Digital to make up 34% of ad spends by 2022-end: dentsu report

Digital to make up 34% of ad spends by 2022-end: dentsu report

Indian advertising industry is expected to reach Rs 62,577 crore by the end of 2021.

Anand_Bhadkamkar

MUMBAI: The onset of the Covid2019 crisis led to an immediate drop in advertising spending. Advertisers had to contend with TGs being confined to their homes, perhaps at a reduced income; live sports and public events were cancelled. After initial setbacks, advertisers improvised and adapted to overcome these challenges, wherever consumer behaviour shifted, advertising spend, too, adjusted in response. As out-of-home and print advertising shrank, TV and digital surged, the latter turning out to be the veritable MVP of the year for advertisers.

In fact, advertising spend on digital media has increased from a share of 20 per cent in 2019 to 28 per cent in 2020, dentsu’s Digital Report 2021 stated. It is further expected to reach 34 per cent by the end of 2022.

The digital advertising industry witnessed growth in market size from Rs 13,683 crore in 2019 to Rs 15,782 crore in 2020, growing by 15.3 per cent from the previous year. Digital media will grow at 20 per cent to reach a market size of Rs 18,938 crore by 2021 and with a CAGR of 22.47 per cent to reach Rs 23,673 crore by 2022.

Spends on digital media is led by social media, with the largest share of 29 per cent (Rs 4,596 crore) closely followed by online video (28 per cent, Rs 4,366 crore) and paid search (24 per cent, Rs 3,725 crore). Online video has seen the fastest growth from a share of 22 per cent in 2019 to 28 per cent in 2020.

The rapid increase in mobile usage and internet penetration has led to 75 per cent (Rs 11,836 crore) of digital media spends on mobile devices. Majority of the online expenditure on mobile devices goes to online video 29 per cent (Rs. 3,458 crore) and social media accounts for 29 per cent (Rs. 3,429 crore).

People belonging to tier-2 and tier-3 cities have contributed the most to the growth of the digital advertising market, the report said. The pandemic fostered the demand for e-commerce purchases in these cities. Consumers have preferred to purchase from online retailers offering delivery at flexible timings while being cautious about safety and health during the pandemic.

The shift in habits and behaviour is evolving as the elder consumers are preferring to use cashless digital payment methods instead of cash transactions. The pandemic fuelled the adoption rate of digital in India coupled with the high consumption of digital video and the growth of regional content.

According to the report, television has continued to enjoy unparalleled reach in the Indian media market and contributes to the largest share of media spends at 41 per cent (Rs 23,201 crore) in 2020, followed by spends on digital (28 per cent, Rs 15,782 crore) and print (25 per cent, Rs 13,970 crore).

Currently, FMCGs have the highest expenditure on advertising with a contribution of 20 per cent (Rs 11,554 crore) closely followed by e-commerce (17 per cent, Rs 9,788 crore) and consumer durables (10 per cent, Rs 5,751 crore).

FMCGs spends a large majority of their advertising budget on television (64 per cent) while retail, automotive and media and entertainment segments spend a large share of their advertising budget on print. The biggest spenders on digital media are BFSI (57 per cent), consumer durables (45 per cent), telecommunications (40 per cent) and e-commerce (39 per cent).

The report further revealed that overall, the Indian advertising industry currently stands at Rs 56,490 crore and has witnessed degrowth of 17.5 per cent over 2019 due to the pandemic. The advertising industry is expected to make a comeback and will grow by 10.8 per cent 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 per cent to reach Rs 70,343 crore by 2022.

dentsu CEO India Anand Bhadkamkar said, “We expect 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. We look forward to your thoughts and opinions to help sharpen our approach towards this fast-growing industry as we strive to expand, together, he said.