dentsu-e4m report: Digital advertising grew 15.3% to Rs 15,782 cr in 2020

Digital advertising is expected to grow at 20% to reach a market size of Rs 18,938 crore by 2021, and with a CAGR of 22.47%, to reach Rs 23,673 crore by 2022

e4m by exchange4media Staff
Updated: Feb 5, 2021 12:32 PM

2020 was a year of reckoning for the digital media industry. Not only was there a tectonic shift in the consumption and adoption of digital platforms and services but there was also a huge bump up in the ad dollars that was spent on digital by brands.
The digital medium has already overtaken print to become the second biggest AdEx medium in India and is fast catching up with TV AdEx numbers. The Covid-19 pandemic has only accelerated the adoption of digital as a key advertising vehicle.
To throw more light on the growth of digital advertising in 2020 and the key trends that shaped the market, Exchange4Media and advertising major Dentsu have come out with the fifth edition of their annual report on digital advertising.

The report titled 'Digital Advertising in India 2021' stated that the digital advertising industry has grown by 15.3% to reach Rs. 15,782 crore by the end of 2020, which was at Rs. 13,683 crore by the end of 2019. Further, digital media is expected to grow at 20% to reach a market size of Rs. 18,938 crore by 2021 and with a CAGR of 22.47% to reach Rs. 23,673 crore by 2022.

The double-digital ad growth registered by digital is due to the widespread digital transformation during the pandemic, and changing consumer habits and behaviour. The traditional media has seen a decline with a negative growth rate of 25.7% over 2019.

Digital AdEx grew even as the overall AdEx witnessed a 17.5% drop at Rs 56,490 crore over 2019 due to the pandemic. As per the report, the advertising industry is expected to make a come-back and will grow by 10.8% to reach Rs 62,577 crore by the end of the year 2021. Furthermore, it is expected to grow with a CAGR of 11.59% to reach Rs. 70,343 crore by 2022.

Digital media is expected to have the highest growth rate of 20% to reach a market size of Rs. 18,938 crore and traditional media will have a growth rate of 7.2% by the end of 2021. The growth of digital media can be attributed to factors like internet penetration, availability of affordable phones with internet connectivity, and change in consumer behaviour. The internet user base has been increasing rapidly and has contributed to the growth of digital.

The report revealed that television contributes the largest share (41%, Rs. 23,201 crore) to the Indian advertising market. This is followed by digital (28%, Rs. 15,782 crore) and print (25%, Rs. 13,970 crore). Television’s reach is unprecedented and accounts for a majority share of advertising spends in India. It has been a leader in terms of media spends thanks to strong audience loyalty, it pointed out.

It also pointed out that out-of-home (OOH), radio, and cinema have also witnessed a decline in media ad spends compared to 2019. The festive season combined with IPL and business activities in the economy post lockdown allowed brands to liquidate their OOH inventory and reasonable proportions of spends came into this medium.

The lockdown has had a severe impact on the businesses and it certainly affected the reach of print, OOH, and cinema. Measures were taken to contain the pandemic and people were confined to their homes due to which there were no footfalls in the cinema halls in the initial lockdown phase. Online audio-streaming services have begun to give stiff competition to radio.
Commenting on the report, Dentsu India CEO Anand Bhadkamkar said, "We, at Dentsu, expect 2021 to witness a colossal rise in digital advertising. We also recognise the need for a business intelligence report that can give directions toward which this industry is moving with ever-changing client demands and market scenarios. The lack of detailed and accurate Digital Advertising Spends is surprising for a medium that lends itself to measurement. It is to fulfill this gap that the digital agencies at Dentsu have collaborated with e4m once again to launch the 5th edition of our Digital Report that extensively covers Digital trends, spends and insights across all sectors."

Offering his take on the report, exchange4media Group co-founder Nawal Ahuja said that the digital industry needs to work together on providing reliable data, better measurement, lesser fraud, and more ROI to sustain the advertising growth.

"Scale brings with it a demand for greater accountability and with digital ad spends look set to equal those on TV, a larger number of CMOs will seek increased transparency and ROI. Thus far, the medium has been used largely as a lead generation platform, heavily funded by big national advertisers. Social media platforms have been under immense scrutiny for content and with major brands across western markets taking a stand against toxic content, these companies will in all likelihood no longer have a free run without taking the onus for the content on their platforms," he noted.

Spends on digital ad formats

According to the report, the highest proportion of spends on digital is contributed by social media (29%, Rs. 4,596 crore). This is followed very closely by online video (28%, Rs. 4,366 crore), and paid search (24%, Rs. 3,725 crore). Spends on display banners stand at 16% (Rs. 2,528 crore).

Social media remains the strongest digital ad platform and has constantly grown by leaps and bounds. Indian consumers spend around 2-3 hours on social media a day, hence, resulting in higher spends on social media platforms. Online video spends have seen the highest growth rate of 46% in 2020 compared to the previous year. This is followed by the growth of spends on social media at 20% over 2019.

