Digital Advertising in India

With its developing economy, India provides advertisers with several opportunities to sell their services and products through the region's expanding media platforms. Economic expansion in India has also increased the purchasing power of a sizable segment of the population, resulting in a more affluent and brand-conscious consumer base. As a result, businesses are focusing on building a strong brand image for themselves through extensive advertising. The advertisement sector in India has been digitally disrupted in the previous decade as the number of individuals utilising smartphones and internet services has increased dramatically. This resulted in the rise of a number of consumer internet models and industries with enormous potential for digital advertising. Digital advertising is anticipated to expand at a modest rate of 8–10% in the fiscal year 2022-23. However, as economic tailwinds kick up in 2023-24, the digital ad expenditure is predicted to more than double to US$ 21 billion by 2027-28. Global internet advertising market growth declined from 30.8% in 2021 to 8.1% in 2022, resulting in a total market value of US$ 484 billion for the year. In contrast, India's internet advertising market expanded 35.3%, from US$ 3.3 billion in 2021 to US$ 4.4 billion in 2022, making it one of the fastest growing in the world. The internet advertising market in India is predicted to develop at a CAGR of 12.3%, with total revenue reaching US$ 7.9 billion by 2027.

In an effort to counter the hegemony of large IT companies in the US, the Indian government is working to ensure that the Internet advertising market is competitive. Additionally, India intends to tighten internet governance with the upcoming Digital India Act. Furthermore, the Indian government has made a concerted effort to make digital media accessible to everybody. The Digital India project is promoting the development of digital infrastructure, corporate transformation, and digital commerce through a variety of applications, including the Unified Payments Interface (UPI), Aadhaar, Open Network for Digital Commerce (ONDC), and Government e-Marketplace (GeM).

Digital Advertising in India

The country is a mobile-first market, with 782 million mobile internet subscribers in 2022. The outdoor advertising business in India is also fast developing. Over the projected period, it will outperform every other OOH market worldwide, growing at a CAGR of 9.9%. In 2022, digital advertising is expected to increase by 52% year on year. By 2027, India will be the fourth-largest TV advertising market in the world, trailing only the United States, Japan, and China. By 2027, mobile internet advertising will account for 73% of internet advertising income in India.

The FMCG segment contributes 38% (Rs. 11,403 crore (US$ 1.37 billion)) and has gained 28% over the previous year. This is followed by the e-commerce segment, which contributes 20% (Rs. 5,982 crore (US$ 719.43 million)) to India's digital media business. When compared to the previous year, the contribution of the e-commerce segment has nearly tripled. Its expansion can be ascribed to the increased popularity of digital transactions and e-commerce among the

Digital Media Spends across Industry Verticals

Source: Dentsu, e4m

digital media business. When compared to the previous year, the contribution of the e-commerce segment has nearly tripled. Its expansion can be ascribed to the increased popularity of digital transactions and e-commerce among the public. While the FMCG and e-commerce sectors account for more than half of the spending on digital media, the telecom and pharmaceutical sectors have experienced the biggest growth in terms of spending on digital media relative to the overall media budget. The telecom business spends half of its media budget on digital media, which has increased fourfold by 2021. The pharmaceutical industry increased its digital media budget by more than thrice over the previous year.

Spending on internet video is predicted to expand rapidly and surpass social media spending by 2024. The FMCG industry spends the majority of its digital media budget on online video, whereas the pharmaceutical and e-commerce industries spend the most of their expenditures on paid search. This increase in digital media advertising spending can be ascribed to an increase in OTT and online video consumption as a result of increased penetration of smart devices and internet access. Digital media advertising trends are also being driven by an increase in the use of digital transactions and e-commerce. Aside from these key drivers, the expansion of advertising opportunities on e-commerce and direct-to-consumer platforms is propelling digital media to new heights.

Advertising Spends on Digital Media Formats

Source: Dentsu, e4m

Among digital media advertising formats, social media has the highest expenditure share (30%, Rs. 8,757 crore US$ 1.05 billion), followed by online video (28%, Rs. 8,319 crore (US$ 1 billion). Paid search contributes 23%, Rs. 6,895 crore (US$ 892.23 million), while display banners contribute 16%, Rs. 4,816 crore (US$ 579.2 million), to the Indian digital advertising market. Social media and online video formats have continuously been the most powerful and largest digital media advertising types. Online video has experienced the highest growth because of the quick rise in consumers of this medium as a result of the widespread availability of low-cost smartphones and high-speed connectivity. Online video advertising formats are predicted to increase at the fastest rate of 29% by 2024, surpassing social media. Social media is predicted to expand at a compound rate of 31%, reaching an expenditure share of 29% by the end of 2024.

Types of Digital Marketing

1. Search Engine Optimization

Search engine optimisation (SEO) refers to the method of developing content in such a way that search engines such as Google will rank your page high on the search engine results page (SERP). Google employs algorithms to determine how pertinent your page is to the user's search terms. Since these algorithms are continuously updated, SEO tactics must also be modified frequently to remain effective.

2. Content Marketing

Content marketing refers to valuable instructive content like as blog entries, how-to videos, and other instructional materials. This sort of marketing allows a business to connect with its audience and respond to their inquiries. Additionally, it can aid in lead generation and sales closure.

3. Email Marketing

Businesses ask people to sign up for email subscriber lists when they visit their websites or storefronts. Then, companies email customers about specials, unique occasions, or upcoming product releases with their consent. The most crucial aspect of this digital marketing channel is that it provides value to the target audience. Offer them exclusives that your target audience would not receive anywhere else, and a business can build a mutually beneficial relationship that will increase brand loyalty.

