56% surge: Why e-commerce is winning the ad race

India’s advertising economy is no longer expanding in uniform waves; it is accelerating in pockets. While legacy categories continue to anchor overall spends, the sharper story emerging from the latest industry data is about velocity. The dentsu–e4m Digital Advertising Report 2026 underscores this divergence. While FMCG held its position as the largest advertiser in the country, accounting for 30% of total ad spends (₹36,084 crore) driven by staples and personal care competition, e-commerce emerged as the fastest-expanding category in both absolute and digital terms. As per the latest report, e-commerce accounted for 18% of total ad spends (₹22,132 crore), underscoring its growing scale and aggressive customer-acquisition playbooks across marketplaces, brands and quick-commerce formats.

What makes the shift more telling is growth momentum. In 2025, e-commerce recorded the strongest advertising expansion across sectors, growing 40.8% year-on-year. On the digital front, the surge was even sharper, with digital media spends rising 56%, the highest among industry verticals. This places e-commerce ahead of tourism (54%), education (50%) and automotive (48%) in digital acceleration, signalling a structural pivot in how budgets are being deployed.

Also read: Digital format allocation by verticals: How India’s ad money has shifted

What are the forces driving retail media’s 56% YoY surge in digital ad spends?

FMCG leads ad spends with 30% share; e-commerce records fastest growth: dentsu-e4m report

Industry leaders argue that this acceleration mirrors how deeply digital shopping has penetrated across India, particularly beyond the metros. Vijay Iyer, Vice President and General Manager of Flipkart Ads, observes that traditional marketing funnels have effectively collapsed within e-commerce ecosystems. The journey from awareness to purchase now co-exists on the same platform, making media more contextual, measurable and conversion-linked. As budgets increasingly follow attention, digital platforms, built on richer signals and faster experimentation, become the natural allocation choice. He added that retail media is also democratising growth, enabling emerging sellers, D2C brands and regional businesses to compete meaningfully alongside larger players and reach what he describes as the “Many Indias” with precision.

Adding perspective to this, Sini Magon, COO and Global Partner at Grapes Worldwide, explains that e-commerce brands function within live marketplaces where visibility directly impacts sales performance. A dip in ranking or reduced feed visibility can slow transactions almost immediately. As a result, marketing is treated less as a long-term brand-building exercise and more as a daily revenue driver, naturally leading to sustained and often higher ad investments.

She added, “Consumer behavior has also shifted in a big way. People are comfortable buying almost anything online, and faster models have shortened the time between discovery and purchase. When decisions happen quickly, brands make sure they show up wherever shoppers are searching or browsing so they are not overlooked. Another reason is the growing crowd of sellers moving online.”

At the same time, the influx of D2C brands, local businesses and legacy companies into digital marketplaces has intensified competition. More sellers vying for attention in the same ecosystem inevitably push up advertising activity — and costs. The advantage, however, lies in measurability. Clear attribution and performance tracking encourage marketers to scale spends behind campaigns that demonstrate tangible returns, creating a direct correlation between sales velocity and advertising budgets.

Experts have further pointed out that the growth has been propelled by the rapid expansion of quick-commerce logistics, sharper search-led intent capture, the rise of social-led discovery ecosystems, and the increasing adoption of closed-loop measurement models that directly link media spends to transaction outcomes.

The surge, industry leaders argue, is not accidental — it is infrastructural.

For e-commerce and D2C brands, advertising is no longer a supporting lever; it is the primary engine of growth. Kautilya Pandey, Head of Growth & Marketing at Shiprocket, points out that as logistics reliability, payment integrations and commerce-enablement tools have matured, the friction of selling online has reduced significantly. Once the “commerce infrastructure friction” eases, across fulfilment, payments and marketing complexity, sellers naturally reinvest in customer acquisition and digital visibility. “That flywheel between enablement and growth has gained momentum,” he notes, adding that this ecosystem-wide efficiency has accelerated advertising and digital media spending.

In other words, improved backend infrastructure has unlocked frontend marketing aggression.

For brands operating within these platforms, the shift feels structural rather than cyclical.

Deep Bajaj, Founder of Sirona, said that what the industry is witnessing is a fundamental reset in how consumption behaves. As more categories migrate online and quick-commerce redefines expectations from days to minutes, the battle for customer acquisition and retention is increasingly being fought on digital platforms. At the same time, the rise of D2C brands and niche categories, from women’s health to specialised personal care, has intensified competition on digital shelves. “Unlike traditional retail, discovery, education and conversion now happen in the same place,” he explained, which is precisely why e-commerce is driving the fastest growth in digital ad spends.

Added “The sharp rise in advertising by e-commerce and quick-commerce platforms reflects the intense competition for acquiring and retaining customers. As these platforms expand into new categories and cities, they are investing heavily to drive app downloads, increase order frequency and build everyday shopping habits. Staying top-of-mind has become critical,” said Anurag Kedia, Co-Founder, Pilgrim.

This convergence of discovery and transaction has changed the role of retail media itself.

Vijay Shenoy, Deputy Vice President at LS Digital Group, frames the shift through three lenses, category, consumer and competition. From a category perspective, he said e-commerce has aggressively expanded both in width and geographic reach. Platforms are pushing deeper into Tier 2 and Tier 3 PIN codes, while quick commerce has emerged as a parallel battlefield. Native quick-commerce players and legacy marketplaces expanding into rapid delivery are competing simultaneously for market share and consumer mindshare — intensity that inevitably translates into higher ad investments.

From a consumer standpoint, he added, the smartphone has become the primary window to both content and commerce. Today’s digitally mature consumer expects convenience, competitive pricing and faster fulfilment. As consumer adoption deepens, brands follow attention. And as brands increase spends, platforms further accelerate user acquisition — reinforcing the growth loop.

Competition, meanwhile, has amplified the equation. The race is no longer limited to acquiring new users; it is about retention, frequency and share of wallet. Visibility on digital shelves, sponsored listings and performance placements have become central to growth strategies, naturally pushing e-commerce’s share of digital media spends higher.

Renu Bisht, Founder & CEO of Commercify 360, added another dimension. “E-commerce sits at the intersection of intent, data and measurable ROI. No other platform offers that level of closed-loop attribution,” she said. In a capital-efficient environment, marketing budgets are increasingly shifting toward channels that demonstrate direct business outcomes rather than just impression metrics.

Importantly, e-commerce platforms themselves have accelerated this shift. With expanded ad inventory, improved targeting tools, DSP integrations, video and display formats, retail ecosystems now support awareness, consideration and retention within a single measurable environment. Commission rebates in select categories, logistics alignments and in-house fulfilment networks further incentivise sellers to scale visibility. “E-commerce is no longer just a lower-funnel conversion engine,” Bisht notes. “It now supports the full funnel, and brands have seen the benefits.”

Taken together, these forces explain why e-commerce is growing faster than all other verticals.