Will start-ups make a comeback in AdEx in 2024?

Experts say while the percentage of start-up spends may not be higher or similar compared to earlier times, it still will be a significant amount that will add to the AdEx growth in 2024

by Sonam Saini
Published - February 22, 2024
3 minutes To Read
Will start-ups make a comeback in AdEx in 2024?

Starting in mid-2022, start-ups reduced their advertising spending due to uncertainty about future investment rounds, and its impact was clearly visible on the AdEx.

According to the recently releasedPitch Madison Advertising Report (PMAR) 2024, the list of top 50 advertisers in 2023 had only onestart-up, as compared to nine in 2022. However, experts believe that after a year of lying low, start-ups have understood that building a brand without advertising will be challenging.

Speaking to e4m recently, Ashwin Padmanabhan, President - Investments, Trading and Partnerships, GroupM – India talked about the comeback of start-ups, which had completely gone off advertising for almost 18 months, this year. He explained that their expenses in the previous cycle were driven by funding, and they went into an overdrive. “Their whole mantra was to get as many new customers as possible at whatever cost, it didn’t matter.” In 2022, they decided to service existing customers profitably. "They have reached a stage where their books are more or less clean. Now their advertising is about sustenance and not about unprofitable acquisition of customers.”

He also shared that the percentage of their spends may not be higher or similar compared to earlier times, but it still will be a significant amount that will add to the AdEx growth in 2024.

According to the PMAR 2024, one of the major reasons that contributed to the lower AdEx growth was the continuation of start-up funding winter, leading to many of these companies completely abandoning their advertising plans, including substantial reduction on spends in performance marketing.

Dream11 was the only start up that maintained its position in top 10 advertisers. However, it ranked tenth as compared to rank four last year. The company spent Rs 700-800 crore in advertising in 2023.

Many start-ups, which previously concentrated solely on top-line growth due to the ease of access to funds at inflated valuations, are now struggling to attract further investments to keep their businesses alive. Meanwhile, many start-ups, such as those in the edtech sector, have halted large-scale investments. “Real money gaming has (also) crippled because of the government’s 28% GST imposition, while crypto currencies are not considered legitimate,” said the PMAR 2024.

It was also noticed that while the start-ups may not have spent significantly overall in 2023 like they have done earlier, but they came forward and spent on large-format shows on TV.

Earlier, Ajit Varghese Head – Network Advertising Sales, Disney Star in an interview with e4m, had shared that start-ups are looking to a comeback and tell their story in a better way. “Now a lot of start-ups are looking to come back and want to tell their stories in a different way.”

However, a senior media planner said that they haven't seen any uptick in spends from start-ups yet. However, he believes that the second half of the year is likely to see more spending from start-ups.  “Our analysis is that the ad spends will start only in the second half of the year,” he mentioned.

While it is difficult to anticipate how much start-up advertising will contribute to the overall AdEx growth, the industry is confident that their return will help the AdEx thrive. Also, with the first half of the year packed with events such as IPL, general elections and the T20 World Cup, the industry is likely to see some spends coming from the sector. In fact, two start-ups, Dream11 and MyCircle11, are among the nine companies that have secured slots for the IPL tender document for associate and special partners.