Indian digital advertising market to grow 32% to Rs 189 billion by 2020

The Indian advertising industry is expected to touch Rs 776 billion, driven by smartphone penetration and subsequent spends on digital advertising, according to an industry report.

The advertising industry is currently estimated to be Rs 559 billion and expected to grow at a compound annual growth rate (CAGR) of 32 per cent to reach Rs 189 billion by 2020, said the Dentsu Aegis Network-e4m Digital Report, which was released here today.

According to the report, digital is expected to be the fastest growing medium of the advertising industry and may account for 24 per cent of the overall industry pie by 2020.

"Digital media spends currently contribute to 15 per cent of the total advertising industry and are expected to reach 24 per cent of the entire market by 2020," the report said.

As per the report, the digital advertising industry at present is pegged at Rs 82 billion and is expected to grow at a CAGR of 32 per cent to reach Rs 189 billion by 2020.

"This growth can be attributed to the roll-out of 4G, reducing data costs, increasing smart phone penetration and increasing time spent on mobile phones," it added.

The e-commerce is the biggest spender on digital media contributing to 19 per cent of all digital spend, followed by FMCG at 13 per cent and telecom at 12 per cent.

Currently, social media takes the lion's share of digital ad spends with 28 per cent, followed by search 26 per cent, display 21 per cent and video 19 per cent.

Video is expected to witness the highest growth at a CAGR of 38 per cent and will have a spends share of 22 per cent by 2020.

Spends on display is expected to grow at a CAGR of 36 per cent, while social media is expected to grow at a CAGR of 34 per cent till 2020, it said

Search is expected to have a slower growth rate of 25 per cent, with its spend share reducing from 26 per cent at present to 22 per cent by 2020, it added.

Spends on mobile is expected to grow at a CAGR of 49 per cent to overtake spends on desktops and reach a spends share of 60 per cent by 2020.

"Some of the drivers of the growth of digital media in the near future are video content along with the engaging mobile experience, voice based interaction, transformations in payment mechanisms, etc," it said.