Digital ad revenue share to double in five years: PwC

The internet's share in total advertising revenue is expected to double from eight per cent in 2013 to 16 per cent in 2018, according to a report by the Confederation of Indian Industry (CII) and PricewaterhouseCoopers (PwC).

Online advertising, an estimated Rs 2,900 crore in 2013, will jump three times to about Rs 10,000 crore in five years, growing at a compound annual rate of 28 per cent. In 2011, only four per cent of Indian advertising revenue went digital.

For the first time, Indians paid Rs 25,200 crore to access the internet in 2013, higher than the Rs 22,300 crore the print medium earned in subscription and advertising, according to the study. In 2012, they spent Rs 17,100 crore for net access, while the print media made Rs 21,000 crore from subscription and advertising.

The revenue contribution of internet access to the total revenue of the media & entertainment industry has gone up from 18 per cent in 2012 to 22 per cent in 2013, while that of the print medium fell from 22 per cent in 2012 to 20 per cent in 2013.

The study projects that while television will continue to be the largest revenue contributor in 2018, with a 37 per cent share, internet access will become the undisputed number two, with a 29 per cent share of revenue. The print medium will be relegated to a poor number-three, with only a 14 per cent share of the total revenue.

Smita Jha, leader of the entertainment & media practice, PwC India, explained that unlike in the West, the shift of advertising online would be gradual in India. In the US, revenue from digital advertising exceeded print advertising long ago and is closing in on television. 

In India, the print medium is continuing to grow, so its advertising revenue is expected to grow at seven per cent annually over the next five years, while television advertising revenue will grow at over 12 per cent. But with internet advertising going faster, its share in total advertising revenue should hit 16 per cent by 2018. Television will maintain a 40 per cent share and print advertising will move down to 34 per cent.

Media planners said advertisers were increasingly turning online but the difference in rates between the digital and traditional media was still too high.

"Digital advertising is unlikely to replace print and TV advertising in India. Yes, digital advertising is growing. But you have to bear in mind that India is the only market in the world where print advertising is also growing. And print and TV will continue to be critical media vehicles in India," said Sam Balsara, chairman & managing director of Madison Group.

"The reason we continue to use TV advertising aggressively is because consumers believe a brand built on TV is trustworthy. While digital is growing, I do not think the importance of a medium like TV will diminish," said Kunal Bahl, co-founder of Snapdeal.