Passengers waiting at a railway station look intently at their mobile phones
Digital advertising now exceeds spending on traditional TV marketing © Dhiraj Singh/Bloomberg

Growth in digital advertising is rocketing in India, as marketers bet that video streaming, influencers and online shopping will win over more consumers in the world’s most populous nation.

Online advertising is set to become one of the fastest-growing segments of India’s rapidly expanding digital economy, according to forecasts by technology research company Omdia.

India is predicted to be the world’s fastest growing digital economy between now and 2027, recording compound annual growth of 9.6 per cent, according to Omdia forecasts based on metrics including internet connections, devices, entertainment subscriptions, payments, and enterprise IT spending. The country is also predicted to see the world’s fastest growth in revenue for online advertising over the period, at a compound annual rate of 12.7 per cent.

This predicted increase in digital advertising comes as India’s 1.4bn strong population, more than half of which is under 30 years old, spends ever more time online.

Mukesh Kumar, associate partner at Redseer Strategy Consultants, estimates that India’s overall advertising market is worth $15bn-$16bn, with digital accounting for a little more than $9bn of that.

People and vehicles crowd a street
Ahmedabad, Gujarat — India is now the world’s most populous country with more than 1.4bn people © Prashanth Vishwanathan/Bloomberg

“Overall, at an India level, digital is clearly the number one media,” says Abhishek Mukherjee, chief business officer at Bengaluru-based media buying agency The Media Ant. “Today, it has overtaken television and it’s probably going to become upward of 55, 60 per cent [of advertising spend] in the years to come.”

Such rapid adoption of digital channels is a boon for US tech companies YouTube and Meta, which can expect to see their video advertising revenues in India grow in the mid to high-teen percentages until 2025, according to Omdia forecasts. Last year, traditional market leader YouTube’s video advertising revenues in India were Rs57.5bn (roughly $690mn), representing 20 per cent year-on-year growth — and even that was its slowest growth for several years, Omdia data shows. 

“Video is the fastest growing digital ad market in India,” notes Redseer’s Kumar. “This video advertising segment is growing around 30-35 per cent compound annual growth rate for the next three to four years”.

And it is not only the US video giant that is increasing revenues. “Excluding YouTube, the total market for video streaming would be approximately $1.5bn in India,” says Kumar. Of that, “around 40 per cent would be ad revenue, $600mn-$650mn”.

The diversion of advertising revenue from traditional media to online streaming is illustrated by Network18, the broadcaster and media group part owned by billionaire Mukesh Ambani’s Reliance Industries. 

A hand holding a mobile phone with video content on the screen
YouTube’s video advertising revenues in India grew 20 per cent last year to roughly $690mn © Dhiraj Singh/Bloomberg

Omdia forecasts that net advertising revenues at Network 18’s traditional TV assets will grow by roughly 10 per cent next year, before slowing to 8.6 per cent growth in 2025. By contrast, Network 18’s online assets, Omdia predicts, will see advertising revenue growth of 40 per cent next year, and 20 per cent the year after.

Some media companies are so convinced by the profit potential of online advertising that they are giving away their most valuable assets to viewers.

Viacom18, which is part owned by Network18, last year spent Rs237bn (close to $3bn) on rights to stream the world’s biggest domestic cricket tournament, the Indian Premier League, on its streaming app JioCinema. But, rather than using the sporting phenomenon to attract paying subscribers, it made the matches free to view — aiming to recoup the heavy cost by selling more advertising space.

Similarly, the popular India streaming service, MX Player, which offers movies and web series on demand, has a subscription option but can largely be watched for free by viewers — if they don’t mind the advertising.

It is a business model that makes economic sense in this market. For many Indian consumers, subscription streaming services are still unaffordable, even if they are much cheaper than elsewhere. While India’s gross domestic product per capita has grown sharply since the turn of the century, the World Bank estimates it is still $2,389 per year — about one quarter that of China.

For streaming services, “introducing ads is an inevitable option”, argues Shobhit Dixit, managing partner at digital marketing company Korshine. “Indian audiences are not against ads. They are fond of it, especially if the ad is wonderful.”

But Dixit adds that a barrage of commercials could put viewers off, and that all apps — not just streaming services — need to tread carefully.

Meanwhile, with Chinese short video streaming app TikTok banned in India, homegrown alternatives such as Josh have gained ground and embedded advertising into their platform.

A logo that reads Josh on a smartphone screen
Josh is a homegrown Indian alternative to TikTok that has embedded advertising © Alamy

For marketers, the creators of this short video content can be a valuable asset — particularly when it comes to reaching consumers outside India’s big cities, in their own language.

“There are influencers who have equal following in Delhi, Mumbai or Bengaluru and there are brands who are really going after them, they’re the most coveted influencers,” says Mukherjee of The Media Ant. “[But] then you have a whole list of nano influencers with sub-100,000 followers . . . but evolving very fast and each one of them has a very unique niche audience”.

Mukherjee says his clients are increasingly interested in hiring these so-called nano influencers as a way to spread their message in India’s many different languages.

But, beyond video, marketers have found an even more effective way to advertise online: on the ecommerce sites that consumers are already shopping on.

Ecommerce sites such as Amazon, Indian fashion and beauty platform Nykaa or delivery service Swiggy collectively “are having an ad revenue north of $1bn”, says Kumar. “These platforms deliver better performance on ad dollar primarily because users are very close to decision making,” he explains.

Between streaming and ecommerce, “digital will only keep growing,” Mukherjee adds, “that’s for sure.”

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