According to a recent WARC report, Alibaba, Alphabet, Amazon, Bytedance, and Meta, are projected to capture more than half (50.7%) of the global advertising expenditures this year, and they are expected to maintain this dominance through 2024, with a market share of 51.9%.
In the Indian context, traditional media still poses a strong competition to digital advertising. But in the realm of digital advertising alone, the big tech giants control about 85% of the total digital advertising expenditure.
With the remarkable growth of these major tech platforms, even Indian digital publishers are struggling to seek a fair share of the revenue generated by Google and Meta from running ads on Indian platforms' content.
However, Ashwin Padmanabhan, President - Investments, Trading, and Partnerships, GroupM, believes that this disproportionate share might change in the next 18-24 months.
He said, “There is clearly a duopoly between Google and Meta. They may have 85% of all digital advertising in India. But the coming 18 to 24 months will be interesting because you will have alternatives which will start popping up to Google, Meta and Amazon.”
“There are enough and more platforms with 150 plus million users, which are investing heavily in ad tech and building apps. Whether it is a payment app, commerce app, or retail commerce app like BigBasket or Flipkart, they are also investing heavily in technology which allows them to monetise their audiences better.”
Having said that, Padmanabhan believes that there is a level playing field in India compared to the rest of the world where adex is concentrated heavily into the hands of these giants.
He explained, “India is still very different from the global market. From a digital ecosystem perspective, India does have Amazon, Meta and Alphabet, but not Alibaba and Byte Dance. On top of it, India is still a very big TV market as well. In the TV ecosystem, whether it's Disney, Sony, Viacom18, Zee or Sun TV, they continue to be bigger than digital in the organised brand space. It’s only when one goes to mid-market and SMB brands, that's where digital becomes predominantly the preferred medium for connecting with consumers.”
He continued, “In India, adex is equally split between the four to five large networks, between Zee, Sony, Viacom, Disney, and Sun in the South. The competition between these five media companies is so intense that even the digital biggies are looking at ways to move money away from TV into digital.”
As per GroupM TYNY 2023 forecast report, it was estimated that digital will account for 56% of adex share and reach Rs 82,542 crore in 2023. The share of TV in the Indian adex in 2023 was estimated to be around 30% at Rs 43,227 crore. While TV’s adex share was estimated to reduce by a per cent, digital’s share was forecast to increase by 2% (YoY).
Sharing the reason for the growth of adex power concentrated in the hands of big-tech companies, Padmanabhan said that digital advertising is a function of two things. Firstly, the ability to aggregate audiences. Secondly, to build an extremely sophisticated and differentiated ad tech product.
“It's not enough to aggregate audiences. One also needs to be able to reach those audiences in a smart manner. India today has a lot of platforms which have more than 150 to 200 million users. But not all of them are sophisticated in terms of offering the technology which allows a brand to connect with the users in an intelligent way.”
He further said, “Companies like Alphabet and Meta are investing hugely in ad products and technology, which allows brands to make their investment work harder and more accountable. They can measure ROI and target smartly. Any platform which focuses on both, aggregating audiences and building intelligence behind how one targets those audiences will do well.”
Industry leaders have long debated that the increasing dominance of big tech companies in the Indian advertising expenditure (adex) is primarily influenced by brands' growing emphasis on programmatic advertising, performance metrics targeting, and a focus on achieving rapid results, often at the expense of long-term creative effectiveness.
Padmanabhan explained that as many brands faced financial constraints and business challenges, they shifted their ad budgets towards performance marketing instead of pure branding efforts. “However, in the realm of performance marketing, there's a point of diminishing returns, where pouring more money in doesn't yield better results,” he said.
Padmanabhan elaborated on the mechanics of performance marketing, pointing out that it involves targeting potential customers repeatedly.
“Over time, this pool of potential customers shrinks, and the efficiency of performance advertising declines. Without brand-building initiatives, a brand can't attract new audiences, and the cost of customer acquisition keeps rising. Branding is essential to bring fresh prospects into the fold,” he said.
Some companies have recognised this cycle and they have started to focus on brand building alongside performance marketing.
Padmanabhan noted that while big tech companies had an advantage in the purely performance-driven approach, the introduction of branding levels the playing field.
“The giants may still secure a significant share, but others will also gain ground,” he concluded.
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