In today’s digital era, the world of advertising is evolving rapidly. Globally, between 2015 and 2024, ad spend rose from 0.6% of GDP to nearly 0.85%. Digital advertising has been the largest contributor to this growth, expanding at an annual rate of 15 to 20% over the last decade.
Let’s take a look at how big India’s digital advertising market is and which factors are playing a key role in the industry’s growth.
Global Landscape and India’s Position
The global advertising market reached nearly USD 1 trillion in 2024, accounting for around 0.85% of global GDP. In developed countries such as the US, ad spend may rise from 1.4% to 1.6% of GDP. The biggest driver of this global growth is digital advertising. In 2024 alone, digital advertising was worth USD 690 billion, making up 70 to 75% of total ad spend. Compared to traditional advertising, digital mediums are expanding at a much faster pace.
Looking at India’s position, ad spend here is still only 0.4% of GDP. However, by 2029, it is projected to rise to 0.5%. For comparison, China increased its ad spend as a share of GDP from 0.5 to 0.8% between 2015 and 2020. Meanwhile, in Japan, this ratio rose from 0.7 to 1% between 2019 and 2024.
India’s digital advertising market is also making strong progress in this direction. In 2019, its size was only USD 2 to 3 billion, which grew to USD 8 to 10 billion by 2024. Furthermore, it is estimated that by 2029, with a CAGR of around 15%, the market will reach USD 17 to 19 billion.
Growth Triggers
Dominance of Mobile: India is now one of the world’s largest digital consumer markets. With over 1.2 billion smartphone users and nearly 950 million internet users, people spend an average of 5 hours a day on their mobiles, about 70% of which is on screens. This is why 70% of digital ad spending goes to mobile advertising. Within this, nearly 90% of spending is on in-app ads.
The Era of Video and Smart TVs: People today love watching short videos such as Instagram Reels and YouTube Shorts. As a result, video ads are growing the fastest. At the same time, the number of smart TV households in India has doubled in just two years, reaching 45 million. Although ad spending here is still relatively low, it is growing at an annual rate of 15 to 17%.
Online Shopping Apps: Platforms like Amazon and Flipkart, and now even quick commerce players like Blinkit and Zepto, have become major advertising channels. When you search for something on these apps, you are also shown ads for other products. For instance, Blinkit’s ad revenue has quadrupled in just one year.
Small and Emerging Businesses: The industry is being driven not only by large companies but also by small and medium enterprises (SMEs) and direct-to-consumer (D2C) brands. Their share in digital ad spending is expected to exceed 40% by 2029.
Challenges and Risks
Like any other sector, this one also comes with challenges that investors should be aware of.
Strict data privacy regulations: The government has become stricter about how companies use customer data. With laws such as the Digital Personal Data Protection (DPDP) Act coming into effect, tracking users and showing them targeted ads has become more difficult. Nearly 85% of users have denied permission for app tracking, making it harder for companies to reach the right audience.
Ad fatigue: Consumers are fed up with repeatedly seeing the same irrelevant ads and are actively ignoring them. This reduces the effectiveness of advertising campaigns.
Rising competition: From April 1, 2025, the government is removing the 6% Equalisation Levy (formerly known as the ‘Google Tax’). This could make large foreign players like Google and Meta even stronger in India, increasing competition for domestic ad-tech companies.
Government Policies and Support
Digital India Mission: Launched in 2015, this campaign has provided affordable internet and digital services across the country. It has laid a strong foundation for the digital advertising industry, bringing millions of people online today.
Digital Advertising Policy (2023): To promote its programmes and messages through digital platforms, the government has introduced an official policy. Under this, websites, OTT platforms, and podcasts can receive government advertisements, giving the sector a direct financial boost.
Support for Start-ups and Innovation: Through initiatives like Start-up India, the government is helping new businesses grow. In addition, the Union Budget 2025 has also provided financial assistance and tax benefits for digital start-ups and MSMEs, making it easier for them to promote themselves online.
What’s in it for Investors?
Investors should keep an eye on certain companies listed in the stock market to be part of this rapidly growing industry. While giants like Google and Meta control nearly 75% of the market, the remaining 25% consists of several small and mid-sized ad-tech companies that are driving this revolution forward.
In India, listed players such as Affle 3i Ltd, Vertoz Ltd, and R K Swamy Ltd are playing a significant role.
What’s Next?
In the next five years, digital advertising will surpass traditional advertising to account for 80 to 85% of total ad spend. Globally, North America’s share is currently 45 to 50%, and is expected to grow at an annual rate of 9 to 11% in the coming years. Meanwhile, the Asia-Pacific region’s share will strengthen further from the current 25 to 30%, driven by internet penetration rising from 50 to 60%, the expansion of e-commerce platforms, and increasing consumption.
India is among the fastest-growing markets in this sector. Here, digital advertising is expected to grow at an annual rate of around 15% between 2024 and 2029. Its share in total ad spend could rise from 50 to 60% to 60 to 70%. The key drivers of this growth are the rise of OTT platforms, widespread high-speed internet coverage, and increasing digital consumption.
*The companies mentioned in the article are for information purposes only. This is not investment advice.
*Disclaimer: Teji Mandi Disclaimer
