In 2023, the Indian digital advertising industry experienced a blend of successes and challenges.

India's digital advertising market witnessed a 54 percent growth in 2023 compared to 2022 and 100 percent since 2021, according to statistics obtained from TAM. The data indicates that media, entertainment, social media and ecommerce brands expanded their digital footprint in FY23, but ad impressions of online gaming and edtech firms, many of which witnessed downfall due to retrospective taxes and funding winters, have declined over the past one year.

The TAM data also indicates that ecom-media/entertainment/social media remained at the forefront, commanding 11% of the ad impression shares. Overall, ecommerce, IT, software and online services occupied over half of the ad impressions. The car and smartphone categories were the new entrants among the top 10 list in FY23. Collectively, the top 10 sectors accounted for 48% of ad impressions during this year.

Ad impressions, calculated based on digital media metrics, offer crucial insights into the advertising landscape, though they don’t give a fair idea about the ad spends. TAM gauges advertisers which spend a substantial amount, though millions of SMBs also advertise on digital platforms directly.

Meanwhile, two out of four major digital ad platforms have reported good growth in FY23. Meta India reported a 13 percent increase in its ad revenue (from Rs 16,189 Cr to Rs 18,308 crore), which was decent considering the economic headwinds, however, it was far less compared to 74 percent growth noted in FY22.

Amazon’s ad kitty also got richer by 28 percent (from Rs 4,170 Cr to Rs 5,380 Cr). However, its growth engine has slowed down, compared to 63 per cent growth in FY22.

Google, which commands largest share of digital Adex in the country, ad revenue for FY23 is still not known, whereas the fourth largest ad platform Flipkart has not reported its ad revenue separately this time making the digital adex picture bit hazy.

Top 5 factors boosting the digital age 

Advertisers are increasingly embracing data-driven strategies, leveraging platforms like Google Marketing Platform and AI-powered tools to personalize ad experiences and optimize campaigns. This leads to higher ad effectiveness and increased spending, experts tell e4m.

Rising consumption of social media 

According to Comscore's latest data, India has witnessed a doubling of social media consumption since January 2020, reaching from 2.6 billion hours to an impressive 5.5 billion hours in 2023, as per Comscore 2023 year in Review, India Edition. The study considered three main platforms Facebook, Instagram and X (formerly Twitter) into account.

Besides, the number of social media users worldwide has swelled to a record 4.9 billion people globally in 2023 and expected to reach 5.85 billion by 2027.

“An estimated 600 million Indians access Whatsapp every month. Number of Facebook and Instagram monthly users are over 450 million and 420 million respectively. This has led to an increase in social media spend”, Shashank Srivastava, Senior Executive Director, Maruti Suzuki Ltd.

Most brands were spending over 29 percent of their total digital AdEx in social media marketing, as per e4m-dentsu Advertising Report 2022, which forecasted that social media will occupy nearly half of digital AdEx pie in the next two years.

Rahul Vengalil, Executive Director, Everest Solutions, a Rediffusion group company, echoes the sentiments. “People are spending more and more time on digital platforms which is an interesting trend for the advertising ecosystem. These platforms offer engaging ad formats and precise targeting capabilities, making them attractive for advertisers,” Vengalil said, adding that video platforms are going to have a higher share of engagement and this investment.

Mobile and internet penetration 

Mobile internet penetration continues to skyrocket, fuelled by affordable data plans and smartphone adoption. This naturally leads to increased consumption of digital content and a fertile ground for mobile-first ad formats like video and in-app ads.

Ambika Sharma, Founder and CEO of Pulp Strategy, says, “Undoubtedly, the mobile channel has benefited the most from this growth, with mobile ad impressions likely exceeding 70% of the total. Video and in-app formats have been particularly successful on mobile.”

Growth of retail media platforms 

The e-commerce sector has witnessed explosive growth, with players like Amazon and Flipkart expanding their reach and diversifying their offerings. This translates to increased reliance on retail media advertising to drive traffic and conversions.

According to Gartner's report “State of Marketing Budgets 2023”, marketers have slashing spends on Search as ad impressions have declined. “The ad dollars are now being shifted to conversion-focused platforms such as e-commerce and social media channels, paving the way for an exciting new era of dynamic advertising opportunities.”

FMCG brands are at the forefront of budget cuts on Search and shifting it to retail media platforms. “We've observed a trend of funds moving towards other platforms in the Consumer Packaged Goods (CPG) sector. However, financial clients allocate the highest budgets to search,” Rammohan Sundaram, President - Integrated Media, DDB Mudra Group told e4m earlier.

OTT is getting bigger, thanks to sports and AvoD 

Industry observers say while social media still bags the highest share of digital media revenues, Over-The-Top (OTT) platforms offer a 360-degree engagement experience with powerful originals and blockbuster movies and hence becoming a preferred choice for advertisers.

“The growth of OTT platforms like Hotstar, Prime Video and Netflix in both India and Bharat is creating more avenues for video advertising, capturing the attention of cord-cutters and younger audiences,” says Ambika Sharma.

The growing craze for sports and high -speed internet user base have emerged as biggest catalysts for OTT growth. Millions of Indian users have complete access to content on several AvoD, Freemium and TvoD platforms which suit cost-conscious Indian consumers, industry experts say.

JioCinema, for instance, which acquired digital streaming rights for IPL 2023-27 for more than Rs 25,000 Cr, streamed it for free to customers across India. This move democratized IPL advertising as small and medium size businesses also got a chance to advertise on the country’s most coveted media property.