With fundraising in top gear, startups likely to spend at least Rs 7,000 crore on advertising this year

India’s flourishing start-up community will single-handedly drive the advertising expenditure for the current year as other sectors such as auto, real estate, luxury brands and consumer durable go slow on advertising.  

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Experts say that record fundraising by these companies will ensure that they spend more towards advertising despite the overall economic situation and stress on margins. The consumer acquisition craze of these companies, which span across ed-tech, fin-tech, health-tech and online gaming, will keep the spirits of India’s media industry high.  

Priti Murthy

According to Priti Murthy, Chief Executive Officer, OMD, startups will contribute at least 10% towards India’s total adex for the current year.  India’s adex is likely to be around Rs 65,000 crore this year. 

“E-commerce, ed-tech, logistics and health sectors definitely look promising. Start-ups can be said to contribute at least 10% to the adex, which has grown in comparison to the past. Our last few wins on new business are start-ups — Cuemath, Country Delight to name a few — and we are excited about these partnerships,” Murthy said. 

Experts said the overall adex by startups and new economy companies will be between Rs 7,000 crore and Rs 8,000 crore. A large share of this spend will go towards TV, followed by digital, print and outdoor. 

The recent season of the Indian Premier League, which was suspended due to the rise in Covid cases, also had the majority of its advertising coming from companies such as MPL, Cuemath, Dream11, Cred among others. 

Shashi Sinha

“The new economy companies are leading the spending around event properties. This trend is likely to continue,” Shashi Sinha, Chief Executive Officer, IPG Mediabrands had recently told BestMediaInfo.com. 

The startup fundraising ecosystem has heated up in India since the start of this year. Several small and big startups have already raised over $3billion from VC funds for their expansion. According to media analysts, a decent share of this will go towards marketing for fund acquisition.  There are 55 start-ups in the Unicorn Club in India now and 13 were added during the peak of the pandemic.

“These are only young companies. If you include established players such as Flipkart, Paytm among others, the adex of new economy companies will be even higher,” another senior executive from a global media planning firm said. 

According to PwC, the ecosystem already has 70% funding in just five months this year as compared to the entire 2020. This seems optimistic for ad space as valuations increase so does the value of branding.  

“There are a bunch of new-age companies that bring in the necessary impetus to growth in adex — boom in e-commerce, fintech and payment apps and now the gaming apps. Such brands consume high value properties, events and remain tapped into right opportunities to drive the impact on adex,” Murthy added. 

Murthy said the adex by startups will continue to grow over the next few years. 

“This provides a lot of trust and confidence for the future. India holds the 57th position in the Global Innovation Index. With supportive start-up policies and ecosystem, I believe the trend should witness an uptick, especially since the youth impels creative and purposeful branding now, more than ever. This is an ongoing trend and will be amplified in coming years,” she said. 

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