India Adtech and Martech
India’s digital advertising market is about Rs 28,000 crore – 35% of the total Rs 80,000 spend, according to Group M’s ‘This Year, Next Year’ (TYNY) report. The charts below from Business Standard based on report provide the full picture:
Denstu’s Digital Advertising report offers a slightly different set of numbers but the broad trends are similar:
Across both these reports, we can estimate the digital advertising spend in India to be about Rs 25,000 crore. Revenues of Google and Facebook in India for the year ended March 2020 were about Rs 18,000 crore, as per Exchange4Media. “Google accounted for lion’s share of digital advertising in India with gross ad sales of Rs 11,442.3 crore in FY20 compared to Rs 9,203 crore in FY19. Facebook has seen a massive jump in its gross ad billing at Rs 6,612.6 crore in FY20 compared to Rs 2,253.7 crore a year ago.” Their duopoly accounts for over 75% of the India digital ad spends and is rising.
Most of this spend is towards performance marketing (primarily new customer acquisition). Startups flush with VC and PE funds, along traditional companies racing to go digital by investing their profits, are fuelling the arms race for new customers.
In contrast, the spend on engagement with existing customers is puny. There are 4 primary digital channels to engage with existing customers: SMS, Email, Push Notifications (PN), WhatsApp. (PNs are not priced on a transaction basis, but come as part of the capabilities offered by martech platforms.)
- SMS: Total spend is about Rs 4,000 crore, of which about 45% (Rs 1800 crore) can be considered as marketing spends. The rest is transactional messaging (15%) and spam (40%). (Unit cost of an SMS is 13 paise, with government entities paying much lower.)
- Email: Total annual spend is about Rs 175 crore. ((Unit cost of an email is about 1-3 paise.)
- Martech platforms: This market is about Rs 500 crore
- WhatsApp: This is still nascent and about Rs 50 crore. (Unit cost of a WhatsApp message is about 30 paise.)
Thus, the aggregate annual spend on martech is about Rs 2,500 crore. This is a tenth of what is spent on digital advertising of Rs 25,000 crore. In other words, brands spend about 10X more on new customer acquisition as compared to engagement with existing customers. (One could quibble over whether the entire digital advertising spend is for acquisition or not, and how much of it is for B2B marketing. Whether the adtech:martech split is 90:10 or 85:15, the fact remains that only a small fraction of the Indian marketer’s budget is spent on customer retention and growth.)
Enlightenment (and change) needs to start with a simple fact that most marketers have forgotten as they have sought to focus on every customer with equal enthusiasm: “All customers are not equal.”
