India’s advertising market exited 2025 at a scale where mistakes are expensive and experimentation has limits. With total ad spends estimated at ₹1.86 lakh crore and programmatic buying accounting for more than 40 per cent of digital media, advertising decisions today are increasingly shaped by algorithms rather than manual planning. What once operated at campaign level now plays out across the entire market. Small optimisation choices can have large financial consequences.
Alongside this growth in advertising spend, India’s adtech industry itself is expanding rapidly. Industry estimates suggest the sector is growing at over 24 per cent annually, driven by automation, AI-led optimisation and deeper integrations with commerce platforms. Together, these trends mark a clear inflection point. The Indian adtech story is no longer only about speed and scale. It is entering a phase of strategic maturity.
When AI agents are redefining advertising
Privacy regulation, platform-level changes and evolving consumer behaviour are converging to force a rethink of how advertising works. As the industry looks toward 2026, artificial intelligence is no longer limited to executing campaigns faster. It is becoming the strategic layer through which decisions about targeting, measurement and growth are made.
When efficiency metrics stop telling the truth
For much of the last decade, scale was a competitive advantage. Cheaper reach, faster optimisation and growing access to user data rewarded brands that moved quickly and spent aggressively. That logic is weakening. Predictive bidding systems now control bids, audiences and creative decisions in real time, often faster than human teams can evaluate outcomes.
Why the next adtech battle will be over reach not fees
Meher Patel, Founder of Hector AI, an advanced AdTech platform that uses artificial intelligence and automation to help brands and agencies optimize their advertising campaigns, says the first signs of strain are visible in how performance is measured. “The first metrics to lose meaning are those designed for a world where humans, not algorithms, were doing most of the optimisation. Last-click return on ad spend, blended cost per click and short-window cost per action increasingly reflect how a platform assigns credit, not whether a campaign created real incremental value.”
In a market as large as India, Patel argues, these metrics no longer answer the questions that matter. Advertisers now need to understand whether growth is incremental, whether audiences are saturated and whether additional spend is delivering marginal returns or simply recycling demand.
e4m report on Indian advertising spends
Vaishal Dalal, Co-founder of Excellent Publicity, providing an all-in-one AI-powered platform that unifies the entire advertising lifecycle from strategy & content to media buying & reporting, explains that AI systems optimise toward outcomes rather than visible actions. “Click-through rate becomes a vanity metric. It measures interaction, not intent or true value. A campaign may accept lower CTR or higher CPC if the algorithm predicts stronger downstream results.” In such cases, headline ROAS or single-touch attribution can be misleading, especially when systems prioritise easy wins like brand search or retargeting existing users.
Abhishek Agarwal, President, Judge India and Global Delivery at The Judge Group that provides AI-powered data analytics, marketing automation integration, platform development (like for CDPs/DMPs), and talent for ad operations says this disconnect became evident in 2025. “Many campaigns looked efficient on dashboards but struggled to explain what happened after the first conversion, such as repeat usage or brand lift.” As AI systems optimise faster than teams can interpret, surface-level efficiency loses meaning. Incrementality, cohort behaviour and assisted conversions become more reliable indicators of real performance.
Diversification moves from choice to compulsion
As major platforms tighten measurement and attribution, media planning itself is changing. Diversification is no longer viewed as testing new channels. It is increasingly treated as a way to manage risk.
Retail media has emerged as a central part of this shift because it connects advertising exposure directly to purchase behaviour. Patel highlights the scale of growth in this segment. By the end of 2025, India’s retail media advertising revenues are estimated at ₹24,280 crore, growing at about 26.4 percent year on year. Projections for 2026 suggest this could reach ₹30,360 crore, close to 15 percent of total advertising revenues. At that level, retail media moves beyond experimentation and becomes a core component of media strategy.
