Digital advertisement spends to grow by 31% by 2021: KPMG report

Rising internet penetration in rural India, rapid growth of digital payments has further strengthened the digital infrastructure

Growing internet penetration and data consumption is likely to help increase digital advertisement spends in India at a compounded rate of 30.8 per cent between 2016 and 2021, according to a recent report.

Further, mobile advertisement spends and social media aided digital video advertisement spends are expected to grow at 50.9 per cent and 40 per cent annually between 2016 and 2021 respectively, said the Digital First Journey report by KPMG.

Enablers such as government's 'Digital India' initiative, growing usage of affordable smartphones, rising internet penetration in rural India and rapid growth of digital payments has further strengthened the digital infrastructure.

This has resulted in video dominating data consumption, which is expected to continue to grow in the near future, it noted.

"There are about 200 million online video viewers in India currently, which is set to exceed 400 million in the next couple of years. Although the catalyst for online video boom was Reliance Jio, the trend now has wings of its own. With data set to be the dominant source of revenue for the telcos, and possibly home broadband seeing traction in the future, the video consumption growth is here to stay," said Gaurav Gandhi, chief operating officer, Viacom 18 Digital Ventures said.

The report also noted the over the top (OTT) content consumption is evolving from niche to mass-based content and long-form content is gathering traction, with investments in large screens, and original content creation.

It further said while Advertisement Video on Demand (AVOD) remains the primary source of monetisation for the OTT players in the country, the Subscription Video on Demand (SVOD) and Freemium models are seeing traction on the back of compelling content, including sports.

Sponsored content has also emerged as an important monetisation tool, the report added.

The growth in monetisation though is partially held back due to challenges around digital viewership measurement and rampant content piracy, the report stressed.

Digital video businesses require high investments, and returns are currently not commensurate given the still-evolving business models.

Media organisations are currently attempting to bridge the gap between market share acquisition and economic viability, as they attempt to build long-term sustainable digital video businesses, it added.