Ad-tech gains momentum in India as investment rose 208% to $8 million in CY21
As digital advertising takes centrestage, the advertising technology (ad-tech) space seems to be the new favourite among investors. According to data sourced by venture capital tracker Tracxn, funding in the ad-tech sector grew by about 208% to eight million dollar in CY2021, from $2.6 million in CY2020. The sector has raised a total of $3.8 million in CY2022, as of date. “As a sector, its compound annual growth rate (CAGR) is projected to be in the nine to 13% range over a 10-year horizon. The recent focus on customer experience management (CXM), intelligent automation and driving better consumer engagements have accelerated growth and investment in this space in the last 18 months,” Gautam Mehra, co-founder, ProfitWheel, a SaaS startup, told BrandWagon Online.
As per a report by advertising agency dentsu, digital advertising spends in India jumped 35% to reach Rs 21,353 crore by the end of 2021, compared to Rs 15,782 crore in 2020. Furthermore, the report projected that digital advertising spends will reach Rs 35,809 crore by the end of 2023. “The ad-tech space will boom over the next four to five years. From a platform perspective, the key will be to evolve continuously and provide technology solutions to ensure digital ads can be used effectively,” Karthik Venkateswaran, co-founder and CEO, Zocket, an ad-tech SaaS platform, added.
Ad-tech firms claim that the fund raised by them has primarily been directed towards product development and expansion of capabilities. “Investments raised are primarily used as smart growth capital and are being invested in enhancing product capabilities and in driving global growth and go-to-market (GTM) initiatives,” Anand Gopal, COO, Voiro, stated. Similarly, with the funds raised, Profitwheel aims to create and strengthen its core product offering which allows marketers to sharpen their audience understanding by looking at sources such as Google, Meta, TikTok, Snapchat, among others. Thereafter, it aims to solve for improved audience and insight investment strategies.
The data from Tracxn also revealed some of the top investors in the sector. These include Singhal Family Charitable Foundation (invested in ProfitWheel), Mela Ventures (Voiro), Pivot Ventures (ProfitWheel), Modulor Capital (Botman), among others, in CY2021. Meanwhile, top investors in CY2022 are JITO Incubation and Innovation Foundation, IPV, Kalaari Capital, Kettleborough VC, as of date. Top funded companies in CY2022 are Zocket ($3.4 million), Coffee ($5,16,000) and Com Olho ($2,41,000).
While the industry continues to grow, industry stakeholders believe that the adoption is still slow due to the pricing model. Typically the ad-tech space is dominated by digital marketing agencies who charge about 25-30% commission for such services, Karthik said. “Self service ad-tech platform, that allows marketers to take direct control of their campaigns, is key as that will bring the pricing down to about five or 10%. Technology will bring down the cost in the overall ad world as well,” he stated further.
For Gopal, ad-tech is a competitive environment but consumers and brands alike will always pay for quality. “We will continue to see the industry evolve to a place where technology minimises revenue leakage through fraud or inefficiency – thereby ensuring that the right price can be commanded and value drivers continue to be rewarded,” he elaborated.