New Delhi: The digital advertising industry is estimated to grow at a compound annual growth rate (CAGR) of 32% to reach Rs18,986 crore by 2020, on the back of affordable data and increased smartphone penetration, says a report from Dentsu Aegis Network (DAN).
Digital ad spends currently stand at Rs8,202 crore, contributing 15% to the total expenditure of the advertising industry. This is expected to touch 24% by 2020, said the digital ad spend forecast report published by DAN in association with trade portal exchange4media. The Indian ad industry stands at Rs55,960 crore and is expected to touch Rs77,623 crore by 2020 growing at a CAGR of 12.5%.
“Digital is growing approximately three times faster than the average ad spend growth rate and it is going to become an extremely crucial medium in the future. Mobile is going to be a key driver aiding this growth because currently 95% of the new internet users are mobile only across strata including rural areas," said Ashish Bhasin, chairman and chief executive, South Asia, Dentsu Aegis Network.
“Digital should no longer be seen as just a medium but a way of doing business. It is impacting every single business and consumer behaviour. So, while India is one country where all media including television and print are registering growth, the rate of growth for digital is way more higher than the rest," he added.
Currently, social media takes the lion’s share of digital ad spends (28%) followed by search (26%), display (21%) and video (19%). The report clearly said that video ads are expected to see the highest growth with a CAGR of 38% and will have spends share of 22% by 2020.
In terms of brand categories, e-commerce is the biggest spender on the digital media contributing 19% (amounting to Rs1, 589 crore) of all digital spends followed by fast moving consumer goods (13%), telecom (12%) and banking, financial services and insurance (11%).
Noting that the mobile is the most measurable medium for advertising because it offers brands and marketers the opportunity to target audiences, the report said that spend on mobile advertising recorded high year-on-year growth. As of 2017, 43% of the digital media budget is spent on mobile advertising which is expected to overtake desktop and reach spend share of 60% by 2020.
Unlike global markets, the report said, where digital advertising is expected to overtake television ad spends this year, traditional mediums like television and print still dominate overall ad spends in India. However, brands are slowly shifting their marketing budgets to digital platforms as consumers increase time spent on the medium. Brand building is still largely happening through mature ad mediums such as television.
While digital advertising is growing aggressively, it is not without its challenges including effectiveness, lack of unified metric system, return of investment on programmatic system, ad fraud, growing use of ad blocking software and brand safety.
The report also predicted that going forward advertisers will shift spend to over the top (OTT) platforms as more and more people stream content. Ads on OTT platforms will have high viewership since more than one third of OTT visits are over an hour long, and viewers complete 98% of all premium video ads.
Apart from video content, engaging ads on mobile, voice based interactions and emerging technologies such as virtual reality, artificial intelligence and internet of things will make story telling engaging on digital media.