GroupM has released its bi-annual advertising expenditure futures report This Year Next Year (TYNY), forecasting India's advertising investment to reach an estimated Rs 61,204 crore in 2017. This represents a growth of 10 per cent for the calendar year 2017 over the corresponding period in 2016.
GroupM in the year 2016 had predicted a growth of 15 .5 per cent but the overall adex took a downturn due to lower than expected ad spend growth from sectors like FMCG, traditional retail, telecom and sporadic spending in categories like e-commerce. In the January-October period itself the Adex was growing at a lower trajectory than forecasted. Furthermore, demonetisation in the last quarter had a negative impact of about 2 per cent on the total Adex in 2016, keeping the total adex to just 12 per cent (55,671 crore).
Categories expected to pump in money on media in the year 2017 include FMCG (27 per cent), auto (8 per cent), e-commerce (8 per cent), retail (7 per cent) and telecom (6 per cent), in that order.
Looking at the advertising industry worldwide, GroupM estimates the global advertising expenditure (adex) to grow by 4.4 per cent and Asia-Pacific to grow by 6.3 per cent. With an estimated adex growth of 10 per cent, India remains one of the fastest growing ad markets globally. While 80 per cent of incremental ad spends growth in major markets comes from digital media, in India the numbers are more evenly split between traditional and digital media. Digital media accounts for about 40 per cent of the incremental ad spend growth.
Last year CVL Srinivas, chief executive officer, GroupM, South Asia, had told afaqs! that IPL 9, T20 World Cup and state elections would give a further impetus to the ad spends in 2016. We asked him if the upcoming IPL and Champions Trophy would have the same impact for the year 2017.
He says, "We are seeing decent growth in sports advertising on television and on HD channels too which is contributing to the overall 8 per cent of the TV growth. High profile tournaments like IPL, will continue to do very well."
GroupM estimates the digital adex to grow by 30 per cent in 2017 to Rs 9,490 crore. The digital adex is estimated to take a 15.5 per cent share of the total adex this year. There will be a high emphasis on viewability metrics and outcome based optimization. Ad spends will grow on OTT platforms, as internet speeds improve and catch up TV gains ground.
Adding on the digital growth, Srinivas says, "Digital infrastructure in the country is improving, smart phone penetration is going up, 4G penetration is going up and moving into different languages and these are the reasons why digital is becoming a lot more mass than it was earlier and clients and agencies are learning what kind of messaging and content works in the whole ecosystem. The consumers are spending most of their time on digital today. So we see this strong growth in digital to continue in the future."
Television will continue to be the largest medium contributing to the adex with close to 45 per cent share. This year, the growth rate for TV is 8 per cent, with 'Free To Air' channels adding more inventory, and pure HD content gaining ground. The market will also see a consolidation of niche channels.
2017 is estimated to be a modest year for newspapers with 4.5 per cent growth. The increase in ad spends expected from print heavy sectors like Auto, BFSI, e-wallets will contribute to this growth. Vernacular and regional newspapers will see a higher growth rate.
While Radio is expected to grow at a little over 10 per cent, there is scope for the medium to pick up as the Phase III rollout is completed in 2017. Higher growth is expected as stations will see the supply impact of the full year.
Other media such as OOH will witness good traction from sectors addressing rural audience and premium niche audience. As per the trend in recent years, cinema advertising will grow at a high double digit rate of 20 per cent. Cinema consolidation has led to investments in infrastructure, this coupled with the growing acceptance of premium Indian and Hollywood content by advertisers augurs well for the medium.
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