Digital ad spending in India to cross Rs 13,000 crore mark by 2018: ASSOCHAM

With the growing demand for smartphones and falling data prices are likely to increase digital advertising spend in India from the current level of Rs 9,800 crore to Rs 13,000 crore by December 2018 growing at a compound annual growth rate (CAGR) of 35 per cent, according to ASSOCHAM.

Due to easy and widespread availability of 3G/4G services and also the on-going surge in internet penetration in the country will lead to an exponential increase in digital advertising in India, according to the Associated Chamber of Commerce and Industry of India (ASSOCHAM), a recent paper.

The paper jointly brought out by ASSOCHAM-KPMG has stated that mobile transactions accounted for 42 per cent of total e-commerce sales in 2015 and that developing a mobile strategy has been an important agenda for many of the leading e-commerce players in the country over the last two to three years.

India manufactured 11 crore mobile phones worth INR 54,000 crore in FY16, showing a year-on-year growth of 83 per cent and 186 per cent, in volume and value terms, respectively. With the ability to provide feature rich yet affordable handsets, domestic manufacturers' share of the handset market is slated to grow further.

According to said paper, the market for mobile handsets in India is growing at a fast rate. It has grown at a CAGR of nearly 15 percent from 2011 to 2016. It also contributed nearly 7.6 percent to the global smartphone market.

The digital advertisement industry is growing rapidly as there is a growth in digital communication devices around the world. The increase in smartphones, tablets is enabling advertisers to reach a wider audience. The digital advertisements are flexible and can be adapted for any kind of device like television, laptop, tablet, or smartphone. The two-way interactive capability and the ability to customize the ad for target audience also make digital advertisements more effective, noted the paper.

More than 235 million people in India access internet through mobile devices. This is the primary reason for e-tailers to focus their efforts on mobile app penetration across the country. The mobile applications are helping to reach more customers located even in remote and rural areas. E-commerce companies have been able to bridge the service gap considerably by sending service updates and other communication via their mobile app, e-mail, and SMS. Customers can get alerts, view product catalogues, purchase and pay with a simple mobile application offering a compelling user experience. Also, from mobile usage, the e-tailers get valuable customer information which can be used for analytics to improve their services and sales.

ASSOCHAM also added India's mobile handset industry is a key enabler for the government's 'Digital India' initiative, launched in July 2015 to work together on a common agenda to transform the country into a digitally powered society and economy. Several international device vendors have set up manufacturing facilities in India, supporting the government's 'Make in India' initiative aimed at boosting local manufacturing.

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