"With telecom operators launching 4G and high-speed Wi-Fi services, mobile-based internet connections are set to surge which will also fuel growth in social media users," P N Sudarshan, senior director, Deloitte India said.
"At the same time, more and more consumers in India are accepting the idea of buying products online through social media. Accordingly, e-marketers will have to devise their strategies factoring in the digital surge," he added.
In the coming years, Deloitte India expects "digital-first brands" (brands that can only be purchased online) to see strong growth across categories such as budget fashion, furniture, jewellery and groceries. These are categories where India has strong design and manufacturing capabilities, thereby allowing companies to set up an efficient supply chain and sell these products at high gross margins, it said.
The report also took note of significant adoption of e-Commerce in the retail medicine sales market. Deloitte India expects that the market for pharma e-Commerce will grow "10 times to $400 million in 2017".
Aggressive 4G rollout plans from major operators and the growing demand for affordable 4G-enabled handsets point towards "2016 being a breakthrough year to kick-start the 4G revolution in India," the report predicted.
The estimated number of smartphone users in India will be 651 million by 2019, a near five-fold jump from 140 million in 2014. The sheer number of people who are online and on social media is encouraging companies to invest in India, including advertising. "As a result, mobile advertising in India has expanded from $25 million market in 2011 to $70-$80 million in 2015, growing at 60-70 per cent annually, according to industry estimates," says the report.
Mobile advertising is gaining momentum through various apps and mobile sites. It has evolved from SMS and call-based marketing into a more sophisticated phenomenon that includes mobile web, in-app ads, mobile search, and social networks. In fact, Google has used its latest version of the Android operating system, Marshmallow, to deliver customised advertisements on the locked screen of a smartphone, silently pushing the ad while the device is being charged. Mobile applications have paved the way for innovations in mobile advertising beyond banner ads. While they work in pretty much the same way as websites, apps are more intuitive, leading to better targeting.
According to the report, users spend significantly more time on apps than on mobile web. India ranks third with respect to app downloads from GooglePlay. "Brands are capitalising on this consumer trend, pushing for larger in-app budgets in the coming years. It is expected that in-app advertisement would be the highest contributor followed by mobile videos and mobile ads. For example, BookMyShow expects to generate up to $4 million in high-margin advertising sales this year and add more video-related content on its website and app," says the report.
Another impetus to mobile advertising is coming from video advertising given the increased consumption of short format videos on mobile. As per the Internet and Mobile Association of India (IAMAI) study, 60 per cent of internet users in India access the internet via their mobile phones now. A recent report from comScore revealed 100 per cent growth in online video consumption in India in the last two years. As a result, companies have started using videos for advertising over the digital and mobile platform as they seem to be more effective than just text and images.