A major factor for the growth spurt of digital advertising in India is the rapid penetration of mobile devices along with internet connectivity. India has the lowest rates for mobile data across the world, while also catering to the second-largest smartphone market in the world. Naturally, Indian advertisers are leaning more towards digital with each passing year. In 2016, traditional media had a share of around 88 percent in the overall ad expenditures across the country. In just two years since then, this share fell to 83 percent and was estimated to further drop to 71 percent by 2021 indicating the steady change in the advertising landscape.
The real push for digital advertising came due to the increasing popularity of smartphones in the country. A vast majority of Indians primarily use mobile phones to access the internet and various social media. As such advertising budgets are progressively catering to mobile-friendly formats, with the goal of improving their user interface and experience designs. Estimates suggest that ad spends on mobile media were expected to take up 64 percent of the total digital media expenditure by 2022, from 47 percent in 2019.
Even then, India is still at a relatively nascent stage of digital advertising. In 2018, 82 percent of all digital media ads were bought through direct manual channels compared to programmatic purchases. Programmatic advertising uses a software or algorithms to purchase ad inventories instead of the traditional route of human negotiations usually involving ad agencies. In just one year since, the gap between programmatic and direct advertising in India had closed in with 41 percent of purchases made via programmatic routes in 2019. However, such technological developments also come with their own set of risks. As of 2019, India had the highest ad fraud rate worldwide with respect to its programmatic advertising. Improvements in audience analytics, along with a better focus on ad fraud detection and data privacy is the need of the hour in order to fully integrate digital advertising as a valuable element in the country’s advertising pie.