Up 56%: How e-commerce pulled ahead in the advertising race

India’s advertising economy is no longer advancing in uniform cycles; it is gaining speed in concentrated clusters. While traditional sectors still underpin overall expenditure, the sharper narrative emerging from recent industry figures centres on momentum. The dentsu-e4m Digital Advertising Report 2026 highlights this divergence. Although FMCG retained its status as the country’s largest advertiser, contributing 30% of total ad spends (Rs 36,084 crore) fuelled by staples and personal care rivalry, e-commerce surfaced as the quickest-growing category in both overall and digital terms. According to the latest report, e-commerce represented 18% of total ad spends (Rs 22,132 crore), signalling its expanding scale and aggressive customer-acquisition strategies across marketplaces, brands and quick-commerce formats.

What makes this shift more significant is growth pace. In 2025, e-commerce posted the strongest advertising growth across industries, rising 40.8% year-on-year. Digitally, the spike was even more pronounced, with digital media investments climbing 56%, the highest among sectors. This places e-commerce ahead of tourism (54%), education (50%) and automotive (48%) in digital acceleration, pointing to a structural reallocation of budgets. Industry leaders contend that this acceleration reflects how deeply online shopping has penetrated across India, particularly outside metropolitan centres. Vijay Iyer, Vice President and General Manager of Flipkart Ads, notes that traditional marketing funnels have effectively compressed within e-commerce ecosystems. The path from awareness to purchase now unfolds on the same platform, rendering media more contextual, measurable and conversion-oriented. As spending increasingly tracks consumer attention, digital platforms, built on stronger data signals and rapid testing, become the default investment channel. He added that retail media is democratising opportunity, enabling emerging sellers, D2C brands and regional enterprises to compete alongside established players and access what he calls the “Many Indias” with precision.

Offering additional insight, Sini Magon, COO and Global Partner at Grapes Worldwide, explains that e-commerce brands operate within live marketplaces where visibility directly influences sales outcomes. A drop in ranking or limited feed exposure can almost instantly slow transactions. Consequently, marketing is approached less as long-term brand-building and more as a daily revenue engine, naturally driving sustained and often elevated ad investments.She added, “Consumer behaviour has shifted dramatically. People are now comfortable purchasing almost anything online, and faster commerce models have reduced the time between discovery and checkout. When decisions are made quickly, brands ensure they appear wherever shoppers search or browse to avoid being missed. Another driver is the expanding base of sellers transitioning online.”

Simultaneously, the influx of D2C brands, local players and established companies into digital marketplaces has intensified rivalry. More sellers competing for visibility within the same ecosystem inevitably elevate advertising activity and costs. The advantage, however, lies in measurability. Clear attribution and performance analytics motivate marketers to increase spends on campaigns delivering tangible returns, creating a direct link between sales momentum and ad budgets.Experts further observed that growth has been fuelled by the swift rise of quick-commerce logistics, sharper intent capture through search, expanding social-led discovery ecosystems, and the adoption of closed-loop measurement frameworks that connect media spends directly to transaction results.The surge, industry leaders argue, is structural rather than incidental.

For e-commerce and D2C players, advertising is no longer a secondary lever; it has become the primary growth driver. Kautilya Pandey, Head of Growth & Marketing at Shiprocket, highlights that as logistics dependability, payment systems and commerce-enablement solutions have matured, the friction of selling online has reduced considerably. Once “commerce infrastructure friction” declines—across fulfilment, payments and marketing complexity sellers naturally reinvest in customer acquisition and digital prominence. “That flywheel between enablement and growth has accelerated,” he says, adding that ecosystem-wide efficiency gains have boosted advertising and digital media outlays.

In essence, backend infrastructure improvements have unlocked aggressive frontend marketing.For brands embedded within these ecosystems, the transformation appears structural, not cyclical.Deep Bajaj, Founder of Sirona, remarked that the industry is witnessing a fundamental recalibration in consumption behaviour. As more categories transition online and quick-commerce compresses expectations from days to minutes, the contest for acquisition and loyalty is increasingly unfolding on digital platforms.At the same time, the emergence of D2C brands and niche segments—from women’s health to specialised personal care—has heightened competition on digital storefronts. “Unlike traditional retail, discovery, education and conversion now occur in the same environment,” he explained, underscoring why e-commerce is propelling the fastest rise in digital ad investments.

“The sharp escalation in advertising by e-commerce and quick-commerce platforms mirrors intense competition for acquiring and retaining customers. As these platforms extend into new categories and geographies, they are investing heavily to drive app installs, boost order frequency and build habitual shopping behaviour. Remaining top-of-mind has become essential,” said Anurag Kedia, Co-Founder, Pilgrim. This blending of discovery and transaction has redefined the function of retail media itself.

Vijay Shenoy, Deputy Vice President at LS Digital Group, interprets the shift through three dimensions category, consumer and competition. From a category standpoint, he noted e-commerce has expanded aggressively in both breadth and regional penetration. Platforms are moving deeper into Tier 2 and Tier 3 PIN codes, while quick commerce has emerged as a parallel battleground. Native rapid-delivery players and traditional marketplaces extending into faster fulfilment are simultaneously competing for market share and consumer attention—intensity that inevitably converts into higher ad investments.From a consumer lens, he added, smartphones have become the primary gateway to content and commerce. Today’s digitally evolved consumer expects ease, value and swift delivery. As adoption strengthens, brands chase attention. And as brands raise spends, platforms accelerate user growth—reinforcing a self-sustaining cycle.

Competition, meanwhile, has magnified the equation. The focus is no longer solely on acquiring new users; it encompasses retention, purchase frequency and wallet share. Prominence on digital shelves, sponsored listings and performance placements have become central to expansion strategies, naturally elevating e-commerce’s share of digital media investments.Renu Bisht, Founder & CEO of Commercify 360, added another perspective. “E-commerce operates at the crossroads of intent, data and measurable ROI. Few other platforms deliver that level of closed-loop attribution,” she said. In a capital-disciplined climate, marketing allocations are increasingly shifting toward channels that demonstrate direct business impact rather than mere visibility metrics.

Crucially, e-commerce platforms themselves have expedited this evolution. With broader ad inventory, enhanced targeting capabilities, DSP integrations, and expanded video and display formats, retail ecosystems now facilitate awareness, consideration and loyalty within a single measurable framework. Commission incentives in select categories, logistics synergies and in-house fulfilment systems further encourage sellers to amplify visibility. “E-commerce is no longer just a lower-funnel conversion channel,” Bisht observed. “It now enables full-funnel engagement, and brands are recognising the advantages.”Collectively, these dynamics clarify why e-commerce is outpacing every other vertical in growth.