Digital ad spend in India set to grow as consumption improves: Redseer

With consumer sentiment and consumption firming up again, India's digital advertising spend is set to grow at a compound annual growth rate (CAGR) of 8-9% between FY23 and FY28, according to a Redseer research report.

Digital advertising spending is expected to double in growth rate and outpace traditional advertising, capturing a 60% market share by FY28, the report said.

While consumer companies spent less on advertising in the past couple of years due to the economic downturn, improved consumer sentiment will now lead to a surge in the ad market again, said Redseer Strategy Consultants.

It hypothesises that consumer-facing sectors such as e-commerce gaming, education, consumer durables and electronics, retail, and automobile will experience substantial expansion over the next 3-4 years, driving ad expenditure, particularly in the digital formats, including video-based and interactive advertising.

Factors such as influencer marketing, creating ads in different languages, contextual advertising, and using generative AI to easily create ad content are likely to drive the surge in digital ad spending as companies strive to create awareness about their brands and products.

Influencer marketing, in particular, will help drive reach in Tier II+ cities in India, Redseer said.

Redseer projects influencer marketing expenditure, estimated at $350 million to $400 million in 2023, to surge to $2.8 billion to $3.5 billion by 2028.

"What sets digital advertising platforms apart is their versatility, offering brands the ability to reach previously untapped audiences and niche markets while delivering high ROI," noted Redseer in the report.

"[Digital ad platforms also] offer multiple touchpoints across the marketing funnel and make it easier for brands to engage with their target audience," the report added.

Overall, Redseer estimates advertising spend in India to hit $23 billion-$24 billion by FY28, at an optimistic CAGR of 9-10%.