Digital advertising is on a perceptive rise. The experts in the advertising space have been showing a growing inclination towards digital media and the allied services stream. Marketing ideas and plans are increasingly exploring digital landscapes to reach out to the ever-growing online user base. Businesses and marketers are more serious with their online moves and are elevating their budget for digital ads with every quarter rising.
As per the latest agency records, the advertising industry was measured at Rs 68,475 crore by the end of 2019 and is expected to grow at a consistent rate of 10.9%. However, the digital base of advertising is marked at Rs 13,683 crore and promises a growth rate of 27% CAGR this year. This manifests the level of penetration and reaches digital advertising is going to set in 2020.
The most obvious and elementary reason for this growth is the revolutionary rise of smartphones and the entire service ecosystem that made it a household utility. Not to mention the accessible internet and cheap data plans.
This is fast stimulating and accentuating the digital trend, which is influencing the advertising practices and approaches to a large extent. Here, the expanding roles of technology, growth in data science, collaborative market forces, and supportive government policies, coincided with evolved user needs and a growing appetite for digital communication to reveal the abounding digital drift.
Owing to this change, the digital goals of businesses and marketers have grown to greater performance marks. They have more plans and more money increasingly invested in their digital outfits to explore most of the digital abundance. This is making the digital ad spends to grow at a sweeping pace to affect the investment patterns and traits at all extents, to virtually change the face of advertising in India.
The spend on digital ads grew at a rate of 26% in 2019 to reach Rs. 13,683, is expected to touch Rs. 17,377 crore mark by the end of 2020.
Head-to-head comparison of the traditional and digital advertising industry trends in the current scenario.
Digital Media Spends Across Media Formats
Ad spends on digital media by formats
Social Media has been the most actively used mode for digital advertising. Different social media platforms like Facebook, Instagram, Twitter, Pinterest, and LinkedIn, have been contributing to a huge volume of user engagement in the past years. The users on these platforms are growing continuously adding to the degree and intensity of the reach of social media.
As per the research data on social media trends, on average an Indian spends over 2.4 hours on different digital media apps, which is close to the global averages. Topping the chart of the popularity and activity across all digital media formats, social media accounts for the highest ad spends in digital advertising which is a leading share of 28% (Rs 3,835 crore).
Paid Search Ads, standing second in the row, take up a share of 25% (Rs 3,471 crore) growing 23% by 2018. With businesses planning to strengthen their reach on search engines through SEO (Search Engine Optimization) and SEM (Search Engine Marketing), they are fast adopting ever better tools and techniques to get greater user response and achieve better performance metrics. This is the reason they are looking to combine their efforts with PPC ads to win an assured response and build a parallel immediate stream of search traffic.
Another big chunk of the Ad Spends rests with Online Video. This advertising pie has a share of 22% (Rs. 2,986 crores) of the total. This has taken the highest leap of all digital marketing formats, registering a growth of 32% over 2018. The growth of online videos has been led by disruptive OTT (Over-The-Top) platforms like Netflix, YouTube, and Amazon Video, and independent business initiatives opting for their own high-end video platforms to leverage the social media opportunities in the segment.
In 2018, linear ad revenues (TV, radio, print, OOH) witnessed a decrease of around 1.5%, while digital ad revenues registered a growth of 15.5%.
Break-up for Ad Spends Across Digital Formats
Almost the same size as Video Media, Display Media (includes banners, rich media, presentation ads) takes over a share of 21% which rakes in an ad stock of Rs. 2,986 crore. As per the growth trends, it is expected to register a hike of 33% in the coming year, taking the most growth share of all formats. Other modes of advertising comprising of classified ads, listings, and parallel media pitches claim a total share of 4% that sum up to an ad spend of Rs. 597 crore.
Digital Media Spends Across Industry Verticals
Ad Spends on Digital Media by Verticals (INR CR)
FMCG owns the largest share of 27% standing at a huge score of the sum investment of Rs. 3,745 crore. Wherein most of the budget goes towards online video taking over a share of 36%, followed by social media which is proportioned at 27%, and rest served by Display ads which accounts for 23% share.
The next big portion of the share is claimed by the e-commerce domain which owns about 19% (Rs. 2,579 crores) of total ad spends. Most of this share goes to paid search and social media ads, scoring 44% and 25% respectively.
The huge consumer durables market takes the third spot in the list of verticals that spend the most on digital marketing. Of which around 30% goes on social media promotions and 27% is invested in paid searches.
