Indian ad market to grow by 7.8 per cent in 2013: Magna Global

The advertising market in India is expected to grow by 7.8 per cent in 2013, with television and print contributing over two-thirds of all revenue, as per Magna Global's advertising forecast.

Radio and out of home advertising will grow by 8 per cent in 2013. With the investment climate expected to warm up and demand from external economies backed by solid domestic consumption, Magna forecasts the advertising revenue to grow 11.9 per cent in 2014.

The Indian economy experienced its worst near decade slowdown in 2012, with real GDP growing by 4.0 per cent as compared to 7.7 per cent in the previous year (source IMF). Downgrading of the economic outlook by rating agencies hampered the investment climate. The government took some measures to reduce subsidies, opened up FDI in retail and planned to introduce targeted subsidy through direct cash transfer to cut expenditure. However, the impact of these reforms remains uncertain in the short to medium term. In its April report, IMF forecast 5.7 per cent of real GDP growth this year and 6.2 per cent in 2014.

Magna's Global forecast

Magna Global predicts the global advertising market to grow by 3.0 per cent this year, to $486 billion, thus slowing down from 2012 (by 3.9 per cent), and then accelerate by 6.1 per cent in 2014, to $515 billion. Compared to Magna's previous forecasts, published in December 2012, this represents a small downgrade for 2013 (0.1 per cent) and a small increase for 2014 (0.1 per cent). Magna's analysis covers ad market conditions in 73 individual markets, adding three new markets this time: Sri Lanka, Pakistan and Kenya.

The predicted acceleration in ad revenues is in line with expectations of accelerated economic growth in the second half of 2013 and throughout 2014. In its April 2013 report, the IMF predicted 2013 real GDP growth to reach 3.3 per cent globally and to accelerate to 4.0 per cent in 2014. Although the economic forecast is still modest for developed markets (1.2 per cent and then 2.2 per cent growth) and for Europe in particular (0 per cent and then +1.3 per cent), it will in many cases bring the economic environment to the point where business growth triggers not only ad spend growth but, in some markets, faster-than-GDP growth. In markets where marketers have been cautious, they may at last switch from optimisation mode to expansion mode.

Digital media will continue its double-digit growth in 2013, as ad revenues will increase 13.4 per cent to $113.6 billion. Growth will be driven by search (14.6 per cent to $52 billion), video (21 per cent to $6.6 billion), mobile formats (54 per cent to $12 billion) and social formats (39.6 per cent to $8.2 billion). Other formats will barely grow, and actually decline in many markets due to the commoditisation and deflation of display inventory, the forecast reveals.

Television advertising growth will slow down in 2013 due to the absence of global televised events. Following a 5 per cent growth in 2012, ad sales will grow by only 2.0 per cent to $196.5 billion, but TV remains the leading media category (40 per cent market share) ahead of digital. Print formats continue their decline: in 2013, newspaper ad revenues will decline by 3.3 per cent and magazine revenues by 5.1 per cent to a combined $110 billion (a 23 per cent market share). Radio advertising will grow by 1.1 per cent to $32.5 billion and out of home media revenues will increase by 2.9 per cent to $32.6 billion.