India's ad sales growth slows but remains the fastest growing globally with leading ad spends

The growth of India's advertising market has slowed down to 11.8 percent this year from 17.4 percent in 2022. The ad sales growth is expected to further drop to 11.4 percent in 2024.

India's advertising market reached Rs 1 lakh crore in 2023 and is estimated to reach Rs 1.2 lakh crore next year, according to an analysis by Magna, a global media investment and intelligence company.

Digital's contribution to growth is slowing down to around 14.2 percent in 2023 from over 25.7 percent in 2022. Yet, digital remains the largest contributor to overall India ad spends at Rs 50,000 crore ($6.4bn) with a share of 46 percent.

Also read: India matches recorded maximum ad volume share in ICC World Cup 2023: Report

Similarly, India remains the fastest growing market globally with a healthy growth rate as compared to other global markets.

Globally, the growth rate in 2023 stood at 5.5 percent which is estimated to be 7.2 percent by 2024.

The Asia Pacific advertising economy which grew at around 8.2 percent to $286 billion this year was powered by India, Pakistan and China, the analysis noted. In 2024, APAC advertising revenues is estimated to increase by over 6 percent.

India leads the ad spend growth globally and is the 11th largest market. It is expected to move into top ten ranks and climb to 8th position by 2028.

Also read: Cricket World Cup to drive festive advertising, spends to grow 15%

“In the first half of 2023, advertising spend grew by more than 9.6 percent. The spends accelerated in the second half of 2023 to over 13.8 percent. The recovery is driven by festive spending and marquee events like ICC Cricket World Cup and elections," said Venkatesh S, SVP, Director - Intelligence Practice, MAGNA India.

He pointed out that traditional media owners’ (TMO) ad revenue growth globally is slowing down, while in India both linear and digital formats are growing. "Traditional formats will still be the largest, at least till 2027, though pure play digital is driving the adex (advertising expenditure). Non-linear formats including AVOD (advertising video on-demand, digital newspaper, podcasting and DOOH (digital out of home) of TMOs are growing steadily in double digits and contributes 5 percent to the total revenue of TMOs,” he said.

Consumers are increasing their spending, primarily driven by the young working adults who are investing in experiential led categories like travel, auto, entertainment. The second half of 2023 which includes festive spending, ICC World Cup and government spending before the upcoming national elections early next year is expected to contribute 10-12 percent incremental growth to adex.

Also read: FMCG TV ad volumes surge 6% in first half of 2023 on rural demand picks up

Consumer packaged goods (CPG), auto and fintech are the most dominant sectors contributing to India’s adex growth followed by government, communication, travel, and real estate.

Retail including e-commerce, financial services, media and entertainment and apparel will see average growth. Startups who have been the main stay for all tent pole properties have either cut budgets or moved to performance marketing than brand marketing, the analysis noted. With the new retrospective taxation policy on gaming, brands have exercised caution in spending.

In terms of mediums, within digital the share of mobile will touch 59 percent this year. There are 467 million social users in the country and it has been the leading segment for digital's growth with over 19 percent increase, the analysis noted. Total video recorded over 16 percent growth with streaming platforms displaying strong growth trends driven by increased connected TV (CTV) subscribers, content choices and local language play. The OTT subscription is estimated to be at 50 million this year. In 2024 total digital growth is estimated at over 13.9 percent to touch Rs 56,900 crore ($7.2 billion).

Also read: Zee, SUN TV continued to face pressure in September quarter due to weak ad spends

Television ad revenues in 2023 will grow over 8.9 percent to reach an estimated Rs 36,500 crore ($4.6 billion). The growth is expected to increase 9.9 percent to to reach Rs 40,100 crore ($5.1 billion) by 2024.

The share of traditional medium including TV, print, radio to India's total advertising spends is estimated to come down marginally from 55 percent this year to 54 percent in 2024. Digital's share is expected to increase from 45 percent to 46 percent by 2024.