At the annual FICCI FRAMES conference, the Federation of Indian Chambers of Commerce and Industry (FICCI) along with EY released a comprehensive report on the Indian Media and Entertainment (M&E) industry.
The report stated that Digital advertising is now the largest share of India’s ad pie, and performance advertising is the largest component of it.
What are the key findings in Advertising?
Indian M&E sector grew over 8 percent in 2023 to cross Rs 2.3 trillion.
The slowing down of India’s nominal GDP growth to 9 percent. in 2023 after two years of double-digit increases impacted advertising, which grew just 7 percent. Globally, too, ad growth was 6 percent compared to global nominal GDP growth of 9.9 percent.
In addition, advertising was impacted by a ban on certain large and high-yield categories like gaming and betting, and a slowdown in investments in D2C brands.
Nominal GDP growth is expected to be 10.5 percent for FY 2025 (2024) and advertising is expected to outpace that based on past trends.
Traditional media advertising was flat, while new media drove the growth in advertising in 2023. New media advertising contributed 52 percent of the total advertising, and 105 percent of the absolute advertising growth in 2023.
Advertising is now 0.33 percent of India’s GDP (EY estimates using IMF data, World Economic Outlook, GroupM TYNY), much lower than developed large markets, which are all between 0.6 – 1 percent.
Digital media comprised 51 percent of total ad spends, up from 31 percent pre-pandemic, and contributed the highest share of advertising in India.
TV comprised 26 percent of ad revenues, down from 36 percent in 2019.
Together, national media (television and new media) contributed 78 percent of all advertising spends, while local media (print, OOH, radio, cinema) comprised the balance 22 percent.
Media breakdown
Television: TV advertising revenue fell 6.5 percent in 2023. Advertising volumes declined 2.6 percent in 2023 as the number of brands using TV in 2023 fell by over 5 percent as compared to 2022; the fall was led by national channels which witnessed a 9 percent drop while regional channels ad volumes remained stable. Ad rates fell 4 percent on an average as the advertiser mix shifted to lower yield categories.
Total TV screens will increase from 182 million in 2023 to 202 million by 2026, with the mix changing significantly in favor of connected TVs. The situation post 2026 could be quite different, once wired broadband crosses 60 million to 70 million homes and 5G connections scale significantly. At this point, the report states that connected TVs are expected to start scaling more quickly, and reach 100 million by 2030, while linear TV homes drop to 140 million, of which 57 million would be free TV homes.
Dgital: India recorded 1.19 billion telecom subscriptions, which indicates a stable digital infrastructure landscape. Although 5G proliferated, with 130 million subscriptions, 4G continues to dominate the market. Connected TV saw a 50 percent growth as internet penetration continues to rise. The broadband market is growing with subscriptions numbers recording 904 million. It is inevitable that smartphone users have grown and consequently, the average usage time continues to rise.
Despite high app downloads of 26.4 billion, India was behind in monetizing this potential, with users spending half their time on social media apps. Video viewership progressed, while content platforms focused on localizing, particularly in popular genres of drama, action and thrillers. Enhanced digital engagement led to different patterns in content consumption and advertising. The year also saw the growth of digital ad spending by 15 percent, predominantly in search and social media. By 2026, the digital segment is expected to grow to Rs 955 billion with an increased focus on governance.
Digital advertising grew 15 percent in 2023 to reach Rs 576 billion. Growth was led by e-commerce advertising and social media, with search and social media comprising 72 percent of total ad revenues. Between 800,000 and one million SME and long-tail
advertisers spent over Rs 200 billion on digital media, primarily on performance advertising on Google, Meta, and e-commerce platforms. Eight advertising categories spent over 30 percent of their budgets on digital media.
Eight categories spent over 30 percent of their total ad spends on digital. These are telecom (spent 64 percent on digital), ecommerce (61 percent), pharma (49 percent), FMCG, BFSI, Automotive, Consumer durables and M&E.
Read More: Online gaming surpassed filmed entertainment in India, touched Rs 220 billion in 2023