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India to break into Top 5 advertising markets across the globe: Arun Gupta

Authored by Arun Gupta, Founder & CEO, MoMAGIC Technologies.

The online marketing landscape is changing at an incredible pace. Over the decades, the digital economy has become an imperative part of the global economy and marketers around the globe are channelling an increasing amount of their ad budgets into digital channels, thereby strengthening the digital economy. 

Digital advertising industry on the whole is pacing up in terms of reach and ingestion. As per the report from Densu Aegis Network, the growth of the digital advertising industry is estimated at a compound annual growth rate (CAGR) of 31.96 per cent and is expected to reach Rs 24,920 crore by 2021. 

Currently, the digital advertising spends contribute to 17 per cent of the total advertising industry. And by the year 2021, this is expected to zoom to 29 per cent of the total ad market size. 

Amongst the largest advertising markets worldwide, China will be spearheading with spends of $4.84 billion, followed by the US with spends of $4.30 billion. In incremental ad spends, India will be the third largest contributor with spends of $1.35 billion, followed by Japan being the fourth highest contributor in the global advertising market investments. 

The Indian ad industry is all set to experience an advertising boom. Over the next few years, the advertising growth rate of India will continue to be robust. All the segments of advertising, including print, television and digital will witness growth in the forthcoming years, however, the shift of ad spending from traditional to digital media is happening at a rapid pace and the fastest growth will be bagged by digital advertising. 

Strangely, India is the only market in the world where print continues to be dominant and is growing in all aspects, that is, circulation, readership and geography. This medium is growing strongly on the back of local languages, which has led to exponential growth in vernacular language papers and magazines. 

But digital will continue to lead the growth in the advertising expenditure in the country. Total ad spends in India is estimated to grow at a rate of 14.3 per cent, when globally, the growth is expected to be about 3.6 per cent. The major chunk of that growth will come from the news segment. 

India creates one of the largest news content across tens of languages, which is consumed by users across age segment. News related apps continue to outperform other segments and is expected to grow further as it is also in much smaller in size and takes up little space in the phone’s memory. 

In a recent survey conducted by MoMagic, News related app installs saw a jump of 94 per cent in Q1 of 2018 vs Q4 of 2017, followed by a jump of 80 per cent for social media related apps and lastly gaming apps at 52 per cent, respectively. 

Social media tops the chart with 29 per cent spends in the digital advertising formats, followed by Search with 25 per cent, display and video constituting of 21 per cent and 20 per cent, respectively. 

Mobile advertising in India is all set to take a quantum jump in the next two years, with more and more Indians moving to consuming content, especially videos, on their mobile phones. With mobile data prices in India being the lowest in the world, advertisers and marketers have changed their strategy to get quantifiable results with deep user insight. 

A recent survey indicated that 84 per cent respondents stated a jump in their budgets for Mobile Ad spends within the spectrum of digital marketing. 

It is anticipated that in terms of the incremental ad spends, India will be amongst the topmost contributors across the globe. The Indian ad industry is expected to grow at compound annual growth rate (CAGR) of 10.62 per cent. From the current Rs 61,878 crore, it is estimated to reach a market size of Rs 85,250 crore by 2021. 

With the rising trends of digital videos and better performance with advertisers, the share of digital videos is all set to grow with compound annual growth rate (CAGR) of 37 per cent, which will touch Rs 5,545 crore by 2021. 

Numerous parts of India are experiencing a digital progression led by mobile phones, thereby driving growth for content platforms as well as for advertisers to experiment with different ad formats such that they can connect with the users. Mobile advertisement is currently pegged at 47 per cent of the total digital advertising budget, which is forecast to be 67 per cent by 2021 and the market size is projected to grow from Rs 5,102 crore currently to Rs 16,718 crore by 2021. 

The factors which will lead to rise in the digital ad spends will include voice-based search technology or interactions, vernacular as well as video content. This evolution will be further enriched by engaging mobile experiences based on augmented reality (AR), virtual reality (VR) technologies and Internet of Things (IoT). 

Advertising, with a mix of technological advancements, has resulted in the enhancement of the overall personalised human experiential level, thereby reaching out to the target audience with resonance. With increasing profitability of online advertising, brands are transforming their business models to reap the maximum benefits of the digital era and leverage it to propel their ventures forward. 

(Arun Gupta is Founder and CEO of MoMagic. Gupta is a technology veteran turned first generation serial entrepreneur, with 25+ years of experience and multiple patents to his credit, while donning the hat of Director, MediaTek, for close to a decade.)

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