Part 1- Digital Advertising Revenue - Finance Ppl

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Part 1- Digital Advertising Revenue

  1. What is digital advertising?

    2. Digital advertising is a form of marketing that uses online platforms and digital technologies to promote products or services to the intended audience. Digital ads appear on social media channels, search engines, websites, mobile apps, and streaming platforms.

    Digital marketing encompasses a wide range of strategies for promoting products/service with target audience. The prominent ones terms of current trend are: social media marketing, search engine optimisation (SEO), video marketing, influencer marketing, AI driven personalisation and programmatic advertising.

    let me explain each of these in few sentences.

    1. Social media marketing: marketing through social media platforms like Instagram, facebook, linkedn etc.
    2. Video marketing: marketing through short form videos (like tik tok, YouTube shorts and thru OTT platforms.) that have high engagement rate.
    3. Influencer marketing: Influencer marketing involves partnering with individuals who have a strong online presence and a dedicated following (influencers) to promote product/brand/service.
    4. AI driven personalisation: Based on data analytics tools and insights from it, AI generates personalised content including product recommendations for the target customers.
    5. Search engine marketing: focuses on increasing the website's visibility in search engine results pages through paid advertising and search engine optimization.
    6. Programmtic advertising: This one is not a specific type of ad content rather its a technology driven mechanism that automates the buying and selling of digital ad space, using algorithms and real-time bidding to target specific audiences
  2. What do you mean by revenue from digital advertising?

    3. Refers to income earned by social media companies, websites, apps and other digital platforms, from allowing advertisers to place advertisements in digital ad spaces owned by these platforms. As mentioned earlier, such ads can be video commercials or sponsored posts or influencer partnerships etc.

    For the year 2024, the digital media advertising accounted for 51% of India’s total advertising expenditure. (Source: Business line ). Quoting MAGNA’s Global Advertising Forecast report, the news article states that Social media advertising is advancing to be the largest format and is expected to overtake Television in the next five years.

  3. Which digital platform earns the highest revenue from digital advertising in India as of 2025?

    4. In India, Google dominates the digital advertising market by earning revenue via search and video ads, especially through its video platform YouTube, closely followed by Meta and Amazon.
    In 2024, Google's ad revenue was ₹31,221 crore while Meta’s (Facebook and Instagram) ad revenue was Rs. 22,730 crore (Source: Economic Times).

  4. Revenue mechanism:
    1. Parties Involved:

      2. There are four primary parties involved in the digital advertising revenue.

      1. Digital platform (like Website owners, app developers, social media companies) that host space/platform and displays ads.
      2. Content creators are individuals or organizations that creates content (in the social media platforms) that attracts the viewers. Content can be videos, articles, social media posts, etc.
      3. Advertisers are business or individuals who pay digital platforms to show their ads online, in their effort to reach the target audience.
      4. Viewers are the users of digital media platforms who are the target audience of the advertisement.
    2. Flow of revenue:

      3. Let me give a simple example explaining the flow of revenue .

      1. Advertisers pay platforms like Facebook or Google Ads or Youtube or website to run ads.
      2. The platforms host and display the ads either as:
        3. --->Video ads -Ads in YouTube before or during a creator’s video (OR)
        --->as Banner ads or Sponsored posts- Banner ads in blog or sponsored posts in twitter.
      3. The platform then shares part of that ad revenue with eligible content creators (based on engagement, views, or agreed terms.)
    3. Revenue Models:

      4. Some of the common revenue models are

      1. Cost Per Click – Platform earns money when someone clicks the ad placed in the Platform (eg: Applicable when the platform shares links to advertiser’s website)
      2. Cost Per Mille – The platform earns money per 1,000 views of the ad. (as in video ads)
      3. Cost Per Action – Earn money when a user completes a specific action (like buying or signing up for the app)

    In the part-2, we shall read about the taxation mechanism of revenue from Digital advertising