Bengaluru, Dec 27 (IANS): With the significant surge in the use of smartphones and Internet, digital ad spending in India is likely to reach $21 billion by 2028, a report showed on Tuesday.

Notedly, growth in user-generated content (UGC) will empower individual creators and influencers to build their digital identity, which brands can leverage for digital ads.

This strong ecosystem of 2.5 to 3 million creators is expected to drive marketing spending of $2.8 billion- $3.5 billion by 2028, according to the report by Redseer Strategy Consultants.

The digital ad spend in the country is set to observe a muted growth in FY23 due to macro factors, post which it would account for 65-70 per cent of overall ad spend in India growing at a CAGR of 19-21 per cent.

"Upon mapping market sizing across media agencies, we observe a significant under-reporting of digital ad spend in India. However, our projection has considered enterprise spends, SMB spends, influencer marketing, affiliate marketing and gaming," said Mukesh Kumar, engagement manager, Redseer.

With users spending around seven hours daily on their smartphones, digital platforms have a good engagement rate.

Some of the most popular performances driving digital advertising platforms include e-commerce, short videos, OTT, social media, long-form videos, and news outlets.

According to the report, global slowdown due to increasing interest rates, energy crisis etc., has led to new-age companies focusing on profitability and controlling their spending on ad and hence slower growth is expected in FY23.

Under the current economic headwinds, the ad market is estimated to grow by 6-8 per cent in FY23, said the report.

"We expect macroeconomic engines to pick up momentum again by FY24 since, after every economic downturn, eventually, consumer morale returns," it added.

As the creator economy grows, it is essential to bridge the gap between brands and influencers through a centralised platform such as the creator marketplace, the report mentioned.