Ficci Frames: India digital ads are dwarfs on global stage

It remains one of the hottest advertising categories in India, ranking third after print and television in terms of size, according to a recently released Ficci-KPMG Report. Yet, India's digital advertising as a share of the global pie will not cross one per cent in the next few years. This despite domestic digital growth rates estimated to be 30-35 per cent, according to KPMG.

Figures provided by media agency ZenithOptimedia show India's share of global digital advertising over the next two to three years will remain around 0.5 per cent. This comes even as markets such as the US, China, the UK, Japan, and Germany will continue to be key contributors to global digital advertising, according to forecasts by the agency.

The US, China, and the UK alone will contribute 33 per cent, 24 per cent and eight per cent, respectively, by 2018. Japan and Germany, on the other hand, will contribute 5.5 per cent and 4.36 per cent, respectively.

Anupriya Acharya, group chief executive, ZenithOptimedia, says, "Historically, India's Adex:GDP ratio ('advertising expenditure to gross domestic product' ratio) has been much lower than other markets', especially the developed world's. This has to do with the absolute size of the Indian economy, as well as the structural composition of ad expenditure and the domestic economy. The second reason is the discrepancy in purchasing power parity - all other media in India are, in comparison to other markets, much cheaper. Third, a large proportion of the digital inventory in India is coming from mobile rather than desktop and laptop. And the price of this inventory is relatively lower, resulting in a lower global share for India in relation to other markets."

Digital revenues, according to media agency experts, are not expected to dramatically change for most media owners in the near term though companies such as Google and Facebook will get bigger.

According to estimates, Google and Facebook already corner 50-60 per cent of India's Rs 5,000-6,000 crore digital ad spends.

Ashish Bhasin, chairman and chief executive, South Asia, Dentsu Aegis Network, says, "Even as these firms (Google and Facebook) get bigger, digital revenues for media owners in general will improve as the base gets larger and digital infrastructure improves. This will help digital owners monetise their digital assets better than they now do."

For instance, a one-month-long digital campaign, according to advertising & media industry experts, costs anywhere between Rs 50 lakh to Rs 2 crore.

On television, in contrast, a one-month campaign is nearly three to five times higher, implying digital remains among the most cost-effective media at the moment.

But as Varun Gupta, partner, deals & advisory, KPMG, says, the tide could turn in terms of ad rates as eyeballs increasingly move to digital in the future. "As people begin to spend greater time on digital media, digital ad rates will grow," he adds,