At A Glance: India's Adex & Trends

Jai Lala Dec 28, 2023

The year 2023 was a fascinating one for the world of advertising, particularly within media. The overall adex saw an estimated growth of about 5-7 per cent, with digital advertising standing out as the main driver behind this increase. However, the first half of 2023 painted a different picture, characterised by a downturn in funding for startups, an uptick in commodity prices for Fast-Moving Consumer Goods (FMCGs), and a sluggish rise in vehicle sales, suggesting potential challenges ahead for the year.

The second half of 2023, however, saw a dramatic turnaround in the adex. FMCG spending recovered following a correction in commodity prices, and vehicle sales experienced a surge during the festive season. The excitement generated by the Cricket World Cup further boosted the growth of adex. Despite these positive developments, startups continued to face significant challenges.

The adex is projected to grow by approximately 10 per cent based on our internal estimates, with digital and TV contributing over 80 per cent of the adex. Several factors contribute to this growth:

1. Events such as the IPL, T20 World Cup, and multiple bilateral series in which India is participating will result in nearly 200 days of cricket. While advertising during these events is expensive, they offer ample opportunities for advertisers to build their brands.

2. The 2024 general elections will trigger increased spending from various political parties. The advertising expenditure during the last general election, five years ago, amounted to approximately 5000 crores. Given inflation and changing spending patterns, this figure is expected to double in 2024.

3. India has over 800 million internet users, with 50 million OTT users, and digital spending continues to rise. While digital advertising has been growing by over 30 per cent year-on-year, this growth is expected to be in the range of 15-20 per cent due to the expanding user base. A primary challenge for digital advertising is the lack of a standardised measurement system for tracking viewership and adex. As digital advertising now constitutes the largest share of adex, the industry must have independent accountability and measurement standards, rather than operating within walled gardens.

4. TV is expected to face challenging times, with anticipated single-digit growth and a dynamic shift within the TV landscape.

a. High-definition (HD) television at the top end of the market will continue to grow, with a subscriber base of over 50 million households.

b. Pay TV is expected to decline, or at best, remain stagnant. This is due to the increasing number of cord cutters and a significant shift towards digital viewing.

c. Free-to-air (FTA) television at the lower end of the spectrum is also expected to grow, with an increase in channels in the free bouquet and an expanding Free Dish subscriber base.

5. Regionalisation in India continues to grow from both ends of the spectrum, with an increasing number of regional channels and content, as well as retail advertising spending from local markets.

6. The main categories expected to drive demand and make the maximum contribution to adex are FMCG, Auto, and BFSI.

Tracking the trends

Several trends that emerged or strengthened in 2023 are expected to continue their upward trajectory into 2024:

1. Digital Dominance: The ongoing shift towards digital advertising and media consumption is projected to persist, fueled by the widespread use of smartphones and expanding internet access. This trend is likely to result in a significant surge in digital ad expenditure, particularly in mobile advertising and video content.

2. Video Content and Streaming: The demand for video streaming services and digital video content is predicted to continue climbing. The transition from TV to digital video is a key driver for the rise in digital adex.

3. Influencer Marketing: Influencer marketing is forecast to play a more prominent role in advertising strategies, particularly on social media platforms like Instagram and YouTube. Brands are expected to increasingly collaborate with influencers to reach specific audiences and stimulate engagement.

4. Personalisation and Data-driven Advertising: With Google discarding cookies gradually from the beginning of 2024 it has become imperative for advertisers to collect and manage first-party data. Whilst many advertisers have already begun the journey the acceleration will happen ion 2024. This coupled with the advanced use of data analytics will deliver personalised and relevant content to consumers.

5. Programmatic Advertising: The adoption of programmatic advertising, which currently contributes to around 20 per cent of the total digital spend across categories, is predicted to continue growing. This growth is expected due to more efficient ad buying and improved targeting capabilities for advertisers.

6. E-commerce Advertising: With the rapid acceleration of e-commerce in India, advertising strategies are expected to align more closely with online shopping behaviors. While still in its early stages in terms of overall spend, it's witnessing significant growth in traditional categories.

7. Regulatory Changes: The Indian government has been proactive in regulating the digital and media landscape. Anticipated regulatory changes in areas such as data privacy, content moderation, and advertising standards are expected to impact advertising and media practices in the country.

These trends should be considered within the broader context of India's evolving digital landscape, consumer behaviors, and regulatory environment.