Digital Advertising Surpasses TV Industry Amid Economic Challenges in India

In the face of economic challenges and unprecedented inflation, India's digital advertising sector demonstrated robust growth in the fiscal year 2023, with Google and Meta jointly reporting a staggering Rs 48,300 Crores in ad revenue. This figure surpassed the entire TV industry's revenue, which stood at Rs 40,000 Crores.

When including Amazon's (Rs 5,380 Crores) and Flipkart’s ad revenues, the cumulative ad revenue for the four tech giants amounted to a remarkable Rs 55,000 Crores in the last fiscal year.

The Pitch Madison Annual Report (PMAR 2023) projected the digital ad expenditure to reach Rs 43,000 crores in 2023, capturing nearly 40 percent of the total advertising revenue. Notably, the growth was attributed to Small and Medium Businesses (SMBs), creators, and influencers, who propelled the ad growth on tech platforms where the entry barrier is low, targeting is precise, and return on investment (ROI) is high.

In contrast, TV channels heavily rely on large advertisers. Many such advertisers either tightened their budgets in response to inflationary pressures or shifted more advertising budgets to digital platforms, driven by the promise of superior ROI and increased sales conversions.

Ashish Bhasin, Founder of The Bhasin Consulting Group, and Former CEO APAC and Chairman India, Dentsu, commented on the trend, stating, “Digital advertising overall grew faster than TV, further magnified by SMBs who can directly advertise on Google and Meta without necessarily going through any ad agency.”

Bhasin predicts that digital advertising is poised to grow at an impressive rate of 18-20 percent in 2024, while TV growth is expected to hover around 8 percent.

The consistent growth of digital over TV can be attributed to several factors, according to industry experts. Indian consumers are spending more time on social media platforms, with a significant portion making direct purchases from platforms like YouTube, Instagram, or Facebook. Advertisers are increasingly allocating budgets to these platforms due to the enhanced engagement and conversion rates they offer compared to traditional TV.

Hareesh Tibrewala, joint CEO of Mirum India, emphasized the shift in consumer behavior, stating, "The entire consumer buying funnel for almost everything can now be mapped on digital."

Rahul Vengalil, Executive Director of Everest Solutions, highlighted a key distinction between TV and digital platforms, noting that while TV relies on a small number of advertisers, platforms like Meta boast a vast clientele, with 6 million advertisers on its global platform.

India's digital advertising market witnessed an impressive 54 percent growth in 2023 compared to 2022 and a staggering 100 percent growth since 2021 in terms of ad impressions, according to statistics obtained from TAM (Television Audience Measurement).

Industry experts anticipate a clearer understanding of the market dynamics once agencies release their annual reports.