DPDP Rules trigger a ground-up reset for India’s advertising industry; compliance costs up 15%
From consented-first data to clean-room collaborations, the new DPDP regime forces agencies to abandon opaque targeting models, overhaul data practices, and brace for penalties up to ₹250 crore per violation. Industry experts warn: this is a structural, not incremental, change.
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India’s advertising ecosystem is entering its biggest regulatory reset in over a decade, as the Digital Personal Data Protection (DPDP) Rules fundamentally rewrite how agencies collect, process, target, and monetise consumer data. With penalties rising to ₹250 crore per serious breach, every adtech practice- from cookie syncing to profiling- now falls under direct scrutiny.
DPDP demands full visibility into where data is collected, who uses it, how long it’s stored, and how it’s deleted- obligations that are resource-heavy for a sector dependent on fragmented martech stacks and multiple third-party vendors.
Karthik Prabhakar, Managing Partner at PeerCapital, calls the rules “one of the most significant shifts India’s technology ecosystem has seen in a decade,” noting that the move redefines trust and transparency across the digital economy.
“The Rules make transparency a baseline expectation and turn privacy into a measure of maturity… For the advertising and media ecosystem, this is not only about risk management. It is about redefining how trust is built in a data-driven economy,” he says.
Agencies say creatives, media planners and analysts now require mandatory compliance checks embedded across the brief-to-execution cycle.
The rules will also force ad firms to re-evaluate data dependencies, with many realising they have limited control over upstream or downstream partners. Although the ambiguity in the exact responsibilities of Data Fiduciaries and Data Processors has left agencies uncertain about the extent of their accountability.
Industry executives estimate a 10–15% increase in short-term operational and compliance costs, driven by technology upgrades, legal consultations, training, and data infrastructure changes. Yet, most agree the investment is worth it.
The era of third-party data is effectively over
Santosh Singh, Senior Vice President, IT, Dharampal Satyapal (DS Group) Group, noted that the final rules mark the definitive pivot towards a Trust Economy where bulk personally identifiable information (PII) collection will be replaced by a mandate for precision and accountability at every digital exchange. "Certainly, the industry must now invest in consent, making data protection a foundation for commerce and not a cost to it. To the common man, this means a new digital reality giving the citizen the right to erase, correct, and truly control his or her own digital identity." He highlighted that this legal shift is a positive catalyst for FMCG, ending passive data capture and demanding precise consent linked to clear customer value (loyalty/engagement).
According to Shashank Karincheti, Co-Founder & CPO of Redacto, the advertising industry faces a “structural” realignment.
“Targeting that relied on third-party data with weak provenance will need to be rebuilt around first-party relationships and provable consent,” he notes. From enrichment to retargeting, “every cross-app profile will need a transparent trail that can be audited… Silent hoarding of clickstreams and device graphs becomes a liability.”
The law formally ends the long-standing practice of vague cookie banners, implied consent, and buried privacy notices. Nudges and dark patterns, often used to maximise tracking opt-ins, now carry real financial and regulatory risk.
Consent Managers become the new gatekeepers
Redacto’s Karincheti emphasises that Consent Managers will sit at the “front door of data collection” for agencies. With purpose-wise consent, withdrawal options, and audit logs becoming mandatory, agencies will have to rebuild consent infrastructure from scratch.
Significant Data Fiduciaries (SDFs), which may include large ad networks, major agencies, and martech platforms, must also comply with heavier requirements:
- annual Data Protection Impact Assessments,
- algorithmic safeguards,
- one-year activity log retention,
- 72-hour breach reporting to the Board,
- prominent DPO contact details,
- and possible localisation of specific data categories.
Kids’ advertising faces the sharpest disruption
As per Vikas Bansal, Partner, IT Risk Advisory & Assurance at BDO India, Rule 10 introduces strict verifiable parental consent before processing children’s data. This spells major challenges for agencies running kids-centric campaigns:
- consent must be tied to an identifiable adult,
- verification may require digital identity mechanisms like DigiLocker tokens,
- exemptions apply only to narrow use-cases (health, safety, education).
Meghna Bal, Director at Esya Centre, predicts a severe contraction in available channels. “Ad agencies will turn to TV for kids’ ads, but with cord-cutting accelerating, even this avenue becomes questionable… influencer marketing may rise, but weak follower authenticity will hurt ROI, particularly for MSME advertisers.”
She warns that OTT platforms could see a short-term gain, with kids’ profiles managed by parents, but “nothing matches targeted ads in ROI,” leaving agencies with fewer precision options.
Compliance costs and operational friction spike immediately
As per Sourya Banerjee of Jajabor Consultancy, the requirement for “reasonable security safeguards” under Section 8(5) will sharply raise compliance costs for ad networks and agencies.
“Silent hoarding of data, unmanaged flows, and legacy tracking will now become high-risk… compliance costs will undoubtedly rise.”
Legal experts also flag operational choke points:
- mandatory breach notification to users immediately,
- detailed reporting to the Board within 72 hours,
- encryption and tokenisation,
- clear, purpose-wise consent,
- one-year retention of processing logs.
According to Bombay HC Advocate Siddharth Chandrashekhar, the 72-hour breach reporting mandate creates a “deadly choice” for agencies.
“Report incomplete information and risk penalties, or delay and violate the law… details of a breach are often uncertain in the early stages.”
He warns that ambiguity around “legitimate use”, “reasonable safeguards”, and the criteria for SDF classification leaves agencies vulnerable to misinterpretation, and enforcement risk.
A full-stack rebuild of adtech infrastructure
Akshayy S. Nanda, Partner at Saraf & Partners, underscores that the law fundamentally challenges the historical practice of collecting broad data for unspecified future use.
“The requirement that consent must be strictly limited to personal data necessary for a specified purpose forces organisations to redesign products and business models around data minimisation,” he explains.
For agencies, this means:
- building consent-tagged data stores,
- automated deletion workflows,
- mapping all data flows end-to-end,
- overhauling vendor contracts with DSPs, SSPs and attribution partners,
- auditing all sub-processors and retargeting partners,
- establishing periodic re-consent mechanisms.
Data mapping alone, often the weakest link, is now a legally binding obligation.
Privacy-tech becomes the next frontier for agencies
Prabhakar frames this as a massive opportunity. “Privacy-tech will stand alongside fintech and deeptech… winners will be those who treat regulation as a roadmap, not a restraint.”
Tools such as clean rooms, consent orchestration engines, compliant measurement systems and automated breach-runbooks will become standard in every agency playbook.
The transition: 18 months, but no time to relax
Multiple industry experts highlight that the staggered rollout, some provisions immediate, others in 12 to 18 months, should not mislead agencies into delaying action.
Karincheti warns, “Timelines matter… enterprises that start now can phase their work sensibly. Those who try to game the margins will discover that the cost of non-compliance exceeds the cost of doing the right thing.”
The DPDP regime ends an era defined by opaque tracking, aggressive profiling, and third-party enrichment pipelines. A new system—rooted in provable consent, transparent data flows, and verifiable accountability—now becomes the baseline.
Agencies that adapt early will protect performance, trust, and revenue. Those that don’t face a future where regulatory risk, not competition, becomes their biggest threat.
