NEW DELHI: India’s digital ad spend, currently witnessing muted growth due to macroeconomic factors, is likely to see rapid growth over the next five years to cross $21 billion by FY28, according to Redseer Strategy Consultants.
By FY28, digital ad spend will account for a major share--65%-70%--of overall ad spend in India, as it will grow at a faster clip, the report pointed out.

As per the estimate, digital ad spending in India will grow 2.5 times in the next five years at a compounded annual growth rate of 19-21%. It also noted that there has been a significant under-reporting of digital ad spends in India by agencies.

“Upon mapping market sizing across media agencies, we observe a significant under-reporting of digital ad spend in India. However, its projection has considered enterprise spends, SMB spends, influencer marketing, affiliate marketing and gaming," said Mukesh Kumar, the company’s engagement manager.

He added that amid current economic headwinds, the ad market is estimated to grow 6-8% in FY23. But it cannot be ignored that $15 billion has been spent on advertising in FY22. About 53% of that went into digital advertisements indicating a growth nested within the overall downturn.

As economic conditions improve, there is likely to be rapid growth in ad spends by 2024.

Globally, there has been a slowdown due to increasing interest rates, Europe’s energy crisis, among other factors, which have led to new-age companies focusing on profitability and controlling their spending on advertisements, hence slowing the growth in FY23. “We expect macroeconomic engines to pick up momentum again by FY24 since, after every economic downturn, eventually, consumer morale returns," Kumar said.

Digital platforms have gained significantly since users are spending about seven hours a day on their smartphones and marketers are increasingly advertising to a more specific target audience. “Incumbent market players like Alphabet and Meta will maintain their market share to alternate digital content platforms. Moreover, content and gaming platforms are emerging as the fastest-growing digital ad platforms," he said.