Ad spends on the rise – what it means for digital advertising: Ashish Shah

India presents a unique growth opportunity, wherein all traditional media platforms will grow. While advertising through television is expected to grow at 13 per cent, print media will see a modest 4 per cent growth. During the Lok Sabha Elections in 2014, the political parties had leveraged the increasing popularity of the digital ad platforms. This trend is expected to continue in the upcoming elections in 2019 as well. Estimates project an increase in ad spends by political parties in the second half of the year on account of the 2019 General Elections. 

Further, television will bounce back after coming under pressure last year. Print media’s share has marginally declined as spends are slowly moving towards digital media. Because of increased Internet speed, 4G LTE, and VoLTE, people are preferring to consume more video content over text content. Last year, because of this, video advertising’s share had increased. Digital will continue to outdo other mediums in the media scenario in India, contributing 18 per cent to the overall advertising expenditure and the share is predicted to go up to 25 per cent in the next three years. Hence, digital advertising, with its huge growth prospects, will be the major player to watch out for. As digital advertising is experiencing such huge volumes of growth, it is important to bear in mind that measurement and transparency are paramount. The key is to assure brand safety and mitigate ad fraud. 

According to GroupM’s report, ‘This Year Next Year’ (TYNY), advertising expenditure in India is expected to grow at 13 per cent to reach Rs 9,346 crore in 2018, greater than the 10 per cent put out for 2017. An increase in the ad spends means that the industry is all set to experience an overall growth boost this year. 

The rise in ad spends in 2018 will be driven by the key financial reforms implemented by the Government, as per the TYNY report. Reforms such as the Budget provisioning for non-performing assets, bank recapitalisation and the Bankruptcy Bill approved by law will fuel a bounce back in consumer demand and private investment. This rise will be further bolstered by sectors such as auto, telecom, technology, e-commerce, fast moving consumer goods (FMCG) and banking financial services and insurance (BFSI). 

Digital continues to take the lion’s share of growth amongst the different media channels, with a growth rate of 30 per cent, to reach Rs 12,337 crore. This accounts for 18 per cent of the total advertising spends. This leaves no doubt in one’s mind that digital is the future of advertising. Digital is also driven by video advertising, which is estimated to grow at 54 per cent. Factors such as improved bandwidth, affordable mobile devices and penetration of cheap data have empowered the digital sector to demonstrate such sky-rocketing growth. These help to get a greater number of users online. This is good news for programmatic advertising companies like Vertoz, as advertisers will heavily explore avenues like video advertising and mobile advertising. 

The biggest takeaway from the TYNY report is that there is still an upward growth across all media formats. India being a nascent market for the digital scenario will take a while to mirror the more developed markets, which have moved to digital. Also, rural volumes are expected to pick up in 2018. A whopping 67 per cent of the Indian population resides in rural areas. As this chunk gets connected to the digital grid, advertisers can expect more demand for digital content. Thus, there will be an increase in brands’ marketing budgets. However, this might take a couple of sluggish years. 

The 13 per cent growth prediction looks quite promising, considering the current trends. Owing to the affordability of digital devices, rapidly increasing Internet penetration, and the numerous initiatives taken by the Government like increasing Wi-Fi connectivity in public places, an upward correction can be expected. With an increased connectivity, around 50 million Indians will be empowered with easy Internet access, and marketers will be able to tap the untapped rural markets and generate more traffic. For advertisers, this means more audience, while for publishers, it means more visitors. Thus, it is win-win situation for the entire digital advertising ecosystem. 

This ascertains the boom in the digital advertising sector. The basic common thread running through all of this is the digital platform. Data, content creation and distribution are the new marketing norms. These emerge as a major trend in today’s advertising dynamics. 

(Ashish Shah is Founder and CEO of Vertoz, a programmatic advertising company that offers engaging and innovative advertising and monetisation solutions which replace the traditional methods of media buying and selling of advertisement.)

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