Real money gaming sector re-evaluates ad spending as industry shifts

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The gaming industry’s evolving structure is set to have an influence on the advertising sector by the conclusion of Fiscal Year 2024 (FY24), with ad expenditure in India projected to grow at a moderated pace of 6%, down from the previous year’s 12%, reaching an estimated $16-17 billion. A recent report from RedSeer highlights the repercussions of reduced consumer spending over the past few quarters, alongside the significant effect of the 28% Goods and Services Tax (GST) implementation on online gaming.

Live Mint referred to this report, titled ‘Breaking barriers: Rise of challenger platforms in the digital advertising landscape,’ which indicates a shifting trend in advertisement expenditure (adex), with the e-commerce sector forecasted to witness a substantial 15% increase in FY24. Sectors like consumer durables and travel and hospitality have also maintained their adex spending, while categories such as gaming and education experienced notable declines. Moreover, advertisers are anticipated to explore alternative platforms like retail media and content platforms for their broader reach and potential for higher conversion rates.

Despite facing immediate challenges, the advertising industry has undergone transformation to adapt to emerging platforms, evolving consumer behaviours, and technological advancements. The report anticipates a consumption rebound by 2029, with a projected advertising spend growth of 9-10% Compound Annual Growth Rate (CAGR) over the next four to five years. Digital advertising is expected to overtake the overall market, growing at 11-12% and claiming a larger share of the advertising landscape, which currently stands at 55% of total spending in FY24.

Internet users are set to surpass television viewership in the coming years, reaching an estimated 800 million. The advertisers are presented with a significant opportunity, given that this demographic spends nearly one-third of their waking hours online. Retail-led sectors like consumer goods, e-commerce, electronics, and automobiles dominated digital ad spends in FY23, accounting for 60% of the market. However, this year, the consumer sector is expected to witness increased spending from digital-first brands and legacy brands transitioning towards digital platforms.

Looking ahead, several key trends are expected to shape the advertising landscape, including the cost-effectiveness of influencer marketing, the accelerated growth of performance advertising, and an increased focus on reaching audiences in tier 2 and 3 cities. Developments in programmatic buying, contextual targeting, and the integration of AI across the advertising value chain are likely to redefine advertising strategies in the coming years.