How digital entertainment platforms are set to cut a thick slice in AdEx this year

August 21, 2021 10:28 AM

Although TV occupies a bigger share in Indian AdEx than digital, the growth in digital platforms’ share of AdEx is more than TV, especially after Covid-19

The impact of Covid-19 has resulted in the growth of digital entertainment platforms.The impact of Covid-19 has resulted in the growth of digital entertainment platforms.

By Keerthivasan Subramaniam

With the advent of the pandemic, countless companies have reshaped their advertising strategies and models. There has been a significant change in the modes of advertising followed by a company. The shift has mainly been from traditional forms of advertising to digital forms. More and more companies are using digital entertainment platforms to advertise their products or services since the arrival of Covid-19. Even before the pandemic, digital entertainment platforms were catching the attention of companies as a better mode of advertising, but after unprecedented Covid-19, digital platforms have gained the deserving momentum. Although the expenses incurred by the companies on traditional forms of advertising such as TV is still higher, digital entertainment platforms are projected to have a significant share in the country’s total Advertisement Expenditure (AdEx) this year.

Changing values of advertisement expenditure (AdEx)

The Covid-19 pandemic has dragged the Indian advertising market at least three years back. Talking about traditional AdEx only, it has gone back to the level what the country achieved in 2015. A whopping difference of six years. The last time Indian AdEx had seen negative growth was in 2009 on account of the Lehman crisis. At that point of time, Indian AdEx had witnessed degrowth by nine percent. However, 2021 will witness significant growth in AdEx. Since the people of the country have accepted living with the pandemic and commercial activities have started taking place, India holds the potential to be the fastest-growing advertising market in the world. Furthermore, significant growth in the Indian AdEx this year is possible due to the sporting events like IPL, ICC T20 World Cup and the Olympics. Heavy sums of money have been spent by sponsoring companies and the government in the promotion of these events. Not only this, but political ad spends also contributed a notable amount to Indian AdEx because politicians spent a considerable amount of money in campaigning activities.

The impact of Covid-19 has resulted in the growth of digital entertainment platforms. The growing use of technology is also leading to the increased use of digital platforms. The Boston Consulting Group reported that the OTT market in India was sized at $500 million in 2018 and was projected to grow to $5 billion, ten times, by 2023. Subscriptions to different OTT streaming channels have increased dramatically. The OTT market is expected to grow at a CAGR of 14% between 2021 and 2023. The growing userbase of digital entertainment platforms is convincing companies to use digital modes of advertising. Advertisers in OTT, mobile gaming, EdTech and digital payments categories are also expected to continue their investments in ad spends due to better results. These investments have substantially increased over the last year. However, the largest pie of AdEx still resides with the TV as India is a developing country where more than 50% of the population don’t have access to the internet or digital means. Therefore, several companies still prefer using TV as their efficient and viable mode of advertising. Other feasible forms of advertising include Print, Outdoor, Audio and cinema which are also important constituents of Indian AdEx, but nowhere stand near TV or Digital.

Although TV occupies a bigger share in Indian AdEx than digital, the growth in digital platforms’ share of AdEx is more than TV, especially after Covid-19. Television is projected to grow by 18% to reach Rs 35,914 crore, whereas digital is predicted to reach Rs 27,700 crore with a growth of 27% this year. The print will witness the growth of 23% to reach Rs 12,731 crore, over 2020. Cinema will behold the biggest growth of 197%, which went down by 83% in 2020 due to the nationwide lockdown and the resultant closure of theatres.

Does India need growth in AdEx?

For a prospering economy, it is considered that the AdEx should be equal to 1% or above of Gross Domestic Product (GDP). Taking the figures of 2019 AdEx, India stood at Rs 82,904 crore that was 0.3% of GDP. In 2021, the AdEx has been predicted to be Rs 80,123 crore, and India is still short to touch the 2019 numbers. But, thanks to the contribution made by digital entertainment platforms, they have acted as the saviours for the economy of the country during the pandemic. Therefore, the nation needs to grow the AdEx significantly for boosting up the drowning economy where digital modes will play an essential role.

In terms of market shares, television continues to hold the largest chunk of AdEx pie at 44%, but digital entertainment platforms are set to cut a thick slice of AdEx (35%) this year. The digital category has grown to secure the second largest market share after television, and in near future, it is likely to leave television behind too due to the shifting preference of people from other modes of advertising to digital means.

The author is founder and CEO of Playtoome. Views expressed are personal.

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