Are Indian brands incurring significant costs due to their dependence on international AdTech companies?

The AdTech market is projected to grow from $579.4 billion in 2023 to $1,496.2 billion by 2030 at a compound annual growth rate (CAGR) of 14.5 pc, according to a marketing report. The report further suggests that the AdTech market is experiencing significant growth due to factors like increased demand for data-informed marketing strategies. The acceptance and growth of audio streaming and podcasts for audio advertising and the growth in-app advertising is also accountable for driving the AdTech market’s growth. From the effectiveness of targeted advertising to the need for personalised marketing has led to a surge in demand for AdTech tools.

A recent report by Dentsu states that the digital advertising industry is estimated to touch Rs 62,045 crore by 2025.  With digital advertising taking the central stage, the dependence on AdTech is likely to increase manifold.

In the given situation and the current digital advertising landscape Indian brands find themselves increasingly dependent on international AdTech companies for their marketing initiatives. While this reliance has its own set of advantages, like access to cutting-edge technology and global reach, it is also followed by significant costs and challenges.

Are Indian brands incurring significant costs due to their dependence on international AdTech companies? 

“As someone deeply invested in the Indian market, I can confidently say yes, many Indian brands do incur significant costs due to their dependence on international AdTech companies,” says Venugopal Ganganna, CEO of Langoor Digital. 

Ganganna elaborates, “International AdTech platforms often lack transparent pricing models, making it difficult for brands to assess true value and negotiate effectively. Hidden fees and markups can inflate costs significantly, leaving brands feeling taken advantage of. Another factor is, data ownership and privacy regulations differ across regions. Additionally, concerns about data security breaches on these platforms create compliance risks for Indian brands.”

“International AdTech solutions may not be designed with the Indian audience and cultural nuances in mind. This can lead to suboptimal campaign performance, wasted ad spend, and missed opportunities to connect with target demographics effectively,” he underlines.

Ganganna notes that the fluctuations in exchange rates can significantly impact campaign budgets for Indian brands using international AdTech.

Ambika Sharma, Founder and MD, Pulp Strategy shares a similar opinion. “One of the major pain points is currency fluctuations. With international AdTech transactions predominantly denominated in USD or EUR, the rising and falling tides of the rupee can result in inflated costs. When the value of the rupee weakens, Indian brands end up shelling out more for the same ad inventory, affecting their budgets and bottom lines,” she adds. 

“Unforeseen costs can disrupt campaign planning and ROI calculations,” she adds.

“Dependence on international AdTech companies often translates to hefty financial commitments in the form of advertising fees, subscription costs, and commissions. These expenses can eat into the marketing budgets of Indian brands, limiting their ability to innovate and invest in other areas crucial for growth,” Kowshik Komandur, Associate Vice President with OnMobile Global.  

Komandur points out data security concerns. “Entrusting sensitive consumer data to international AdTech firms raises concerns about data privacy and security compliance, particularly in light of evolving regulations such as GDPR and CCPA. Indian brands may face legal and reputational risks if their data handling practices do not align with these standards,” he says.

“International AdTech platforms may not always cater to the unique needs and preferences of the Indian market. This can result in generic advertising strategies that fail to resonate with local audiences, leading to suboptimal campaign performance and diminishing returns on investment,” Komandur adds.

“Indian businesses, particularly startups and emerging enterprises, often find themselves grappling with the challenges posed by the international AdTech landscape,” observes Abhil M Nair CEO SmartMatrix Global Technologies Pvt Ltd. 

“While these companies offer cutting-edge solutions and expansive reach, they often operate within a framework tailored for global markets, neglecting the nuanced intricacies of the Indian economy and consumer behavior. The discrepancy between international standards and the realities of the Indian market can lead to misalignment in strategy, inefficiencies in spending, and missed opportunities for local engagement,” he underlines.

Nair elaborates on the drawbacks of relying on international AdTech companies. “One of the most significant drawbacks of relying on international AdTech companies is the financial strain it imposes on Indian brands. The cost structures and pricing models employed by these global entities may not be optimized for the Indian market, resulting in inflated expenses and suboptimal returns on investment. Moreover, the lack of transparency in pricing and performance metrics further compounds the financial burden, making it challenging for Indian brands to accurately assess the efficacy of their advertising efforts and justify their expenditure,” he adds.

According to Sharma, another challenge lies in the limited transparency within programmatic advertising.  “The complex nature of these processes often leaves brands struggling to track their ad spend effectively. Without clear visibility, concerns about inflated costs and wastage emerge, hindering brands from optimizing their campaigns and achieving the desired outcomes,” she adds.

“Moreover, data privacy regulations, like the GDPR and CCPA, introduce compliance challenges for international AdTech companies operating in India. This can impact data access and targeting capabilities, limiting brands’ ability to fully leverage customer insights for highly effective campaigns. The lack of local expertise also poses hurdles for Indian brands. Relying solely on international solutions may disregard the nuances of the Indian market and consumer behaviour. Consequently, campaign performance suffers, resulting in wasted ad spend and missed opportunities to connect with the target audience. Vendor lock-in is yet another factor driving up costs for Indian brands. By being dependent on a single AdTech vendor, negotiating power and flexibility are limited, potentially leading to higher expenses and missed chances to explore alternative, cost-effective solutions,” she further adds.

Charting a Path Forward

“The good news is that Indian brands have several options to mitigate these costs and gain more control over their marketing efforts,” says Ganganna while speaking about the way forward for Indian companies.

“Supporting and adopting homegrown AdTech solutions built for the Indian market offers numerous advantages. Local players usually provide greater transparency, cater to local audiences and regulations, and understand cultural nuances for better targeting,” he adds.

“Indian brands can collaborate and advocate for fairer pricing models and data ownership rights within international platforms,” Ganganna underlines.

According to him, the AI-powered marketing tools can optimize ad spends, personalize targeting based on local data, and provide valuable insights into campaign performance. This data-driven approach can significantly reduce costs and increase ROI.

“Focus on measuring campaign success beyond just clicks and impressions. Consider metrics like brand awareness, engagement, and customer acquisition cost to gauge the true impact of your marketing efforts. This empowered approach will pave the way for more efficient, culturally relevant, and cost-effective campaigns that resonate with the Indian audience and drive sustainable growth,” Ganganna adds.

“Prioritising data sovereignty and compliance with local regulations is essential for safeguarding consumer privacy and mitigating legal risks. Indian brands should explore solutions that offer robust data protection measures and transparent data governance frameworks tailored to the regulatory landscape of the country,” observes Komandur.

Nair adds, “Investing in indigenous AdTech solutions tailored specifically for the Indian market can provide brands with greater control, flexibility, and cost-effectiveness in their advertising endeavors. Additionally, fostering partnerships with local startups and tech innovators can facilitate the development of customized solutions that address the unique needs and preferences of Indian consumers. By leveraging homegrown expertise and embracing a mindset of innovation and adaptation, Indian brands can navigate the complexities of the digital advertising landscape more effectively and unlock untapped opportunities for growth and success.”

Sharma suggests to expand the horizons by partnering with multiple AdTech providers. “This not only helps you leverage different strengths but also allows for negotiation flexibility, potentially reducing costs,” she adds.

“Empower your marketing team by providing them with the necessary training to understand AdTech principles. This will enable them to make strategic decisions aligned with your brand’s vision and goals. It’s crucial to note that the AdTech landscape is an ever-evolving world of opportunities. By staying vigilant and keeping abreast of the latest trends and developments, Indian brands can make informed decisions and mitigate potential costs,” Sharma surmises.