Digital advertising growth is accelerating in India as marketers bet video streaming, influencers and online shopping will win over more consumers in the world’s most populous country.
Online advertising will become one of the fastest-growing segments of India’s fast-growing digital economy, according to forecasts by technology research firm Omdia.
India is expected to be the world’s fastest-growing digital economy by 2027, registering compound annual growth of 9.6 percent, according to Omdia forecasts based on metrics such as internet connections, devices, entertainment subscriptions, payments and enterprise IT spending. The country is also forecast to record the world’s fastest online advertising revenue growth during this period, at an average annual rate of 12.7 percent.
This projected increase in digital advertising comes as India’s 1.4 billion people, more than half of whom are under 30, are spending more and more time online.
Mukesh Kumar, associate partner at Redseer Strategy Consultants, estimates that India’s total advertising market is worth $15 billion to $16 billion, with the digital market accounting for just over $9 billion.
Ahmedabad, Gujarat – India is now the most populous country in the world with more than 1.4 billion people © Prashanth Vishwanathan/Bloomberg
“Overall, digital is clearly the number one medium at the Indian level,” says Abhishek Mukherjee, chief business officer of Bengaluru-based media buying agency The Media Ant. “Today it has overtaken television and is likely to go up to over 55, 60 percent [of advertising spend] in the coming years.”
Such rapid adoption of digital channels is a boon for US tech companies YouTube and Meta, which can expect their video advertising revenue in India to grow in the mid to high teens by 2025, according to Omdia forecasts. Last year, traditional market leader YouTube’s video advertising revenue in India was 57.5 billion rupees (about $690 million), up 20 percent year-on-year – and even that was its slowest growth in several years, as data from Omdia shows.
“Video is the fastest growing digital advertising market in India,” notes Redseer’s Kumar. “This segment of video advertising will grow at a compound annual growth rate of approximately 30 to 35 percent over the next three to four years.”
And it’s not just the US video giant that is increasing its revenue. “If you exclude YouTube, the total video streaming market in India would be about $1.5 billion,” says Kumar. Of this, “around 40 percent would be advertising revenue, $600 to $650 million.”
The diversion of advertising revenue from traditional media to online streaming is exemplified by Network18, the broadcast and media group that is part of billionaire Mukesh Ambani’s Reliance Industries.
YouTube’s video advertising revenue in India rose 20 percent last year to around $690 million © Dhiraj Singh/Bloomberg
Omdia forecasts net advertising revenue from Network 18’s traditional TV assets will grow by around 10 percent next year before slowing to 8.6 percent in 2025. In contrast, Omdia forecasts Network 18’s online assets to see advertising revenue growth of 40% next year and 20% the year after that.
Some media companies are so convinced of the profitable potential of online advertising that they are giving away their most valuable asset to viewers.
Viacom18, a part-owner of Network18, spent 237 billion rupees (nearly $3 billion) last year on rights to stream the world’s largest domestic cricket tournament, the Indian Premier League, on its streaming app JioCinema. But instead of using the sports phenomenon to attract paying subscribers, the games became free to watch – with the aim of offsetting the high costs by selling more advertising space.
Likewise, the popular Indian streaming service MX Player, which offers on-demand movies and web series, has a subscription option but is largely free for viewers to watch – if they don’t mind the ads.
It’s a business model that makes economic sense in this market. For many Indian consumers, subscription streaming services are still unaffordable, even if they are much cheaper than elsewhere. Although India’s gross domestic product per capita has grown rapidly since the turn of the century, the World Bank estimates it is still at $2,389 a year – about a quarter as much as China’s.
For streaming services, “introducing advertising is an inevitable option,” argues Shobhit Dixit, managing partner of digital marketing firm Korshine. “The Indian audience is not against advertising. They like it, especially when the advertising is wonderful.”
However, Dixit adds that a barrage of commercials could turn off viewers and that all apps – not just streaming services – need to tread carefully.
While Chinese short-video streaming app TikTok has been banned in India, homegrown alternatives like Josh have gained traction and embedded advertising into their platform.
Josh is a native Indian alternative to TikTok with embedded advertising © Alamy
For marketers, creators of these short-form video content can be a valuable asset – especially when it comes to reaching consumers outside India’s major cities in their own languages.
“There are influencers who have the same fan base in Delhi, Mumbai or Bengaluru and there are brands that are really targeting them, they are the most sought-after influencers,” says Mukherjee of The Media Ant. “[But] Then you have a whole list of nano-influencers with less than 100,000 followers. . . But they are evolving very quickly and each of them has its own niche audience.”
Mukherjee says his clients are increasingly interested in engaging these so-called nano-influencers to spread their message in India’s many different languages.
But beyond videos, marketers have found an even more effective way to advertise online: on the e-commerce sites where consumers already shop.
E-commerce sites such as Amazon, the Indian fashion and beauty platform Nykaa and the delivery service Swiggy together generate “advertising revenues of over a billion US dollars,” says Kumar. “These platforms offer better performance in terms of advertising revenue, mainly because users are very close to the decision-making process,” he explains.
Between streaming and e-commerce, “digitalization will continue to grow,” Mukherjee adds, “that’s for sure.”
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