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Uncharted markets drive growth for digital advertising in India

Google India and the Boston Consulting Group (BCG) recently released a new forecast that India’s current $40bn digital consumer spending will become more than double, to reach $100bn by 2020. This is because, out of the present 430m Indian internet users, only 20% shop online, leaving a huge chunk of 80% users, who do not. This means that there is a huge growth potential for the digital sector to expand its consumer base further and generate more revenue.

The report titled “Digital Consumer Spending in India: A $100 Billion Opportunity” predicts that the online spending in the country will experience a multi-fold growth of around 2.5 times over the next two years. The report also projects a rise in the number of female shoppers to 2.5 times by 2020. The number of shoppers aged over 35 – a major part of the target audience – would also grow by more than three times. This increase in the target audience opens up the possibilities of increased sales.

Further, Google India and BCG also calculated the growth in e-commerce. Their report estimates that by 2020 [glossary_exclude]e-commerce[/glossary_exclude] would grow from the current $18bn to $45bn. The growth of [glossary_exclude]e-commerce[/glossary_exclude] is synonymous with the growth of the digital sector. With such high growth projections, the digital sector is all set to be one of the most profitable and fastest growing segments in India.

Other sectors too are expected to show similar growth rates. For instance, the online spends on travel and hotels, are expected to rise from $11bn to $20bn as currently, only 17% of the Indian population books travel online, leaving a huge part of the market untapped. Digital media is also expected to more than double from $200m to $570m as currently, a negligible fraction pays for digital media. Even among those who do, only 20% spend a significant chunk (about 60-65 %) of their overall online spends on digital media. This leaves a [glossary_exclude]vast[/glossary_exclude] audience segment for advertisers to target, further driving sales. The report also says, that 75-80% of the total online shoppers fall under the category of “occasional shoppers”. The key to unlocking the market here lies in value-added services.

Even in this segment, a major chunk is yet to onboard the online shopping bandwagon. We can see that the segments like [glossary_exclude]e-commerce[/glossary_exclude] and online shopping are exploding with growth potentials. As the markets develop and improve their hold, we can expect multi-fold growth in the near future.