Dalal notes that many brands are now structurally diversifying their budgets. Depending on category maturity, around 20 to 30 percent of digital spend is being allocated to retail media, connected television and commerce-led platforms. These environments offer first-party data tied to transactions, access to audiences that are expensive or underrepresented elsewhere and greater resilience as cookies disappear and cross-platform visibility declines. Over-dependence on a small number of platforms, he argues, is now a business risk rather than a strategic preference.
Agarwal adds that brands are increasingly uncomfortable placing 80 to 90 percent of their budgets within two or three platforms. Retail media provides clearer intent signals, while CTV offers scale without the same attribution blind spots. The goal is not perfect measurement everywhere, but a balanced mix of channels that behave differently when algorithms or policies change.
Rising CAC and the return of retention logic
As auctions become more crowded and optimisation more automated, customer acquisition costs have grown volatile. In 2025, sharp CAC fluctuations exposed the fragility of growth models built primarily on acquisition volume.
Patel points out that “scaling spend alone does not guarantee scaling outcomes.” Brands showing resilience are those that create value beyond the first conversion. Signals such as repeat purchases, branded search, verified reviews and engagement within platforms are proving more durable than raw acquisition numbers.
Dalal describes this as a shift from acquisition-led growth to relationship-led growth. “Brands with strong retention can absorb CAC shocks. Brands without it are forced to rebuy the same customer at higher costs.” Retention improves profitability, stabilises forecasting and reduces reliance on volatile media markets. In a privacy-first environment, trust itself becomes a performance driver.
Agarwal observes that brands investing in consistent experiences, transparent data use and habit formation recovered faster from CAC spikes in 2025. Lifetime value began to outweigh headline growth. Predictability, he notes, is becoming one of the most valuable assets in modern marketing.
Adtech grows into core infrastructure
Behind advertising spend, India’s adtech industry is expanding as a software and infrastructure layer. Market estimates place the value of the sector at around ₹220 crore in 2024, reflecting revenues from platforms and tools rather than media budgets.
Patel says this segment is projected to grow at a 24-26% compound annual rate, implying more than a threefold increase by the end of the decade. This signals a deeper change. Adtech is no longer a supporting function. It is becoming core infrastructure that shapes how campaigns are planned, optimised and governed.
Agarwal notes that growth through 2025 was uneven. AI-led optimisation platforms and commerce integrations gained momentum, while legacy tracking-heavy solutions slowed. Investor capital flowed toward companies that could adapt to privacy regulation and platform shifts. Going into 2026, growth is likely to be steadier, but more sustainable.
AI becomes the orchestration layer
If 2025 proved that AI could execute campaigns efficiently, 2026 is shaping up as the year AI begins to orchestrate marketing systems. According to Google, agentic AI will increasingly manage planning and optimisation in the background, guided by human strategic intent. Gemini-powered tools already support the full campaign lifecycle, from generating creative ideas to resolving performance issues.
Measurement is also evolving. Google notes that AI will move beyond reporting toward demonstrating margin impact by connecting behaviour across discovery, video and commerce. At the same time, access to professional-grade creative tools is widening, allowing both large and small businesses to adapt content faster. This is paired with a stronger focus on culture, understanding how Indian users search, speak and engage, and feeding AI systems with people-first, authoritative content.
Sinch’s outlook for 2026 extends this shift into customer communication. The company expects AI agents, voice technologies and conversational messaging to drive a three to fivefold increase in interaction volumes. Ankur Agrawal, Chief Business Officer at Sinch India, says India is emerging as a testing ground for intelligent communication at scale. As deepfakes and spoofing rise, verified and secure communication, he adds, will become central to trust.
A quieter but deeper reset
India’s adtech market is not slowing down. It is recalibrating. The next phase is less about chasing reach and more about building systems that reward credibility, incrementality and long-term value. Metrics are changing, diversification is becoming structural, retention is regaining importance and AI is shifting from automation to governance.
As 2026 approaches, the challenge for brands is not whether to adopt AI or new platforms. It is whether their strategies are resilient in a market increasingly shaped by machines. In that environment, visibility is no longer bought through volume alone. It is earned through trust, structure and decisions that compound over time.