Social media and search take more than 50 per cent share of digital ad spend: Dentsu Aegis Network exchange4media Digital Report
According to the Dentsu Aegis Network exchange4media Digital Report, which was unveiled today, the Indian advertising industry currently stands at INR 56,398 cr and is expected to grow at a rate of 14% to reach INR 64,488cr by 2017. TV and print contribute to the largest share while digital advertising contributes to 12% of the overall advertising share in India.
The share of spends on digital media is expected to reach 24% by 2020 from the current 12%. The reason behind this growth will be a shift from traditional mediums to digital mediums due to greater effectivity and benefits of hyper-targeting. The digital advertising industry currently stands at INR 6,825 cr and is expected to grow at a CAGR of 37% to reach INR 23,795 due to an increase in consumer adoption of mobile phones as an important medium of communication along with increased Internet usage. Local language content will be one of the key drivers in this growth as consumers are comfortable viewing content in the language they are most familiar with.
Ad industry in India:
The overall advertising industry in India stood at INR 56,398 cr as of 2016. This is expected to grow by 14% to reach INR 64,488 cr by 2017 and with a CAGR of 15% to reach INR 99,595 cr by the end of 2020.
Ad spends on various media:
As stated earlier, the Indian advertising industry currently stands at INR 56,398 cr with spends on traditional accounting for 88%, while digital media spends stand at INR 6,825 cr and accounts for 12% of total ad spends. Among the various traditional media, spends on television stand at 41% with INR 22,872 cr, followed by print (36%), Out of Home (6%) and the remaining budget distributed across radio and in-cinema advertising.
Coming to ad spends by industry verticals, FMCG has been the highest spender when it comes to advertisements. The industry contributes 29% to the INR 56,398 cr advertising industry in India. This is followed by auto (10%) and e-commerce (9%). BFSI contributes 7% while consumer durables, telecom and retail contribute 6% each to the advertising sector.
As for the choice of medium, the FMCG sector spends the highest on TV (72%) followed by print (18%). It spends 6% of its marketing budget on digital media. The automotive sector spends the highest on print (46%) followed by TV (33%). 10% of the marketing spends go to digital, followed by 6% on OOH. Among all industry verticals, e-commerce spends the highest proportion of its marketing budget on digital (25%). This is only next to the industry’s spends on TV (38%) and print (28%).
Retail spends the highest on print (49%) followed by TV (17%) and OOH (15%). 12% of marketing spends in the retail sector are made on digital. Telecom, BFSI and consumer durables sector spend the highest on TV and print, followed by digital. E-Commerce, telecom, BFSI and media & entertainment (M&E) spend nearly one fifth of their marketing budgets (19%) on digital media.
Spends on digital media are expected to grow by 37% CAGR to reach 24% by the end of 2020. Considering the rapidly increasing adoption of Internet in India, the spends on traditional media will reduce from the current 88% to 76% by 2020. The proportion of spends on cinema will continue to remain the same. The advertising spends on TV will reduce by 4% from the current 41% to 36% by 2020. Ad spends on print will reduce by 6% to reach 30% by 2020.
Ad avenues in digital media:
As stated earlier, the digital advertising industry is expected to grow by 35% to reach INR 9,234 cr by 2017and is estimated to have a 37% CAGR to reach INR 23,795 cr by the end of 2020.
The various avenues for advertisement on the digital medium are social media, search, online video, display and online classifieds. Social media and search take the lion’s share of digital ad spending. 28%of total digital ad spends (INR 1,911 cr) is made on social media. This is followed closely by spends on search (27%, INR 1,843 cr). Spends on display stand at 20% (INR 1,345 cr) while that on video is at 18% (INR 1,249 cr).
Growth of digital shopping in India:
The increasing shift towards digital media along with Indian government’s push towards digital transactions/finance will increase the number of online shoppers from current 160 Mn to 352 Mn in 2020 (CAGR of 22% 1). With this increasing customer base, E-Commerce is evolving from a mere transactional/selling and buying platform to a potential advertising platform.
