• Short-form video (SFV) platforms in India have surpassed $200 million in revenue, engaging nearly 250 million users monthly.
• The digital advertising market in India is projected to nearly double by FY2029 to reach $16-17 billion, with video advertising as the fastest-growing ad format.
• Influencer marketing is projected to reach $700-800 million by FY29, and virtual tipping is expected to reach the same amount.
• The rise of SFV platforms and direct-to-consumer (D2C) brands in India is redefining the digital advertising and e-commerce sectors in the country.

The Indian digital landscape is witnessing a significant shift, with short-form video (SFV) platforms taking center stage. These platforms have surpassed a revenue milestone of $200 million, engaging nearly 250 million users monthly. This surge in popularity and revenue is attributed to various factors, including influencer marketing, video commerce, and virtual tipping, which have opened up new avenues for growth and monetization.

The SFV market in India has seen a dramatic increase in daily active users, a 3.6 times surge since the ban of the Chinese app TikTok in mid-2020. This growth has established SFV platforms as a mainstream entertainment format, deeply embedded in India's digital landscape. Interestingly, over 63% of SFV engagement comes from tier 2 cities and beyond, indicating the widespread acceptance and usage of these platforms across the country.

The digital advertising market in India is poised for exponential growth, with projections indicating a near doubling by FY2029 to reach $16-17 billion. Video advertising is leading this growth as the fastest-growing ad format. Mukesh Kumar, an associate partner at Redseer, stated, 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.

The Future of Advertising and Influencer Marketing

Currently, ad revenue represents 1-2% of India's digital ad spend, generating $95-100 million in FY24. However, as platforms shift towards performance marketing, advertising is expected to expand significantly. Influencer marketing, currently estimated at $80-100 million, is projected to reach $700-800 million by FY29, growing at a rate of 40-45%. The popularity of micro- and macro-influencers is a key driver in this growth, with creator marketplaces allowing brands to reach targeted audiences more effectively.

Virtual tipping, a relatively new concept, has gained traction in the last 12 months, especially among audiences engaging in live streaming. Indian users are spending roughly Rs 100 monthly on tips, providing accessible support for creators and influencers. This trend is projected to reach $700-800 million by FY29.

The report also highlighted the potential of video commerce on SFV platforms, expected to hit $5 billion by FY29. This growth is attributed to the maturing user-influencer connections on these platforms. On average, users now spend 30 minutes per day on India SFVs platforms, a shift driven by high-quality, personalized content and user-friendly interfaces that cater to both metro and non-metro audiences.

The Rise of Direct-to-Consumer Brands

The rise of SFV platforms in India mirrors the global trend of consumers shifting towards direct-to-consumer (D2C) brands. The onset of the pandemic and advancements in technology have driven this shift, with consumers now taking complete control of their purchasing journey and decision-making. D2C brands cater to consumers' quest for simplicity, eliminating the hassle of researching, browsing, and culling from a plethora of options, making shopping effortlessly convenient.

D2C brands manufacture, market, and distribute their products without intermediaries, reducing costs, directly interacting with consumers, and ensuring a seamless start-to-finish buyer experience.

More than 30% of consumers prefer to purchase products, especially beauty products, directly from the brand, assuring them of the originality and authenticity of the products. This direct access to consumers and their related data allows brands to generate a considerable margin, leading to a dramatic increase in the number of D2C brands in recent years.