Why advertising agencies can no longer afford single-sector dependence

When India’s real-money gaming sector hit a regulatory wall earlier this year, the tremors were felt far beyond the gaming platforms themselves. Advertising agencies and adtech firms that had ridden the meteoric rise of gaming revenues suddenly found themselves staring at drying pipelines, unpaid campaigns, and reworked client rosters.

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The episode, industry insiders say, is a cautionary tale for the entire advertising ecosystem: dependence on a single high-growth category is no longer a strength- it’s a ticking time bomb.

According to GroupM, India’s advertising industry is projected to touch ₹1.64 lakh crore in 2025, with digital commanding nearly ₹99,000 crore of that pie. Yet, even within digital, the dependence on a few “hot” verticals: gaming, fintech, crypto, and influencer commerce- has grown disproportionately.

Bhavesh Talreja, Founder and CEO of Globale Media, estimates that India’s RMG (real-money gaming) market alone accounted for up to ₹4,500 crore in annual ad spends before new regulations curbed promotional activities. “If an agency derived even 30–40% of its revenue from gaming, any policy shift could wipe out a large chunk of its topline overnight,” he says.

Talreja’s firm, which works with digital-first brands across verticals, has taken deliberate steps to spread risk. “We ensure no single category contributes more than 20% of revenue. It’s not just prudent- it’s vital for long-term resilience,” he notes.

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His three-pronged approach involves diversification across sectors and geographies, integration through AI-led programmatic tools, and deep partnerships with publishers and OEMs. “The agencies that evolve beyond category dependency, focusing on data, transparency, and measurable outcomes, will lead the next growth phase,” Talreja asserts.

The illusion of specialization

The idea of specialization- becoming the go-to agency for one booming category once seemed like a smart play. But, as Nisha Singhania, Co-Founder and Director of Infectious Advertising, points out, “What seems like specialization can quickly become vulnerability when external factors change overnight.”

The crash of crypto, the cooling of edtech, and now the gaming clampdown all underscore a common lesson: when your clients’ industry sneezes, your business catches a cold.

“Agencies that over-index on one industry tend to mirror that industry’s fortunes, for better or worse,” Singhania says.

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Infectious Advertising has consciously built a sectorally balanced model, with clients across FMCG, finance, real estate, retail, hospitality, and B2B. The agency has also extended its capabilities beyond traditional creative work- launching its content arm Epidemik Content and developing strategic tools to engage clients throughout their brand journey.

“This multi-pronged approach ensures we remain future-ready, regardless of category cycles,” Singhania explains.

The investor mindset for agencies

Kapil Arora, COO of Ogilvy Indonesia, likens agency portfolio planning to financial investment strategy. “Centre around a few anchor clients and stable categories, double down on big bets where you have strength, take calculated risks on emerging stars, and future-proof with low-margin experiments in new services or models,” he advises.

The key, Arora says, lies in balance.

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“Any category that’s lowly regulated or sits under the ‘sin tax’ umbrella- like gaming, alcohol, or crypto, is vulnerable to abrupt policy shifts,” he cautions.

Even geopolitical volatility, while less direct, can affect campaign strategy or client confidence. The lesson, he says, is simple: “Single-category overreliance is risky, especially if that category isn’t a staple or established enough.”

Beyond gaming: new fault lines emerging

If gaming was the latest victim of over-concentration, other sectors may be next in line. Rohit Agarwal, Founder and Director of Alpha Zegus, warns that fintech, crypto, healthtech, and influencer commerce are equally fragile.

“These are high-growth but high-regulation zones. A change in UPI transaction caps can shake fintech ad spends overnight, or new health data laws can freeze influencer campaigns,” he explains. Even food delivery and quick commerce, he adds, are vulnerable to FSSAI or pricing regulations.

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Agarwal describes overreliance as “building dependency, not a business.” His firm has diversified across three pillars- gaming and tech marketing, content studios, and influencer SaaS tools- to maintain stability.

“We also cross-train our teams so we can reorient from gaming to consumer tech or lifestyle within weeks,” he says. “The agencies that survive the next five years won’t be the biggest- they’ll be the most adaptable.”

Diversification isn’t just a hedge- it’s a growth strategy

While diversification is often discussed as a defensive measure, industry leaders believe it can also fuel growth. As Talreja notes, the slowdown in one category often creates openings in another.

“When gaming spends slowed, we saw a surge in OTT, retail media, and vernacular entertainment,” he says. GroupM’s mid-year report projects digital adex growth of 27% in 2025, led by these emerging sectors. Agencies that anticipate these shifts can redirect talent and resources to capture new opportunities.

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At Infectious, diversification has also driven creative evolution. “Each sector brings unique challenges and insights,” Singhania says.

“Working across categories helps us spot consumer patterns that single-sector agencies might miss.” This cross-learning, she adds, strengthens both creative output and strategic agility.

The new metrics of resilience

Agencies once measured strength by the size of their marquee accounts. Today, resilience is defined by portfolio diversity, tech adoption, and organizational agility.

“Markets move at the speed of policy and platform updates,” Agarwal says. “You can’t build a moat with just creative excellence anymore- you need dynamic structures that can pivot as fast as your clients’ industries evolve.”

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For some, that means embedding data intelligence at the core. For others, it’s about expanding horizontally into new service areas such as content creation, influencer management, and performance marketing. The goal is to create multiple engines of revenue that can offset each other when one slows.

As Arora puts it, “Agencies must think like investors- diversified, data-backed, and disciplined.” The winners will be those that not only spread their risks but also invest early in the skills and systems that make them fluid.