The ever expanding e-commerce user base coupled with increasing preference given to non-intrusive ad format by the advertisers has led to the innovation in the digital advertising space: commerce advertising. Commerce advertising is a new and emerging form of digital advertising offered by e-commerce platforms, which allows advertisers to target online shoppers with high intent of purchase visiting these platforms. The ads displayed are aligned with the purpose of shopping/e-tailing. Since the intent to purchase is higher among the target audience who are viewing these ads, the conversion ratio for this format is higher than banner ads, take overs and other form of display ads.
Ad spends on digital media by industry verticals:
E-commerce is the biggest spender on digital media, accounting for 19% or INR 1,309 cr of total digital spends. This is followed by FMCG, which accounts for 14% i.e INR 935 cr, telecom (12%) and BFSI (11%). The other significant contributors are consumer durables (9%), automotive sector (8%), media & entertainment (8%) and retail (7%).
For the FMCG category, the lion’s share of spends on digital media is taken by video (40%) followed by display (26%) and social media (22%). The automotive segment spends the majority of its digital ad budget on video (29%) followed by search (25%) and display (25%). The e-commerce segment spends the majority of its digital ad spends on search (42%), followed by social media (20%). Social media accounts for nearly one third (33%) of the digital ad budget for the retail sector. This is followed by search (28%), display (21%), videos (15%) and classifieds (3%). The telecom segment spends the majority of itsdigital media budget on social media (30%) and video (29%). The remaining budget is spent on display (23%) and search (18%). The BFSI segment spends majority of their digital media spends on search (36%) and display (29%). The rest of the budget is spent on social media (20%) and video (15%). Media & Entertainment segment spends a large among of its digital media budget on video (31%) and social media (29%). The remaining budget is spent on display (24%) and search (16%). Consumer Durables segment distributes a large part of spend towards search (28%) and social media (23%). This is followed by spends on display (23%) and video (18%). The remaining budget is spent on classifieds (8%).
Ad spends on digital platforms/devices:
As of 2016, 63% of the digital media budget is spent on advertising on the desktop (INR 4,300 cr) and the rest 37% is spent on mobile devices (INR 2,525 cr). The majority of the digital media budget on desktops is spent on social media (29%) followed by search (27%), video (19%), display (18%) and classifieds (7%)
Digital media spends on mobile devices are distributed mostly on search (27%) followed by social media (26%) and display (23%). The rest is spent on video (16%) and classifieds (8%).
Although digital media spends are more skewed towards desktop than mobile currently with 63% of spends on desktops, ad spending on mobile is estimated to grow at a rate of 52% CAGR to overtake desktop spends and reach INR 13,325 cr in 2020. This is 56% of the estimated digital media market size. This is due to the high rate of mobile Internet penetration and the shift from the traditional TV/desktop screens to the mobile device as the preferred screen of interaction. On the other hand, digital media spends on desktop are estimated to grow at 25% CAGR to reach INR 10,470 cr.
Digital media buying:
The digital media for display and video can be purchased in two ways: direct media buying and programmatic media buying. Historically, most of the ad inventory on various media avenues are bought directly. The advertisers/agencies contacted the publishers/ad networks with requirements for ad sizes, rates for which ads to run, when and for how much duration to run them. As the order volume increased over time with multiple publishers/ad networks, execution and tracking became tedious. Programmatic media buying removes all manual processes in digital advertising where algorithms scan and filter ad impressions combined with consumer usage data. This now allows advertisers to specify media budgets and objectives. Programmatic is known to reduce risks and improve the ROI of the advertiser. Globally, programmatic is said to be the future of digital advertising and ad spends in programmatic is forecast to grow exponentially. In India, digital media is still primarily purchased directly (90%), though programmatic buying has started to make inroads. It is estimated that by year 2020, the share of spends on programmatic media buying will increase by 74% CAGR to reach 25% of the entire digital media budget.
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