OTT or social media: The big advertiser dilemma defining India's booming digital landscape

• Indian digital advertising industry grows with internet penetration, smartphone adoption, and digital ecosystems

• Industry experts delve into key factors behind the development of the industry

• GroupM India's report predicts overall ad revenue to reach Rs 1,55,386 crore in 2024

• OTT grows with consumer demand; social media sees monetisation and ad format expansion

The Indian digital advertising industry has experienced growth in recent years, propelled by factors such as increasing internet penetration, widespread smartphone adoption, and a burgeoning digital ecosystem. Additionally, the rise of social media platforms and streaming services has provided new avenues for brands to engage with consumers.

According to media investment and advertising company GroupM India’s annual This Year Next Year (TYNY) report released on February 13, 2024, the overall ad revenue is expected to reach Rs 1,55,386 crore in 2024, with an incremental Rs 14,423 crore compared to 2023.

In recent years, India has experienced a boost in internet connectivity and smartphone usage, democratising online content consumption. This broad access to high-speed internet has boosted the appeal of over-the-top (OTT) platforms and new social media formats.

Media and agency reports anticipate favourable growth in the digital advertising industry. Sources say that the digital advertising industry is estimated to reach Rs 62,045 crore, growing at a compounded rate of 23.49% by 2025.

Where is the money getting invested?

Debarshi Chakravorti, VP - business communication and planning, Interactive Avenues, a digital agency and the digital arm of IPG Mediabrands India, notes that with India's mobile-first internet usage, a significant portion of advertising investment is directed towards mobile ad formats.

“The substantial investments are in video, particularly short-form content, on platforms like YouTube Shorts, Instagram reels, and emerging social players like ShareChat, Moj, and Josh,” he says.

Manoj Kandasamy, national lead, digital – Motivator, media agency and a part of GroupM, says that marketers are strategically allocating their budgets to where their customers and prospects are most active. While investments in search and performance marketing remain steady, there is a clear inclination towards amplifying presence in video advertising, notably on addressable video platforms and connected TV (CTV).

“From a broad perspective, I believe video and commerce advertising options are spearheading the industry's growth, offering diverse opportunities for brands to engage with their target audience effectively,” he adds.

What exactly is leading the growth of digital advertising today?

Ashit Chakravarty, managing partner - brand strategy, Dentsu Creative, a creative digital agency, believes that mediums, such as digital and television, evolve in tandem with consumer behaviour.

“People are spending more time online and consequently buying more. This has resulted in the emergence of new forms of content engagement, such as on-demand, quick commerce, and e-commerce,” he says.

Marketers have been quick to take note of these new formats. As per Kandasamy, they recognise the immense value of digital not only for mid and bottom-funnel strategies but also as a complementary tool for top-funnel strategies when integrated with traditional mediums like TV, print, and radio.

“The emergence of e-commerce advertising and the proliferation of transactional payment platforms have significantly expanded the audience base,” he adds.

With consumers increasingly spending more time online browsing websites, watching videos, or scrolling through social media, digital channels offer granular targeting options based on demographics, interests, location, online behaviour, enhancing the credibility of reaching a receptive audience.

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According to Anand Chakravarthy, chief growth officer, Omnicom Media Group India, the rapid penetration of data in India has significantly empowered marketers to access a broader audience through diverse digital channels.

“This has been strengthened further by the emergence of various online marketplaces and quick commerce platforms, leading consumers to increasingly turn to online channels for their purchasing needs. This combination of widespread digital adoption, enhanced targeting capabilities, and the growth of e-commerce is driving the growth of the digital ad industry,” he says.

OTT vs Social media: Where is the money flowing?

Kandasamy explains that with most internet users in India accessing the web through mobile devices, both OTT platforms and social media have adopted a mobile-first approach. “User-friendly mobile applications and optimised mobile experiences make it convenient for users to access content on the go, further driving engagement.”

Ashit is of the view that both OTT and social media play different roles in a consumer’s life. The entertainment consumption today has increasingly moved towards on-demand.

In the early 2000s, organic content held significant importance and continues to do so today. However, platforms now lean towards monetised solutions, resulting in social media’s expansion.

“I think OTT will keep becoming important as on-demand habit of consumers gets developed and social media right now, will also have its growth as we keep seeing more monetisation and ad formats happening,” he says.

As the digital advertising industry continues to grow, Anand mentions that even though e-commerce might still be at a nascent stage in India, it is poised for phenomenal growth.

“A trend everyone will surely see is greater digital investments in marketplaces and q-commerce sites as more brands are building their own D2C channels.”

Ashit emphasises consumers’ understanding and inclination towards the authenticity of content as a thing that they are latching onto. Apart from this, he notes that the MarTech domain will also grow.

“MarTech is going to be increasingly important as the future holds significance for the first-party data in terms of unlocking lifetime values of customers and keeping them engaged,” he says.

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Another crucial aspect to highlight is the transformative power of AI-driven optimisation, poised to emerge as a significant driving force, shaping the future of the digital landscape. As per Debarshi, optimising audience targeting, creative production, and bidding strategies in real-time.

This shift would prompt brands to prioritise responsible data practices, emphasising the gathering of first-party customer data as the most effective method.

He further adds, “The growing prominence of shoppable ads indicates a deeper integration between e-commerce and social media, enabling viewers to make direct purchases within ads.”