What caused Indian adex to be as low as 0.33% of the country's GDP in 2023

In 2023, advertising was 0.33% of India’s GDP, much lower than developed large markets, which are all between 0.6% to 1%, according to the latest EY report on the media & entertainment sector.

Commenting on the current state of adex to GDP ratio in India, Ashish Pherwani M&E Sector Leader Ernst & Young LLP, said, “Currently, the Adex ratio to GDP in India is really saddening. India is ranked 5th in world's GDP rankings in 2024. In the other countries which are in the top five, the adex to GDP ratio ranges between 0.6-1%, whereas in India it is still at 0.3%. This shows there is still a lot of headroom for growth, and that's what we expect to see over the next few years.

The slowing down of India’s nominal GDP growth to 9% in 2023 after two years of double-digit increases impacted advertising, which grew just 7%, as per EY the report.

“Headwinds from geopolitics, the uncertainty of war, a funding scarcity and regulatory implications impacted advertising spends and reduced consumption,” Pherwani added.

Globally, too, ad growth was 6% compared to global nominal GDP growth of 9.9%.

In addition, advertising was impacted by a ban on certain large and high-yield categories like gaming and betting, and a slowdown in investments in D2C brands, stated the report.

Having said that, as per the EY estimates, Nominal GDP growth is expected to be 10.5% for FY 2025 (2024) and advertising is expected to outpace that based on past trends.

The media and entertainment (M&E) sector is projected to grow 10.2% to reach Rs 2.55 trillion by 2024, then grow at a CAGR of 10% to reach Rs 3.08 trillion by 2026, according to the EY Report, launched at FICCI Frames 2024.

According to the report, the Indian M&E sector continued its growth trajectory. It grew by Rs 173 billion (8.1%) to reach Rs 2.32 trillion (US$27.9 billion).

While the sector was 21% above its pre-pandemic levels, television, print and radio still lagged their 2019 levels. While television remained the largest segment, digital media is expected to overtake it in 2024, the report stated.

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