Digital advertising market to double by FY29 to $17 billion, reveals Redseer's report

Since the ban of TikTok in 2020, Short Form Video (SFV) platforms have seen a 3.6x increase in daily active users, establishing themselves as a mainstream entertainment format, revealed Redseer's 'India SFV in 2024: From ‘Likes’ to Monetizing Millions' report. As per the report, the SFV market engages close to 250 million monthly users with over 63% of SFV engagement coming from tier-2+ regions. “India's digital advertising market is set for exponential growth, projected to nearly double by FY2029 to reach $16–17 billion, with video advertising leading the way as the fastest-growing ad format. SFV platforms, with a massive pool of monetizable users play a critical role in reshaping digital engagement and monetization across the country, offering brands a new channel to reach India’s diverse audiences,” said Mukesh Kumar, Associate Partner at Redseer Strategy Consultants.

The report unveils that platforms like Josh and Moj have spearheaded this trend by tailoring content for local languages and preferences, positioning SFVs as preferred platforms for regional audiences. On average users now spend approximately 30 minutes per day on India SFVs platforms, a shift driven by high-quality, personalised content and user-friendly interfaces that cater to both metro and non-metro audiences.

"Brands have come out of experimental phase and started advertising on SFV platform with most of spendings on branding focused activity. However, the ad products of these platforms still needs some improvement when compared to platforms such as Meta or YouTube. When it comes to branding spends, these platforms are becoming more and more mainstream. Sectors like FMCG, Automobile, Fashion are increasingly use these platforms," Kumar explained.

More than 50% of SFV users are monetizable, and their discretionary spending is often directed toward e-commerce, OTT, in-app purchases, and paid gaming services. In addition to advertising, the study also highlights potential for new revenue streams like virtual tipping and video commerce. With roughly 30% of monthly income earmarked for discretionary spending, SFV users are well-positioned to support these monetization models. The report identifies four main user archetypes driving SFV engagement: Value Seekers, Digital Innovators, Household Stewards, and Career Mavens.

When it comes to advertising, the SFV market has generated $95–100 million in FY24, ad revenue currently represents 1-2% of India’s digital ad spend, which is expected to further expand. For Influencer Marketing, it is set to reach $3-4 billion by FY29 and estimated to grow at 40–45%. Meanwhile, virtual tipping is expected to reach $700-800 million by FY29, which is currently at $80-100 millions. The report suggests that tipping has gained traction in the last 12 months, especially among audiences engaging in live streaming. With Indian users spending roughly Rs 100 monthly on tips, this avenue provides accessible support for creators and influencers. However, video commerce is at nascent stage but high potential for e-commerce integration as it is expected to hit $5 billion by FY29.

"When compared to global platforms, these platforms have content creators with regional appeal. The reason behind this being the kind of follower that these content creators are getting here is more than compared to global platform, where the pull of celebrity is lot more higher," Kumar pointed.

Furthermore, with over 99% original content, Indian SFV platforms offer a rich array of genres that cater to varied user preferences, which has resulted in rising base of micro-influencers and significant algorithmic advancements, which reduce content repetition and enhance relevance, thereby distinguishing Indian platforms from global peers. According to the report, the quality of content on Indian SFV platforms remains exceptionally high, with an inflammatory content rate below 0.6% while around 70% of SFV users report rarely or never encountering inflammatory content on these platforms.