Digital Advertising Spends To Triple In Next 3 Years

Thanks to explosive growth in smart phones, rapid internet penetration and cheaper data rates, there is some good news for all digital platforms. Digital advertising spends are set to triple very quickly to cross Rs 23,790 crore by 2020 from Rs 6,830 crore in 2016. Also, as the percentage share of the overall advertising pie, the share of digital advertising is set to double – from 12 per cent in 2016 to 24 per cent in 2020. These numbers are part of the recently released report by industry body FICC-Deloitte report on Retail, FMCG and E-Commerce markets.

While FMCG industry is amongst the biggest spenders on advertisements – 29 per cent, the share of digital advertisement in e-commerce is the highest - 26 per cent.

It should be noted here that the digital advertising industry has been growing at a CAGR of over 40 per cent from 2011 to 2016, compared to the overall advertising industry growth of about 12 per cent during the same period. This trend is expected to continue till 2020.

According to Deloitte Touche Tohmatsu India Partner Rajat Wahi, the consumer related sectors such as FMCG, e-commerce, retail and consumer durables account for approximately half of the advertisement spends across all industries in India. As per another report of CII and KPMG, India’s digital advertising industry is growing at a CAGR of 33.5 per cent and by 2020; its value will surpass Rs 25,500 crore mark. Although, experts believe that the share of this sector in India’s GDP will remain around 0.50 per cent in the next two fiscals.

The Ad spending in India is expected to grow at 10 per cent to reach Rs 61,204 crore in 2017 over 2016, lower than the revised estimate of 12 per cent according to GroupM. This is lower than the revised estimate of 12 per cent that GroupM put out for 2016. The ad spending stood at Rs 55,671 crore last year.

In terms of media channel growth, digital continues to be the fastest medium registering a 30 per cent growth rate to reach Rs 9,490 crore, while television remains the largest advertising medium with a growth rate of 8 per cent. C.V.L. Srinivas, chief executive of GroupM South Asia had said, “Government and the media sector has increased its ad spends making up for sectors like FMCG, consumer durables, real estate and retail which will still take time to come back to the double-digit growth.”