The changing face of digital advertising

Popularity of e-commerce marketplaces, short video apps, social media, streaming platforms, e-learning, online news and online gaming are driving increased spends on digital

With the worst of the pandemic hopefully behind us, India’s advertising industry expects expenditure on various media to increase on the back of enhanced economic activity. Forecasting the future of advertising may be foolhardy as technology is impacting businesses in unexpected ways, yet advertising and brand experts offer insights on possible digital advertising trends in 2023 and beyond.

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That advertising expenditure (ad ex) on digital media will grow the fastest is a no-brainer. But it will not clock the erstwhile crazy growth rates of 40-50% a year. “Digital is no longer a challenger media. That era is over. Digital has won,” says Pratik Gupta, founding partner, Zoo Media, a network of specialist digital agencies, who expects more judicious spends on the medium going forward.

The share of digital spends in the total ad pie is close to 48% followed by television at 36%, Gupta maintains, though a recent note by Crisil Ratings says TV dominates ad revenue share given its wider reach, but digital will lead in growth, rising 15-18% annually over the medium term. A Redseer Strategy Consultants’ report estimates a compound annual growth rate of 19-20% for digital advertising slated to hit $21 billion by 2028.

Proliferation and popularity of e-commerce marketplaces, short video apps, social media, streaming platforms, e-learning, online news and online gaming are driving increased spends on digital. With users spending nearly seven hours a day on their smartphones, digital platforms have a good engagement rate, says Redseer.

Yet digital advertising is set to evolve with big tech platforms like Apple, Google and Meta moving to restrict advertiser’s ability to track users’ internet browsing history. “Mature advertisers understand that cookies tracking internet behaviour of consumers will go away in less than two years. So, they have already started deploying technology to ensure they collect first party data before it becomes very expensive. In the next two to three years, you will see marketing technology and advertising technology or mar tech and ad tech as they call it, boom,” says Gupta.

The growing privacy related concerns and stricter regulations to protect the consumer from being tracked and traced will create fresh challenges. “We are likely to see the rise of ad blockers that will make it even harder to reach the consumer. We will, therefore, witness the rise of permission marketing, which could eventually become the norm,” says Samit Sinha, managing partner at Alchemist Brand Consulting. Permission marketing refers to a form of advertising where the target audience is given the choice of agreeing to receive promotional messages.

With consumers in control of what they want to hear and see, it will become increasingly harder for advertising messages to go through. This could push more and more brands to create their own entertainment\infotainment content and an increased use of brand placements in films, TV and web shows as well as gaming.

There will also be a much greater level of personalisation in advertising messages factoring in a consumer’s geography, demography, language, mindset and behavioural traits. “With digital media’s ability to provide cost-effective micromarketing, brands can literally customise a marketing message on a mass scale to an audience of one,” says Sinha.

A large part of the advertising process may also become fully automated thanks to artificial intelligence (AI). Advertisers will use AI not just for making intelligent and accurate predictions about consumer responses but also for interacting in real time with consumers as a matter of routine without any human intervention. Sinha says the proliferation of AR/VR devices may begin and the metaverse may become an accepted reality, creating richer, more engaging brand experiences.

But creative people needn’t worry about humans getting replaced by bots in the advertising industry. With the democratisation of technology, the role of human creativity – engaging emotions through stories that touch people at a deeper level – will become even more important, says Sinha, adding that creative people will have to adapt to this new paradigm and up-skill themselves beyond print advertising and 30-second TV commercials.

Gupta feels that storytelling in advertising is getting a lot more contextualised. The format of storytelling has changed. Social media posts, a hyper-specialised video, an NFT, an ad campaign or an influencer campaign – all of these require creativity, he says. The number of big brand campaigns are on a decline. A lot of campaigns now are very precise and to the point of what they actually want to achieve.