Various industry reports on ad spends in 2023 came out in the first couple of months of 2024, there was naturally a surfeit of numbers with various agencies, publications, and other industry stakeholders looking at different metrics, and using different sets of numbers. However, two specific trends were broadly agreed upon, and while marketers are happy to talk about the first, the second isn’t as popular a topic of conversation.

According to the PMAR Report, dentsu-e4m Digital Advertising Report, and EY-FICCI report, among many others, digital ad spends overtook TV for the first time in India, the first year of an era that has already been taking place in other large ad markets for a while now.

The second trend is that the overall growth of digital advertising is slowing down, something that many industry veterans are keen to brush aside.

The digital advertising industry's growth rate is slowing down amid a thriving economy and despite the expectation of 250 million new online users in the country by 2025, necessitating a detailed study of market dynamics. Several things lead to the apparent discrepancy.

According to Kunal Luhar, Co-founder, 5W1H, “While the influx of new online customers has enormous potential, it also increases competition among marketers, resulting in additional ad inventory and, as a result, lower ad costs. Furthermore, increased consumer awareness and worries about data privacy and ad tracking have resulted in regulatory measures such as GDPR and CCPA, which limit targeting and tracking capabilities, affecting ad effectiveness and ROI.”

Furthermore, the maturing of digital advertising platforms and channels has resulted in a saturation point in some areas, with marketers facing declining returns on investment due to ad fatigue and demographic saturation.

Ruchita Purohit, EVP, FCB Interface says that when you peel back the layers, the apparent flagging growth rate of the digital ad industry isn't as alarming as it might seem at first glance. It's a nuanced shift that's taking place.

“The industry is undergoing a transformation, where it's not just about pumping out ads and expecting returns. It's about precision, targeting, and most importantly, relevance. Consumers are inundated with content and ads daily, and their tolerance for irrelevant or intrusive ads is at an all-time low. This shift is leading to what many perceive as a slowdown but is, in reality, a market correction,” she says.

Indeed, according to Deleise Ross, SVP and Business Head, Mudramax, digital still has a lot to recommend especially as many brands are planning only digital campaigns. “This is because advertisers are moving media monies to where the audiences are. The medium also allows advertisers to slice and dice the consumers across relevant segments, thus making it easier to focus.”

“Today, we need to understand our audience better, and create campaigns that are not only effective but also welcome by our audience. We as an agency moved away from a spray-and-pray model long back, today we practice a more surgical approach in digital advertising which requires a deeper understanding of consumer behaviour, leveraging data analytics, and embracing new technologies like AI and machine learning to predict and meet consumer needs more accurately. Hence, this is the most lucrative time for us,” adds Purohit.

“As the industry embraces this influx of 250 million new online consumers expected by 2025, advertisers have to adapt their strategies to effectively engage with this expanding audience. It's a positive shift that prompts advertisers to evolve their approaches to align with the changing digital landscape and consumer behaviour,” echoes Harish Iyer, EVP, Media & Investment, Interactive Avenues.

However, it’s not all sunshine, and while issues like ad fatigue and platform dominance by tech giants are at play globally, India also faces unique hurdles.

“Measuring ad effectiveness in a diverse, data-limited market and uneven internet penetration, especially in rural areas, restrict reach. However, this presents an opportunity for a strategic shift. The new user base isn't just a number; it's a chance to redefine digital advertising in India. The key lies in building trust and fostering connections. Regional language ads that resonate culturally, coupled with leveraging vernacular content platforms where users feel comfortable, will be crucial,” says Russhabh R Thakkar, Founder and CEO, Frodoh World.

“This correction forces advertisers to reconsider their strategy, emphasizing quality over quantity and prioritizing relevance, innovation, and personalization in ad campaigns. It also emphasizes the significance of diversifying advertising efforts across numerous channels, including developing platforms and formats, to effectively reach and engage with increasingly fragmented consumer segments,” notes Luhar.

“Additionally, a mobile-first approach acknowledges the dominance of smartphones in India. By prioritizing data privacy and user experience, the industry can move beyond generic advertising and forge meaningful connections. This correction isn't a dead end; it's a springboard for a future where Indian digital advertising thrives through innovation and user-centricity,” adds Thakkar.

As Manan Malik, Director – Strategy & Growth at Social Panga, concludes, “The digital ad industry, much like a chameleon, is likely to adapt and evolve, finding new ways to thrive in this ever-changing landscape. Furthermore, ad spending is following consumers like a loyal shadow as they migrate to social media platforms, apps, and other online spaces. This underscores the ongoing shift in consumer behaviour and the critical need for the industry to adapt and innovate to stay relevant in this dynamic ecosystem.”