4. Mobile Marketing

According to a Google study, 27% of people around the world utilise mobile voice search. The consumer experience on mobile devices is expanding exponentially. Smartphones are one of the most quick problem-solving partners anywhere, anytime in digital marketing since it demands immediacy as much as loyalty. For brands who want to stand side by side with their customers, mobile marketing is a need. Everything the marketer does on the desktop must be adapted to mobile. Additionally, businesses must be proficient in mobile-specific duties including texting, social messaging apps, and in-app advertising. It is quite crucial for brands that cater to younger audience.

5. Pay Per Click/ Search Engine Marketing

SEM, or search engine marketing, refers to paid adverts that show at the top of search engine results pages. The term "pay-per-click" refers to the fact that the price of these advertisements often depends on how many people click the link. When you pay for these top SERP positions, the label "Ad" will appear next to your URL. Despite the fact that many consumers are aware that these are advertisements, this can be a very successful digital marketing tactic.

6. Social Media Marketing

Social media platforms are employed as a digital marketing medium with social media marketing. To reach a new audience, advertisements can be purchased. Alternatively, a business can build a profile on any social media network and post updates about deals, new items, or recently published material. The social media platform a business chooses will determine the type of audience it wishes to attract. According to Pew Research, Instagram is excellent for reaching audiences aged 25 to 29, and Facebook is best for reaching individuals aged 65 and up.

Emerging Trends in the Digital Marketing Industry

1. Video Marketing

Video has become a potent weapon in the armoury of digital marketers, and in 2023, its use is only anticipated to increase. With the popularity of sites like YouTube, TikTok, and Instagram Reels, companies can now take advantage of the enormous potential of video content to draw in customers. Video marketing provides the power to visually convince audiences and increase conversions by delivering complicated concepts. Businesses should prioritise producing shareable, high-quality video content that appeals to their target audience.

2. Influencer Marketing

Influencer marketing has grown rapidly in recent years and remains a very successful tactic for companies trying to increase their reach and establish brand trust. It is anticipated that more companies will collaborate with relevant influencers to market their goods or services in 2023. Micro-influencers are gaining popularity as an economical alternative to macro-influencers due to their niche and engaged fanbase. Businesses may gain their followers' confidence and build meaningful engagement by engaging with influencers who share their brand values.

3. Personalization and Customer Experience

In this age of information overload, consumers are increasingly demanding customised experiences that respond to their own interests. In India, digital marketers must focus on providing personalised content and experiences to their target audience. Businesses can gain insights into their consumers' behaviour, tastes, and purchase habits by employing data analytics and automation. This information may then be utilised to develop customised marketing campaigns, personalised emails, and relevant recommendations, thereby improving the entire customer experience.

4. Voice Search Optimisation

The increased adoption of voice assistants and smart speakers in India has spurred the growth of voice search. Optimising content for voice search is no longer optional; businesses must do so to remain discoverable to voice search users. When optimising their website and content, marketers should concentrate on using conversational language and long-tail keywords. Additionally, using schema markup and making sure that mobile pages load quickly can enhance voice search visibility and increase organic traffic.

5. Social Commerce

Social media platforms have become an essential part of the Indian consumer's shopping experience. Recognising this trend, social media behemoths such as Facebook, Instagram, and WhatsApp have implemented capabilities that enable smooth buying experiences right within their platforms. Businesses should embrace social commerce in 2023 by establishing online stores, implementing shoppable postings, and utilising social media advertising to boost sales. Building a strong social media presence and actively connecting with customers can have a big impact on business success.

6. Artificial Intelligence and Chatbots

Artificial intelligence (AI) and chatbots are changing the way businesses communicate with their clients. Instant responses to consumer inquiries, streamlined customer service, and improved user experience may all be achieved with the help of AI-powered chatbots. Implementing chatbots can improve response times, lower operational costs, and increase customer happiness. Furthermore, artificial intelligence (AI) may be used to examine massive volumes of data, allowing organisations to make data-driven decisions, customise marketing efforts, and optimise customer journeys.

7. Metaverse, Web 3.0, etc

Because of the current stage of technological advancement, we feel that combining the physical and virtual could totally revolutionise how we experience our world. This technology has progressively crept into our lives as extended reality (XR), a hybrid of virtual reality (VR), augmented reality (AR), and other immersive technologies. With the introduction of 5G in India, consumers will be one step closer to a mixed reality experience in the form of the metaverse very soon. Combining 5G, IoT, cloud computing, and Web3, customers are poised to embrace a new era of networking that will be inventive and engaging. Consumers recognise their first augmented reality experience in their daily lives through immersive apps such as the Ikea app.

Road Ahead

Digital marketing trends in India are continuously changing, and being up to date on the latest advances is critical for business growth. Despite the fact that the COVID-19 epidemic is having a negative impact on the market, the Indian government has provided enormous assistance to the advertising and marketing industry. Advertising expenditure in the banking industry is projected to rise as a result of Reserve Bank of India (RBI) measures that may result in a more favourable business environment. Furthermore, prospective licences for new banks and improved market emotions make the marketing and advertising and marketing firm in India a fruitful ground. Businesses must adopt video marketing, influencer collaborations, personalisation, voice search optimisation, social commerce, and artificial intelligence (AI) in the upcoming times. Because of the increasing adoption of next-generation Web3 technologies and the growth of the mass market, Indian consumers' expectations are expected to shift towards convenience, commerce, and immersive media and marketing. The future of the digital economy will transform businesses at all levels, including the grassroots, ushering in a new era of interactive marketing and innovation.