These industry segments are followed by BFSI (Banking, Financial Services and Insurance) at 10% (Rs. 1,354 crore), Telecom 9% (Rs. 1,260 crore), Automotive 7% (Rs. 923 crore), Media & Entertainment 6% (Rs. 783 crore), Retail 5% (Rs. 719 crore), and others rounding off to 6%.
Ad Spends on Digital Media By Formats and Verticals
The industry-wise digital ad spends share depicted by the leading sectors is going to grow as their advertising folio expands to accommodate broader marketing formats, growth strategies, and acquisition goals in 2020.
Digital Media Spends on Devices
The device-wise breakup of digital marketing spends
The consistent increase in the use of hand-held devices and the connected facilities along with a parallel growth of high-speed internet services, have made the mobile phone a highly preferred choice to interface with digital services and consume online data.
As per a study based on the internet usage by categories, the majority of aggregation on the desktop is now restricted to official and educational purposes. A large section of users uses mobile phones and tablets to serve their purpose of online communication and services. This includes everyone from on-the-move users to individuals who access the internet to help them connect with some online utility or value.
This holds a large chunk of users seeking some form of digital service and engagement value. These offerings or facilities range across online shopping, gaming, personal messaging, on-demand services, mobile wallet and payment, social media, news and information, deals, and offers. This encompasses everything a user accesses an app or website to connect with a service at an individual capacity. And this usage includes both personal and work access.
The penetration and growth of the mobile platform are extensive owing to the scope of service value and user reach it scores for. This is the reason why the marketing spends targeting mobile users is reaching ever larger figures with time. As per 2019 data, it reached around Rs. 6,429 Crore which is around 47% of the total spends on digital media. And this was a result of a whopping 26% growth in the media spend share it registered in 2018.
This suggests the intensity and pace at which it is expanding to replace the desktop usage and is speculative proof of how big it is going to grow in the coming times.
The monthly mobile internet user reach grew by 49% in 2018, to register a total monthly audience reach a share of 64% in 2019. With a continuous incremental growth trending, it is expected to impact mobile spends greatly over the course.
Share of the modes of advertising across devices
In this measure for advertising spends for different devices, social media rakes in the most value claiming 27% (Rs 1753 crore) of share on the mobile platform. However, the same for desktop is estimated at around Rs 2082 crore of the amount at a share of 29%. On mobile, the second most popular channel for advertising is Display with a share of 24% standing at a mark of Rs 1,525 crore. On the desktop, the second spot is taken by Search Ads and these are 27% of the total marketing spends recorded for this platform. These are followed by Search Ads, Video Ads, and Classifieds on Mobile platforms with a share of 23%, 22%, and 4% respectively. While on Desktop you have Video Ads, Display Ads, and Classifieds at these spots with a share of 22%, 18%, and 4% respectively.
Ad Buying Trends in Online Media
As per the data recorded for 2019, spends on programmatic buying stands at 41% of the total buying and is depicted by Rs 5,568 crore of ad spending. This programmatic disposition is highly influenced by the digital traits and resources that power software-based campaigns to allow marketers with greater flexibility, control, and ease to drive results. This has been a reason for them to operate and execute their campaigns in a streamlined and organized manner and track and measure results in a more effective manner. Which has led to the increased practice of programmatic buying over the years, to gradually grow and claim a large share in ad buying trend in digital media.
However, on the other hand, direct buying stood at 59% in 2019 and is expected to drop-off by 15% in 2020 which is going to be trailed by consecutive falls of 11% and 7% in the coming years. Which is going to cover the 74% portion of the ad-buying trends leaving the traditional method with a meager share of 26% by the year 2022.
The growth of software-run campaigns is growing at a CAGR of 56% and is all set to overtake the direct media or traditional method of ad buying with sweeping margins.
The study and insights presented here clearly suggest the extent of the growth of digital media and allied technology and services. It shows how it is going to replace the traditional stream of marketing and advertising with the online approach. As we already see, digital advertising being adopted and practiced at all scopes and expenses by different industry segments, business types, product niches to serve them with more inventive and compelling ways to drive their marketing programs and conversion goals.
As per the trends that show up, this is only going to take a bigger shape with technology advancements and user behavioral shifts taking place over time. Different hybrid channel formats, evolved communication practices, screen interfacing factors, engagement dispositions, and innovative marketing tactics should be incessantly driving the change. This will have a huge impact on the digital ad spends which will further drive the market forces, industry trends, and advertising practices to behave and respond to this change. And this should, in turn, continue to deliver better possibilities with ever new perspectives and ideas of marketing and advertising joining in to deliver the digital edge.