know what value Cheil India can bring to their business. Whenever we speak to new clients, they are pleasantly surprised to see the kind of value addition we can do. The key for us would be to tell our story to more and more clients and get them to trust us with their business.”