India's internet advertising market to reach $7.9 billion by 2027 with 12.3% CAGR: PwC

India’s internet advertising market is expected to grow at a CAGR of 12.3% and see the total revenue climb to $7.9 billion by 2027, according to PwC's Global Entertainment and Media Outlook 2023-2027.

Global internet advertising market growth fell from 30.8% in 2021 to 8.1% in 2022, leading to a total market value of $484 billion for the year.

In contrast, India’s internet advertising market, among the fastest growing in the world, increased 35.3%, from $3.3 billion in 2021 to $4.4 billion in 2022. Overall global revenue is expected to grow at a CAGR of 6.5% to $663 billion in 2027, while India’s internet advertising market is expected to grow at a CAGR of 12.3% and see the total revenue climb to $7.9 billion by 2027, according to the report.

Mobile sub-segments will see strong growth

In emerging markets such as Indonesia, India and the Philippines, the main driver of internet advertising revenue is the increasing penetration and use of internet connectivity, particularly mobile. Mobile sub-segments will continue to see strong growth.

Although devices such as CTVs will continue to grow their share of internet advertising revenue, mobile’s share of global revenue will expand from 67.8% in 2022 to 73.4% in 2027. Indeed, the internet advertising market is now, and will continue to be, very much a mobile-first proposition. By 2027, mobile internet advertising will hold a 73% share of internet advertising revenue in the Indian market.

According to the report, in India’s mobile-first market, there were 30 million fixed broadband households in 2022, a penetration rate of 10.8%, while there were 782 million mobile internet subscribers in 2022 – a penetration rate of 56%. The addressable market in India is already considerable and there is enormous headroom for further growth.

User-generated content plays a key role in India’s internet advertising market

The creator ecosystem, with an estimated 3 million content creators, and social media platforms are an important part of India’s digital ad market. It has been reported that in India, the maximum number of social platforms is used per person, with an average of 8.7, compared to 3.7 in Japan. Businesses can therefore leverage user authenticity to increase brand awareness and boost engagement, as per the report.

User-generated content eliminates the need for high-budget content production for advertisers. This segment is seeing greater self-regulation of content quality and type, which brands will need to factor in while leveraging the sector.

As first-party data becomes paramount, telecoms have an opportunity to gain a foothold

Three major telecom operators – Bharti Airtel, Jio and Vi (Vodafone Idea), which have almost 1.2 billion users between them – have launched their own AdTech platforms, hoping to capitalise on the vast amounts of first-party data they already have access to, which will be increasingly important for personalised ads when Google phases out third-party cookies by the end of 2024.

Businesses will need a new approach amidst a fast-changing regulatory landscape

The Indian government is trying to ensure that the internet advertising market is competitive and addresses the dominance of big tech firms in the US. This regulatory push comes in the face of legislative action in the EU, where the Digital Markets Act and Digital Services Act were both passed by the European Parliament in January 2022. India is also planning to strengthen regulation of the internet with a forthcoming Digital India Act, as per the report.

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