India's adex to grow nearly 11% in 2021, digital on fast lane: Dentsu Digital Trends Report

India’s media industry is likely to continue to reel under the impact of Covid-19 pandemic in 2021 as a full recovery may not be possible this year as well. According to Dentsu’s Digital Trends Report, the Indian advertising industry witnessed de-growth of 17.5% and currently stands at Rs 56,490 crore.

The industry will grow by 10.8% to reach Rs 62,577 crore by the end of the year 2021 and is expected to grow by 11.59% to reach Rs 70,343 crore by 2022.

As against the overall industry, digital continues to carve its own growth trajectory.

According to the report, the digital advertising industry market was up from Rs 13,683 crore in 2019 to Rs 15,782 crore in 2020—recording a growth of 15.3%.

The report says digital media will grow at 20% to reach a market size of Rs 18,938 crore by 2021 and with a CAGR of 22.47% to reach Rs 23,673 crore by 2022.

Television, however, continues to be the leader with 41% share in the overall adex. The medium had an adex of Rs 23,201 crore in 2020. The trend is likely to continue.

Print, which has been the worst-hit, has shrunk to 25% in terms of overall share. In 2020, it had a total adex of Rs 13,970 crore.

Digital to command 34% share in total adex

According to the Dentsu report, digital is growing rapidly and the pandemic has propelled adoption of the medium. Advertising spend on digital media increased from 20% in 2019 to 28% in 2020. It is further expected to reach 30% in 2021 and 34% by the end of 2022.

Digital adex in 2020 stood at Rs 15,782 crore, up 15.3% from Rs 13,683 crore in 2019. It is expected to reach Rs 18,938 crore in 2021 and Rs 23,673 crore in 2022.

People from tier-II and tier-III cities contributed the most to the growth of the digital advertising market. The pandemic fostered the demand for e-commerce purchases in these cities. Consumers preferred to purchase from online retailers offering delivery at flexible timings while being cautious about safety and health during the pandemic.

The shift in habits and behaviour is evolving as the elder consumers now prefer to use cashless digital payment methods instead of cash transactions. The pandemic fuelled the adoption rate of digital in India coupled with the high consumption of digital video and the growth of regional content.

Spends on digital media is led by social media with the largest share of 29% (Rs 4,596 crore) closely followed by online video (28%, Rs 4,366 crore) and paid search (24%, Rs 3,725 crore). Online video has seen the fastest growth from a share of 22% in 2019 to 28% in 2020.

The rapid increase in mobile usage and internet penetration has led to 75% (Rs 11,836 crore) digital media spends on mobile devices. Majority of the online expenditure on mobile devices goes to online video at 29% (Rs 3,458 crore) and social media accounts for 29% (Rs. 3,429 crore).

“We expect 2021 to witness a colossal rise in digital advertising. Dentsu is over-invested in digital. Of our 3,000 people, more than 1,800 are in our digital companies. Additionally, more than 50% of our revenue comes from digital at a time when the market average in India is still 10-12%,” said Anand Bhadkamkar, CEO India, Dentsu.

Largest advertising categories

At present, FMCG has the highest expenditure on advertising with a contribution of 20% (Rs 11,554 crore) closely followed by e-commerce (17%, Rs 9,788 crore) and consumer durables (10%, Rs 5,751 crore).

FMCG spends a large majority of their advertising budget on television (64%) while the retail, automotive and media and entertainment segments spend a large share of their advertising budget on print. The biggest spenders on digital media are BFSI (57%), consumer durables (45%), telecommunications (40%) and e-commerce (39%).

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