Spends on online video have increased from 22% in 2019 to 28% in 2020 and will continue to grow steadily. The pandemic accelerated the digital trends and businesses moved online during the lockdown period. The media and advertising industry is shifting at a rapid speed and digital is taking the lead. Digital media saw the quickest recovery and digital advertising spends returned to pre-lockdown levels by the end of 2020.

Growth of e-commerce advertising in India

The report highlighted that 2020 has witnessed accelerated growth of e-commerce usage and people belonging to different age groups now shop online more frequently than before. The adoption of the digital-first approach was one of the significant drivers of this change.

There is also a growing trend of online shoppers coming from the Tier II and Tier III cities and beyond, thus truly widening the reach of this platform. E-commerce giants have been focusing on these consumers with initiatives like the use of local language and localized content and offers.

In addition to that, the advent of DSPs by e-commerce platforms and higher focus on product search during the pandemic period has driven the evolution of e-commerce advertising in India. By the end of 2020, the advertising spends on e-commerce platforms were Rs. 4,700 crore. Based on the current trajectory, the advertising spends on these platforms is expected to grow at a CAGR of 40%.

Digital media spends across industry verticals

The report noted that e-commerce makes the highest contribution of 24% (Rs. 3,782 crore) to the digital media industry. This is followed by consumer durables (17%, Rs. 2,609 crore), FMCG (14%, Rs. 2,163 crore) and Telecom (13%, Rs. 2,046 crore). Compared to the previous year, the share of the e-commerce segment has increased from 19% to 24% to be the highest contributor to the digital media spends pie. The key drivers in these sectors are young demographic profile, improving internet penetration, government initiatives, and improving economic performance.

FMCG spends the highest share of its digital media budget on online video (49%) followed by social media (32%) and display banners (14%). The automotive segment spends the largest share of its digital media budget on online video (32%) followed by social media (23%), paid search (21%), and display banners (15%).

E-commerce segments spend the most with 42% of their digital media budget allocated for paid search. It is followed by social media with 26% and online video at 21%. The e-commerce segment spent their digital media budgets on online videos more this year compared to the previous year. The retail segment majorly spends its digital media budget on social media (45%) followed by paid search (19%) and display banners (18%).

The telecommunications sector spends 34% of its digital media budget on social media and online video respectively. BFSI sector spends a maximum of their digital media budgets on paid search (31%), then on display banners (25%), and social media (24%).

The media and entertainment segment spends the largest share of the digital media budget on online video (41%) followed by social media (31%) and display banners (15%). The consumer durables segment spends 27% of its digital media budgets on social media followed by 24% on paid search and 19% on online video.

Digital Media Spends across devices

Currently, 75% (Rs. 11,836 crore) of digital media spending is made on mobile devices. Spends on mobile has increased by 84% compared to 2019. The increase in internet penetration, affordable data costs of high-speed internet, and ease of accessibility have made mobile devices overtake desktops to be the first screen of choice for most Indians.

Online video contributes the highest proportion to the digital media ad spends on the mobile device (29%, Rs.3,458 crore) compared to desktop (23%, Rs. 908 crore). Spends on the desktop are led by social media at 30% (Rs. 1,167 crore), followed by search (28%, Rs. 1,120 crore) and online videos.

During the lockdown, the top activities done on phone by users were to spend time on online gaming, watching online video content, using social media platforms, and internet surfing. Mobile gaming has exponentially expanded its reach in India within a few years of span. The time spent on popular titles like Call of Duty Mobile, Garena, and similar online games downloads increased drastically during the lockdown period.

It is estimated that by the end of 2022, 77% of all digital media spends will be made on mobile devices. Stakeholders are adopting digital advertising ecosystem to ramp up the user experience, increase reach and engagement with the help of mobile advertising. With the evolving technology and use of AR/VR, voice, etc., on the mobile device, it has revolutionised the media and advertising industries. More people in India are becoming familiar with the usage of these technologies.

Trends in digital media buying

Spends on programmatic buying contributes to 38% in 2020 of the digital media pie. The adoption of programmatic buying has evolved and spends have increased from 25% in 2019 to 38% in 2020. It is expected that programmatic media buying will grow with more marketers investing and its share will increase to 40% by 2021.

The programmatic is highly influenced by the digital resources that enable software-based campaigns, allowing marketers to have flexibility and control while being result-oriented with their advertising efforts. The use of programmatic while executing campaigns is to organise, streamline and measure results effectively. The direct buying stood at 75% in 2019 and declined to 62% in 2020. By 2021, direct buying will cover 60% with a larger proportion compared to the programmatic method. Furthermore, it is expected that the share of spends on programmatic buying will increase to 42% by the end of 2022.

The dentsu-e4m Digital Advertising Report and Conference has been presented by our sponsor Verizon media and co-powered by sponsors ABP Live, Microsoft, VOOT and Co-Gold sponsor Trell. We thank them for extending their support.  

Find the full report here:

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