From flash to frugality: Startups optimise ad spend in 2025

New Delhi: With the funding winter and a GDP growth that's taken a slight nap, startups in 2025 might just be tightening their purse strings when it comes to ad spends. While they are known for splurging on high-impact properties, this year, expect a more cautious approach. The startup crowd is set to be a little more mindful, opting for smart, strategic moves rather than going all in.

Puneet Kumar Kanojia, Founder and Director of Sakshar Media, said that startups may pivot to performance-driven advertising and leaner strategies, potentially scaling back on big-ticket sponsorships. 

He said, “The ongoing funding winter has reduced capital inflows and led startups to prioritise profitability over growth, resulting in cautious investor sentiment and reduced consumer spending. This may cause startups to scale back on expansive campaigns, especially in high-cost platforms like sports sponsorships.

While IPL and similar platforms offer unmatched visibility, their high costs could deter startups under financial constraints. But if the funding ecosystem shows signs of recovery and macroeconomic conditions stabilise, there is potential for a moderate growth of 5-8% in startup AdEx in 2025. This growth will likely be driven by strategic reallocations towards digital and hyper-targeted campaigns or a selected group of well-funded startups.”

Contrary to Kanojia’s prediction, Abhishek Tiwari, Global Business Head of NetSetGo Media, shared a different perspective. He said, “Despite concerns about startup spending cuts, local IPOs like Ola Electric and Firstcry are helping maintain market confidence. With a steady payment balance, investors will stay optimistic, driving higher ROI and growth. This stability, along with a stronger market, will create a more favourable economic environment for the industry in 2025.”

Startups with robust funding may use advertising to gain a competitive advantage and market share, highlighted Kanojia. 

He commented, “Platforms like the IPL remain attractive for well-funded startups aiming for national visibility. Additionally, the shift toward performance-driven digital marketing, which offers cost efficiency and measurable outcomes, could provide a sustainable avenue for maintaining advertising momentum.”

Mukul Raj Sharma, Founder of Digital Eminent, added, “In 2024, startup advertising in sports, especially, in IPL is set to undergo a strategic change. Despite the overall advertising spend expected to drop by 8-10%, certain sectors are either maintaining or increasing their advertising spend in IPL. Predictions for the year 2025 indicate an increase of 15 to 18% provided the market recovers and active listing of companies takes place.”

According to Sharma, (Digital Eminent), “15-30% of most startup budgets are spent on advertising but the range could also differ from sector and level of growth. In very high growth phases, companies will spend between 20% to 35% depending on how important the growth stage is.”

Driving these spends are, “Gaming platforms (Dream11, MPL), fintech players (PhonePe, Paytm), and e-commerce companies (Meesho) are leaders in spending on sports advertising. These sectors usually spend roughly 45 to 55% of their marketing budgets on advertising,” Sharma quoted.

Supplementing Sharma’s thoughts, Tiwari said, “Advertising expenditure in e-commerce is typically at least 20% of revenue generated, which isn’t what all the top firms do due to the very complex nature of constant competition among all eCommerce firms – whether it be healthy competition with regards to revenue and market share or competition with regards to the popularity of a specific product or even further down to the growth of a specific company or brand.”

As per Kanojia, the average ticket size for startups' advertising in high-profile events like the IPL ranges from Rs 5 crore to Rs 50 crore, depending on the scale and type of association, such as on-ground sponsorships, title sponsorships, or premium ad slots during prime matches.

Providing more insight on the subject, Sharma said, “For basic sponsorship, IPL advertising campaigns start at Rs 10 crore, and Rs 150 crore for title sponsorships. Match sponsorships add to the base amount where television advertising costs between Rs 5-15 lakh per ten seconds with additional charges for play-off matches.

It can be seen that marketing strategies have become more focused and selective alongside the decrease in economic activities, with startups decreasing total costs but remaining active in Olympic sponsorships by focusing more on global events by around 20 to 30% reductions. However, it has been noticed that rather than generic visibility tools, the focus has moved towards the quantum of marketing accomplished and strategically building the brand.”

Wrapping it up in the words of Kanojia, “The decline in GDP growth and ongoing funding winter will significantly impact startup advertising expenditure (AdEx) in 2025. Indian startups, major contributors to sports advertising like the IPL, will need to reassess their strategies due to economic downturns and reduced capital inflows. While well-funded startups may continue investing, others will shift to performance-driven, digital marketing for better cost control and measurable outcomes.”