India's Online Ad Market to Hit Rs 62,045 Cr By 2025: Report

India's online advertising market is thriving, fuelled by growing internet penetration, smartphone adoption and evolving consumer behaviour. The sector has become essential for MSMEs and startups, collectively categorised as Small and Medium Businesses (SMBs). Complementing traditional media, the market is expected to grow at a CAGR of 23.49 per cent, with digital ad spending projected to reach Rs 62,045 crore by 2025.

To shed light on this dynamic shift, Primus Partners, in collaboration with the India SME Forum and Broadband India Forum released an empirical report titled 'Leveraging Online Ads for India: Unpacking the Impact of Online Ads on MSMEs and Startups'. The report, unveiled by Shri Jitin Prasada, Hon’ble Union Minister of State for Electronics and Information Technology and Commerce and Industry and Shri Anurag Singh Thakur, Hon’ble Member of Parliament highlights that 8 out of 10 SMBs find online ads more effective than traditional methods.

Through this initiative, Primus aims to underscore the rising impact and success of online advertising in empowering MSMEs and startups across India.

As online advertising evolves, businesses are adopting innovative strategies to remain competitive in a dynamic marketplace. The report highlights key trends in SMB branding, with 74 per cent of respondents affirming the effectiveness of personalised ads in achieving business objectives. Notably, 70 per cent of SMBs now use more than two online advertising platforms to maximise reach and ensure consistent brand visibility, catering to diverse consumer preferences.

The rise of regional language ads and platforms like ShareChat and YouTube has enabled SMBs to penetrate untapped markets in Tier 2 and 3 cities. Meanwhile, AI-driven targeting, big data analytics and short-form video content on platforms like Instagram and OTT services have enhanced ad campaign efficiency, improving engagement, ROI and lead generation.

The report by Primus Partners also reveals factors influencing SMBs’ choice of online ad platforms. Nearly half (49 per cent) prioritise platforms that deliver strong Return on Investment (RoI), followed closely by geographical reach (47 per cent). SMBs tend to opt for moderate ad frequencies to balance cost-effectiveness and engagement, focusing on seasonal or ad-hoc campaigns during high ROI periods like festivals or sales. However, high-frequency campaigns remain prevalent in sectors like ecommerce, where continuous customer interaction is essential.

Commenting on the launch, Ramakrishnan M, Managing Director, Primus Partners, said, “MSMEs and startups, contributing 30% to India’s GDP, play a vital role in the nation’s economic growth. To boost their performance, these businesses can leverage the power of digital advertising, including AI and AI-related tools, which 69% of our surveyed SMBs found effective in achieving their business goals. Our research highlights that harnessing the full potential of online advertising requires policy reforms and industry strategies that address their unique challenges, foster innovation, and reduce barriers, ensuring sustained digital competitiveness.”

He further added, “To enhance SMB access to online advertising, affordable tools and platforms could also be provided through government-industry collaborations, offering subsidised or tiered pricing. Additionally, we feel a multi-stakeholder approach to regulatory frameworks is needed to ensure transparency, consumer protection, and inclusivity while avoiding burdensome regulations.”

India’s expanding online advertising market offers vast potential for MSMEs and startups to strengthen their digital presence and drive business growth. To harness these opportunities effectively, collaboration between industry and government is essential to eliminate barriers, provide accessible tools and establish a conducive regulatory framework. By adopting innovative approaches and refining digital advertising strategies, SMBs can enhance their competitiveness while playing a pivotal role in driving India’s economic growth in the digital age.