Growth in internet subscribers to fuel India’s digital advertising potential

India’s internet landscape is undergoing a transformation with the active Internet User base surging to 88.6 crore in 2024, registering 8% year-on-year growth. This momentum is expected to continue, with projections as per industry reports suggesting the user base will cross 90 crore by 2025.

It has also been noted that rural India has emerged as a major contributor to this growth, boasting 48.8 crore users — 55 per cent of the country’s total internet population. This shift highlights the increasing digital penetration in smaller towns and villages, driven by affordable smartphones, low-cost data, and a growing preference for content in Indic languages.

Indic languages are proving to be a game-changer, with 98 per cent of users consuming content in their native tongue. Tamil, Telugu and Malayalam lead the charge, fuelled by extensive digital availability. Interestingly, 57 per cent of urban users prefer regional language content, reflecting a nationwide trend favouring consumption in local languages.

More investment in digital on cards

This unprecedented digital expansion has energised India’s digital advertising market, which was believed to be worth Rs 50,000 to Rs 60,000 crore at the end of 2023, commanding half of the country’s advertising spends. Experts predict exponential growth in digital ad spends in the coming years as advertisers seek to capitalise on the expanding and increasingly diverse internet population.

Reacting to findings in the report by IAMAI and KANTAR, Subhadeep Dasgupta, Head of Digital Marketing and D2C at Dabur India, said: “We see this as a transformative opportunity to deepen engagement with India's diverse internet population. Our campaigns are becoming hyper-targeted, leveraging regional and behavioral insights. A significant share of ad spends now goes towards vernacular content, particularly for regionally relevant products like Dabur Almond Hair Oil and Dabur Herbal Toothpaste.”

Brands are also recognising the power of hyperlocal strategies to deliver tailored messaging to audiences in Tier 2 and Tier 3 cities. According to Ripal Chopda, CMO at The Sleep Company, “With digital adoption accelerating and the middle-income population expanding, ad spends on digital platforms are naturally rising. We’re strategically allocating resources to ensure we remain at the forefront of this evolution.”

‘Digital growth to outpace traditional media by 3-4 times’

The rise in internet penetration is not just a rural or urban story; it is a game-changer for the media industry as a whole. Karan Taurani, Senior VP at Elara Capital, predicts that digital advertising growth will surpass traditional media by 3-4 times. “Digital’s lead over TV and traditional media will only widen,” he notes, emphasising the role of AI-enabled tools in sharpening campaign execution.

Prasanna Iyer, CEO of Rezilient Digital, agrees: “The growth of the internet base will positively impact digital media investments. For many categories, digital ad spend may soon exceed half of the total advertising budget, as AI tools make marketing campaigns more efficient and impactful.”

SMBs to drive growth

Small and medium businesses (SMBs), which have been fuelling digital ad spend over the last few years, are likely to be a key focus area for advertising and media companies. This will result in lower ad pricing compared to metro cities, as brands adopt a mass-appeal approach, Taurani noted.

As rural India’s digital footprint grows, advertisers are placing a greater focus on regional campaigns. This trend is not limited to small towns; even metro markets are seeing a shift toward vernacular content. Nimesh Shah, Head Maven, Windchimes Communications, observes, “Digital advertising has predominantly targeted urban males. However, with rural internet users and female participation surging, brands are reallocating budgets to regional platforms to confidently target new audiences.”

While national campaigns will remain for marquee events like IPL, the rise of regional campaigns is inevitable, says Rahul Vengalil, CEO of Tgthr.

Video Ads Take Center Stage

Brands and marketers are increasingly tailoring campaigns to tap into the vast and diverse audience of rural India. “Brands are focusing on video ads across TV, connected TV, and mobile, as these formats are central to every marketing strategy ” says Vengalil.

Sayak Mukherjee, Founder at Brandwizz & Creatorcult Media, agrees. “Brands are expected to allocate more budgets toward hyperlocal targeting and mobile-first campaigns. This is already visible in media strategies across YouTube and OTT. Interestingly, Brands have already started regionalising this strategy even in the erstwhile Hindi speaking market.”

AI and Payment Integration

The integration of technology into advertising strategies is driving innovation across the board. Advertisers are leveraging AI for hyperlocal targeting and real-time content adaptation. “We collaborate with regional influencers and deploy AI tools to create culturally resonant campaigns in Tamil, Telugu, and Malayalam regions,” says Dasgupta.

Additionally, platforms like WhatsApp and UPI are becoming integral to brand strategies. Sachin Kumar, Founder of Bottle Openers Digital Solutions, explains, “Brands are using WhatsApp for localised communication and UPI to simplify transactions, driving engagement and sales in regional markets. UPI’s seamless integration with promotional offers and in-app purchases is making it a vital tool for converting engagement into sales.”

As digital advertising costs rise, even in a price-sensitive market like India, smaller advertisers may struggle to sustain. Brands will likely pivot to point-of-sale campaigns or invest more in building brand preference to ease their dependence on costly performance campaigns, Vengalil noted.