India’s digital advertising sector is set for significant growth in the next five years, although structural issues may slow its momentum, according to Bain & Company’s recent report ‘Advertising in the Digital Age, in India and Around the World’.

The consultancy predicts that India's digital advertising market, estimated at $16-18 billion in 2024, will expand at a compound annual growth rate of approximately 15 percent through 2029, achieving $17-19 billion.

Total advertising expenditures are expected to increase from 0.4 percent of GDP currently to approximately 0.5 percent by 2029, ranking among the quickest growth rates worldwide, yet still behind China and Japan in terms of the ad-to-GDP ratio.

“India's digital ad market is at a turning point,” remarked Prabhav Kashyap, partner at Bain & Company. The merging of mobile-driven consumption, the swift growth of video formats, and the incorporation of AI into all phases of the advertising process is transforming how brands engage with consumers. In the coming five years, the capacity to integrate creativity, data, and technology will be the key determinant in identifying who gains the most value.

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In India, mobile leads digital consumption, comprising almost 70-80 percent of advertising expenditure — surpassing the global average — as users spend 4.8 hours daily on their devices in 2023, an increase from 3.7 hours in 2019. In-app video formats are increasing the most rapidly and are expected to increase their share by 6-8 percentage points in the next five years.

Connected TV (CTV), while still in its early stages with under a 5 percent market share in India, is gaining momentum as the number of homes with smart TVs increased to 45 million from 2022 to 2024.

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Small and medium-sized enterprises (SMEs) and direct-to-consumer brands are also propelling the transition, with their portion of digital advertising expenditures anticipated to increase from 37 percent in 2024 to over 40 percent by 2029. A large number of these advertisers prioritize mobile, focus on ecommerce, and lean towards performance marketing.