Small-town India drives next wave of AI-led advertising

India’s digital advertising landscape is advancing rapidly on the back of artificial intelligence, even as consumer understanding of the technology remains limited, according to a new report from LS Digital titled: The Rise of AI-Native Advertising in India: Hyper-Personalisation Meets Vernacular Scale. The study highlights what it terms an ‘AI paradox’, where industry innovation is moving faster than consumer awareness.

The report notes that 99% of consumer searches continue to focus on basic advertising concepts, with only a small fraction exploring advanced or platform-specific topics. Yet, on the adoption side, India has emerged as one of the most receptive markets for AI. Nearly half of Indian consumers reportedly trust AI-generated content, while a large majority are willing to engage with AI-led product recommendations. Brands producing vernacular-first content are experiencing a 30-40% rise in engagement. 

Language continues to be a critical advantage for India. With dozens of official languages and hundreds of dialects, vernacular AI has become central to reaching the country’s expanding digital population. Most innovation in this area is focused on multilingual content generation, voice-led interfaces, and dialect-based targeting. 

The report also highlights a major shift toward Tier-II and Tier-III regions, where affordable AI tools and self-serve platforms are enabling small businesses to participate in digital advertising. By 2030, projections indicate that social commerce in these markets will reach $70 billion.

Despite rapid technological progress, human oversight remains important. Most marketers view AI as an enhancement rather than a replacement, while India’s new data protection law is driving stricter norms around consent and transparency. The report emphasises that the future of AI-led advertising in India will depend on balancing automation with creativity, privacy, and consumer education.