Digital ad spends catching up with TV, will 2023 be a defining year for the medium?

Predictions in 2022 said the share of digital advertising will stand at 45% of the ad pie and TV will be down to 39%. Here’s what really happened:

At the beginning of 2022, GroupM’s This Year Next Year report predicted that Indian ad spending will grow by 22% during the year and swell to Rs 1,07,987 crore. A large part of this growth was expected to be driven by digital advertising. It was predicted that digital ad spending will outdo TV spending by 2023.

Advertising on digital media has been growing at a clip of about 30% over the last five years and the pandemic fuelled this further. Digital advertising was predicted to grow by 33% in 2022 and emerge as the largest medium with an estimated share of 45%. Whereas, TV was expected to grow by 15% with an estimated share of 39%.

Another industry report revealed that at the start of 2022, digital advertising expenditure saw a dramatic 50% increase in 2021 over 2020. Brands are spending their digital budgets on various digital channels including search, social media platforms, video, and e-commerce platforms.

Now as we approach the end of the year, it is time to find out if the prediction will come true. While final reports that will reveal the true position of ad spends that took place during 2022 are yet to be out, industry experts say that the digital adex is poised to soon overtake mainline. If not in early 2023, digital ad spending is expected to overtake TV by the end of 2023.

Hareesh Tibrewala, joint CEO, Mirum India points out that Covid has certainly accelerated the digital transformation, resulting in more brands investing in digital. “Marketplaces (like Amazon and Flipkart) have media products that enable brands to advertise for the bottom-of-the-funnel consumers.”

Additionally, he says that the emergence of D2C brands as a sizeable category is boosting digital spending. Finally, OTT platforms are also emerging as a new revenue channel for digital advertising. 

Vineet Bajpai, Founder & CEO, Magnon Group, says that while digital is certainly closing in on TV in the race, it is yet to outstrip TV when it comes to share of the advertising pie. According to him, digital has surpassed print as a medium and has covered a massive stretch to edge closer and come at par with television in terms of ad budgets. Although television still rules as the favourite medium for marketers because of the edge and wider reach it offers.

A lot of factors have contributed to this lag. Speaking about these factors, Bajpai explains that television as a medium for ad and communication prevails in India because it has been a significant mode of entertainment for decades.

“Traditional industries like FMCG and automobiles depend on TV ads to relay the language of trust to their audience. Although digital medium offers a better demographic targeting, drawing rooms continue to act as a bridge between brands and consumers,” he adds.

Adding to what else has led to this delay, Sahil Shah, president - digital experience, Dentsu Creative says that the overall advertising growth has slowed down due to global recessionary trends in H2 of 2022.

“Besides this, TV still has a much bigger reach and impact than digital and for mass brands, the reach and cost per reach matter more and this is still driven by TV. That shift is taking time and will keep growing as the audience reach and costs get better in digital,” mentions Shah.

The measurement challenge

With the emergence of new platforms and the heightened penetration of digital media, enabling a proper measurement system becomes necessary. The booming digital economy has led to the need for advanced data and measurement tools to strengthen decision-making related to media spends.

Different brands have different mechanisms in place for measuring digital and as per Shah of Dentsu Creative, this works because digital is not ‘one size fits all.’

“Some (brands) track full-funnel, some only bottom and others only engagement and BLS scores.” Every agency has built measurement models to plan, optimise and measure media spending and effectiveness. No industry standard exists yet.

A continual audit of the media plan is essential to make sure that the campaign is impactful. It is crucial to analyse the mix of channels used and get a clear picture of the advertising efforts.

“Accurate attribution of spends enables estimation of the effectiveness of channels and consequently helps in balancing the allocation of budgets. A precise measurement comes from tackling inefficient cross-channel indicators and fixing the fragmented analysis of campaigns,” Bajpai of Magnon Group explains.

Platforms that benefitted the most

While Google and Meta’s platforms (Facebook, Instagram) command the highest share when it comes to ad spending, multiple new platforms have become important.

As per its latest regulatory filing, for the financial year 2021-22, Google India had posted revenue of Rs 24,926.5 crore, a jump of nearly 80% from the previous year. While Meta India's online services had clocked gross ad revenue of Rs 16,189 crore, up 74% on-year during the same period.

According to Mitesh Kothari, co-founder and CCO, White Rivers Media, over the fiscal year 2022, Google and Meta have together earned over Rs. 41,000 crore through online advertisements.

"These two companies dominate the Indian digital sector with nearly 80% market share. Amazon India and Flipkart have also clocked nearly Rs. 7000 crores together. We are seeing rapid growth in the digital sector with many e-commerce, OTT, and gaming players joining it," Kothari observes.

Bajpai of Magnon Group says that Amazon is also emerging as an avenue to leverage performance marketing as e-commerce is gaining tremendous ground clubbed with India having robust infrastructure for digital payments.

The shift in trends and consumer expectations has pushed brands to rethink their media strategies. Social media ads will continue to garner a major part of the pie for marketers.

2022 has further fuelled the growth of short format videos, especially platforms like Instagram Reels and YouTube Shorts have garnered great interest from advertisers, where brands across the board (digital or non-digital) are seen spending on these platforms). Vernacular content on social media, mobile gaming, new-age e-commerce players, OTT platforms are all projected to gain from the increasing marketers’ affinity to spend big bucks on digital.