Ad market to grow in 2002

By , agencyfaqs!, na | In Advertising | December 05, 2001
A recent report prepared by the Zenith Optimedia Group sees single digit positive growth in advertising next year

agencyfaqs! News Bureau

According to a recent report prepared by the Zenith Optimedia Group, which looks at trends in global advertising expenditure, there is a chance for single digit positive growth in the Indian advertising industry next year. The report also seeks to allay fears that the events of September 11 will have a negative impact on advertising, optimistically predicting a recovery. This is the first forecast to be released after the events of September 11.

In fact, according to the report, the current year had set off on an optimistic note. While the first quarter (Q1) of the year 2001 had seen good growth over the same period last year, the second (Q2) and third quarters (Q3) have shown dips in ad spends, and quarter four (Q4 of 2001) is expected to see lower ad spends compared to the same period in 2000.

Though this negative sentiment will be carried over to Q1 of 2002, the report forecasts a levelling off of the trend, in Q2 2002, and recovery Q3 onwards. However, the report seems to indicate certain sectors of the advertising like outdoor and cinema are expected to either remain stagnant, or to go into decline.

Going by advertising spends the report sees dotcoms, telecommunications and financial services as weak, while tobacco and alcohol advertising will be hit by new restrictions. The report warns that branded FMCG advertisers, to grab share-of-voice and so share-of-market, will exploit an undersold media market. The report also foresees a recovery in the travel and leisure/sport segments with the World Cup soccer and winter Olympics in 2002, and further out, for household durables to respond to deferred demand.

The total advertising expenditure (calculated on the basis of current prices) which was Rs 71,312 million in 2000, showed a marginal increase to Rs 78,552 million this year, according to the report. The report forecasts that the spend will go up to Rs 85,931 million in 2002, and reach Rs 103,834 million in 2004. Estimated ad expenditure on print stood at Rs 35,064 million in 2000, and was Rs 38,217 million in 2001. This is expected to go up to Rs 41,419 in 2002, and Rs 48,884 million in 2004. TV expenditure in the year 2000 was Rs 28,098 million, Rs 31,775 million in 2001, and is expected to go up to Rs 34,987 million next year.

This figure will touch Rs 43,543 million in 2004. While the advertising spend on all media is going up, spending on cinema advertising is going down. While it stood at Rs 350 million rupees in 2000, it went down to Rs 280 million this year, and is expected to grow marginally to Rs 295 million in 2004.

Despite the rise of the Internet, and the preference of media planners for TV, which has greater exposure, print is expected to hold on. Right now, going by percentage share of advertising expenditure by medium, print had the lion's share with nearly half the ad spend - 49.2 per cent in 2000, and 48.7 per cent in 2001. This figure is estimated to remain more or less the same with 48.2 per cent in 2002, and hover at 47.1 in 2004.

Television had 39.4 per cent of ad sped in 2000, 40.5 per cent in 2001, and is expected to have a 40.7 share in 2002. That figure will reach 41.9 per cent in 2004. For radio, the corresponding figure was 2.5 per cent of the total ad spends in both 2000 and 2001. This figure is expected to rise to 2.9 per cent in 2002, 3.2 per cent in 2003, and 3.3 per cent in 2004.

With the earlier trend of screening ads before movies showing a marked decline, cinema, as a medium, is losing out on the percentage share of ad spend. Last year, it stood at 0.5 per cent, and this year it fell to 0.4 per cent. After decreasing to 0.3 next year, it is expected to stagnate at that figure till 2004.

According to the report, outdoor too will decline. Spends on outdoor advertising stood at 8.4 per cent last year, 8.0 per cent this year, and will be 7.4 per cent in 2004.

The report also foresees a growth in overall ad spend, arguing that at the most conservative estimates, GDP growth is expected to be 5.5 per cent and inflation between 4.5 per cent and 5 per cent. The report calculates the ratio of ad spend to GDP as being between 0.32 per cent and 0.34 per cent - a figure supposedly growing slowly. The report also says that government incentives to spending on infrastructure and the concessions to the food processing industry among others, will give a boost to the economy in the latter half of 2002, and says that GDP growth should be back at 6 per cent-plus 2003 onwards.

The report does not see any dramatic impact as a result of the attacks on September 11. It says though travel advertising was hit hard, the sector will improve, as it has done in the past, and asserts that the terrorist attacks briefly disrupted but did not derail the advertising business.

© 2001 agencyfaqs!

© 2001 agencyfaqs!