Advertising spends in India are expected to reach $16-17 billion in FY24, seeing a muted growth of about 6%, stated a report released by RedSeer Strategy Consultants on Thursday. This growth trajectory is expected to be primarily fueled by challenger advertising platforms such as retail media and content platforms, owing to high conversion potential and wider reach among tier-2 audiences, the consulting firm said in its report.
Within this, digital advertising, constituting 55% of the total, is projected to grow by 6-7% this fiscal year, reaching $8.8-9.3 billion. Notably, global players like Alphabet and Meta are anticipated to slightly reduce their share of advertising spending from 62% of the overall pie in FY23 to 60% in FY24.
The report attributes the subdued growth in part to a slowdown in consumption over the past few quarters and a decrease in private equity/venture capital investments due to rising interest rates and geopolitical tensions. Furthermore, the advertising industry has been adversely affected by the 28% GST levy on real money gaming formats, it said.
Meanwhile, FY24 is anticipated to witness significant digital disruption in the consumer sector, driven by increased spending from digitally native brands and traditional brands transitioning to digital platforms. Sectors such as eCommerce, travel and hospitality, and consumer durables are expected to boost their advertising expenditure with a focus on customer retention. The ecommerce sector will see an ad spending increase by 15% in FY24, the report stated.
Additionally, retail media platforms like eTailing and hyperlocal advertising are forecasted to experience a growth rate of 20% in FY24, elevating their market share from 18% in FY23 to 20%. Content-based platforms are projected to maintain their 20% share this fiscal year.
“Of all the platforms, hyperlocal platforms, which have already exhibited a 70% increase in ad revenue CAGR between FY21-23 and short-form video platforms (which have exhibited a 50% ad revenue CAGR increase) are the fastest-growing. eTailing and OTT are two other hypergrowth sectors for advertisers to watch out for,” the report suggested. It anticipated a rebound in consumption and sectoral growth over the next 12-18 months driven by a surge in urban demand and a gradual recovery in rural demand.
Looking ahead, the sector is expected to witness significant shifts, including the rapid expansion of influencer advertising due to its cost-effectiveness, increased focus on tier-2 audiences, accelerated growth of performance ads supported by analytics tools, maturation of programmatic play with an emphasis on contextual advertising, and the integration of GenAI across the advertising value chain.