2023 marked a landmark year for the Indian advertising and marketing industry, which saw digital ad spending take over the top spot from TV, the long-time reigning champ. Several industry reports, including the recently released dentsu e4m Digital Advertising Report 2024 and the Pitch Madison Advertising Report have recognized this.

While Search and Social, two categories long dominated by the duopoly of Alphabet and Meta, continues to command the lion’s share of digital ad spends, newer entrants are making their presence felt. Retail media with VoD platforms, ranging from YouTube to OTTs, are seeing big jumps as well.

Venugopal Ganganna, CEO, Langoor Digital, says that while search and social media have long been digital frontrunners, we're witnessing a fascinating expansion into previously untapped territories. “Retail media, for instance, is exploding, with platforms like Amazon and Walmart offering brands direct access to engaged audiences at the point of purchase. This hyper-targeted approach, fuelled by rich customer data, translates to higher conversion rates and deeper brand engagement.”

“Video advertising, particularly driven by streaming services like Netflix and Hulu, is experiencing a similar boom. With consumers consuming more video content than ever, brands are capitalizing on premium placements and advanced targeting capabilities to reach specific demographics and interests,” he added.

“This industry, like many others, continues to see rising and falling trends - to be fair though this flux has been going on for a while. For context, spending on traditional media like TV was overtaken by digital globally way back in 2018. And in 2023 this became a reality in India as well. This, of course, was predictable. However, changing trends are now playing out even within this digital universe,” observes Santosh R., Co-founder and CMO of Elever.

For instance, not too long ago the lion's share of digital spends was taken by search ads. However, a 2023 report shows more than a 7% decline in search ads. “The biggest shift has been to TikTok, Insta and influencer marketing, which are more engaging compared to the reactive format of search marketing. Now, there are even newer media on the horizon in the form of OTT platforms that are struggling to monetize their businesses effectively, ad revenue is becoming an inevitable reality for them. And if used right, this could prove to be even more engaging,” says Santosh. 

Attention to Retail

According to the dentsu e4m Digital Advertising Report by the end of 2023, e-retail platform advertising commands a substantial share of Rs 9,149 crore, constituting 22.49% of the overall digital media spends, and has grown with a robust CAGR of 24.86%.

“The retail sector is experiencing a significant shift, driven by the marketplace, particularly quick commerce trends. Due to the increasing popularity of e-commerce and online shopping, the emphasis on effective search and display strategies is crucial. These strategies play a key role in driving sales and building brand presence,” says Rajeev Jain, Senior Vice President, Corporate Marketing, DS Group.

Moreover, GroupM's 2023 Global Mid-Year Forecast report says advertising revenue from retail media channels grew by 9.9% to reach $125.7 billion in 2023 and will further surpass television revenue in 2028, when it will represent 15.4% of total ad revenue. The report also stated that retail media is the third-fastest growing advertising channel, as brands seek more meaningful interactions with customers.

Darshil Shah, Director, ChtrSocial, says the exponential growth of retail media platforms in India can be attributed to the continuously expanding internet user base in the country. “Retail media is playing a crucial role in dominating the whole digital space and will further continue to grow as brands look to diversify their digital spends beyond search and social media. These media platforms enable engagement between brands and audiences, allowing brands to understand consumer behaviour.” 

As Ganganna points out, “Retail media offers laser-focused ads at the purchase point, where intent is at its peak. Imagine browsing for running shoes and seeing personalized recommendations right there. Video, on the other hand, captivates with compelling storytelling, holding attention longer than ever before. These strengths are undeniable, attracting brands seeking targeted conversions and deeper engagement.”

Demand for Video Ads

Harish Iyer, EVP, Media & Investment, Interactive Avenues (the digital arm of IPG Mediabrands India) believes that when it comes to driving consumer engagement on video, content remains pivotal, especially with the surge of new shows on OTT platforms and shifting consumer viewing trends, driving increased adoption rates.

Jain believes that online video, in particular, commands a substantial share of this growth, owing to the widespread popularity of platforms such as YouTube and other video platforms. “Many individuals are increasingly hooked on to these video platforms, leading to a thriving environment for video content. Consequently, our advertisements are strategically placed across various video platforms to capitalize on this trend.”

“These platforms offer new opportunities for advertisers to engage with consumers through compelling video content. With regards to the impact of these emerging avenues on search and social media, the pie in the digital advertising industry is expanding, providing enough room for all players. While other streams of ad revenues are dominating, we won't see ad revenues earned by social or search platforms reduce anytime soon. They will continue to play a crucial role,” says Shah.

And that brings us to the biggest takeaway of this advertising pie. Even if overall growth is slowing, the entry of new digital options for advertisers means that the pie is still growing, and nobody expects to get burned, or starved out any time soon.

A Bigger Pie

“A key thing to remember is that while the decline and rise of different digital mediums will play out, the overall size of the digital pie is also growing at a rapid pace. It is expected to more than double in value to almost $3 trillion by 2026. Another important fact to keep in mind, the variance between industries is significant when it comes to selecting digital media. For instance, while search ads are declining at an overall level, for fashion retailing brands, there has been a 14 per cent increase. So, continue to watch this space,” says Santosh.

Jain adds that in the digital marketplace, being easily discoverable through search is essential for retailers. “Investing in search optimization ensures visibility to potential customers actively seeking products. This not only boosts immediate sales but also contributes to continuous brand recall.”

Display advertising is a powerful tool for showcasing products, creating brand awareness, and engaging the target audience. A well-executed display campaign enhances brand visibility, making a lasting impression on potential customers. This is particularly vital in the competitive e-commerce landscape, where capturing attention quickly is essential.

Each platform offers unique value, making them complementary rather than cannibalistic. Ganganna says this is the plot twist: “The ad pie isn't just expanding, it's transforming. Search giants are incorporating video and shopping features, while social platforms are boosting their targeting and analytics capabilities. The near future will be the synergistic combination of both cross-channel storytelling and AI hyper-personalization.”

Iyer sums it up, “Retail media has exhibited consistent growth in recent years, further bolstered by the introduction of numerous new products, enabling substantial scalability. Search and social media platforms continue to experience double-digit growth, primarily attributed to the rise in performance advertising on social platforms. The overall digital advertising landscape has expanded, providing ample opportunities for growth on each platform.”