In today’s digital era, advertising is a cornerstone of success for any company. With the exploded adoption of smartphones, mobile internet and broadband over the past decade, companies have significantly increased their ad spending to attract the eyeballs of potential customers, leading to higher sales and revenue. Interestingly, India’s ad spending market reached $15.2-$15.7 billion in FY23, clocking nearly 12% YoY growth. It is estimated that the market grew by 6% YoY to $16-$17 billion during FY24, according to Redseer.
Even though the growth rate in fiscal 2024 – which ended on March 31, 2024 – was low as compared to the previous five years, the future appears promising. The ad spending market is expected to sustain a healthy annual growth rate of 9-10% until fiscal 2028.

It is worth noting that among all the thriving sectors, retail has emerged as a dominant force in driving the growth of advertising spending in India, with a particular focus on untapped opportunities in Tier 2 cities.
Let’s dig deeper!
Retail Drives Digital Ad Spending
Digital advertising accounted for nearly 55% of India’s total ad spending in FY23, amounting to $8.2-$8.7 billion. Notably, retail companies were the biggest spenders, contributing 60% to this total.
Retail-centric sectors, including e-commerce, consumer packaged goods (CPG), and consumer durables, collectively accounted for 60% of India’s digital ad market in FY23. This figure is expected to increase in the near future.
Companies like Amazon, Flipkart, Tata, Zomato, Swiggy, and Zepto allocate significant portions of their revenue to digital channels each year due to their effectiveness in engaging consumers and driving conversions.
Despite this heavy reliance on digital platforms, traditional ad platforms like TV remain relevant, especially in Tier-2 and Tier-3 cities where TV ads significantly influence consumer behaviour. In particular, CPG and retail brands tend to spend more on traditional ads compared to digital, while e-commerce brands focus predominantly on digital advertising.
Companies like JioCinema delivered record digital advertising revenue for the 16th season of IPL (Indian Premier League), highlighting the continued importance of traditional media channels.
However, due to the economic uncertainties in FY24, both businesses and Indian consumers were cautious with their spending. Although e-commerce companies maintained a strong growth rate in ad spending, other sectors, such as CPG and retail, saw more subdued growth rates.
For example, Zomato, India’s food and grocery delivery giant, spent a whopping ₹1,432 crore on advertisement and sales promotion during FY24. This expenditure accounted for nearly 20% of the company’s total expenses, and increased 17% YoY during the year. Another quick commerce startup Zepto allocated ₹216 crore to advertising promotions during fiscal 2023 (FY24 numbers yet to come), an increase of 23% YoY.
Digital Ad Spending by Content and Service Sectors
Retail, one of the fastest-growing sectors, has been dominating India’s digital ad spending market. However, other sectors, such as Content and Services, BFSI, real estate, and healthcare, are also increasing their investments in digital advertising.
Content and Service sectors accounted for 27% of the digital advertising market in India during fiscal 2023. This category includes media and entertainment, gaming, IT and telecom, travel and hospitality, and education. These sectors use ads to boost engagement, drive website traffic, encourage app downloads, and promote services. Their focus is more on audience interaction than on immediate purchases.
Traditional businesses such as real estate, infrastructure, BFSI, and healthcare have recently turned to digital advertising to increase visibility, generate leads, and stay competitive in a digital-first world.
Now, one might assume that the majority of digital ad spending in India comes from metro and tier 1 cities, where the population is predominantly tech-savvy. However, the landscape is rapidly evolving.
Over the past five years, the Internet has reached more people in smaller cities, including Tier-2 and Tier-3 regions, largely due to the proliferation of smartphones and advancements by telecom companies. This shift is prompting brands to strategically reallocate advertising budgets to target these new internet users. These brands are increasing their presence on regional platforms and creating content in local languages.
India’s digital advertising market is poised for continued growth, driven by factors such as increasing internet penetration, rising disposable incomes, and evolving consumer behaviour. It would be interesting to see how brands in the retail sector adapt to these changes and generate revenues.