Indian AdEx to increase by 12.6% in 2015: GroupM Report

By afaqs! news bureau , afaqs!, Mumbai | In Advertising
Published : February 02, 2015
The total advertising investment is expected to reach Rs. 48,977 crore this year

GroupM, leading global media management firm, has released its biannual AdEx (advertising expenditure) futures report. Titled 'This Year Next Year' (TYNY), the report estimates India's AdEx to increase by 12.6 per cent in 2015, over last year.

The total advertising investment is expected to reach Rs. 48,977 crore this year.

According to GroupM, the ad spend in 2014 was Rs. 43,490 crore, which reflected a 12.5 per cent increase over 2013. This growth was attributed to the heavy media investment during the general and state elections, as well as increased spends in categories like e-commerce and telecom. The FMCG sector (which contributes to nearly a third of the total AdEx) registered "steady" spends, "growing broadly in line with the industry average," says the report.

"Last year," GroupM says in its report, "began with uncertainties on the political and economic fronts. Once a stable government came to power, the mood changed to one of cautious optimism."

CVL Srinivas

CVL Srinivas, CEO, GroupM South Asia, says, "With a new government coming to power the negative sentiment has lifted but there is still some bit of caution amongst advertisers. We continue to operate in the same zone as last year at an overall level. Digital, TV and cinema are expected to be high growth media channels."

He goes on, "We are seeing a lot more confidence amongst local businesses to invest in brand building than before. This is a positive sign for the industry. Penetration of smartphones, coupled with the popularity of online video, is making FMCG spend more on digital."

Other trends, he adds, include the emergence of categories like e-commerce, and increased competition in telecom. "Both," he says, "are aiding the growth of traditional media channels including print and TV, apart from digital."

According to GroupM, "e-commerce is expected to lead the charge in 2015 in terms of ad spend growth, although from a relatively smaller base than more established categories. There is increased competition in this sector and no dearth of funding. FMCG, auto and telecom are expected to do better than the previous year. More multinational entrants under single brand retail are likely to add to AdEx spending in the retail category."

The recent rate cuts by the Reserve Bank of India, finds GroupM, will play a role in stimulating the banking sector. This year will also see a number of IPOs, as there is a sense of stability in policy and an increased risk-taking propensity on part of investors. "The market will also see higher spends from the Central Government as they showcase their new initiatives," says GroupM.

Prasanth Kumar

Prasanth Kumar, managing partner, Central Trading Group, GroupM South Asia, and CEO Designate, Mindshare South Asia, says, "Over the last few years, Indian media has been in a state of change. The next three to five years will be about embracing technology, which will allow both advertisers and media owners to customise distribution to a premium niche audience with very nominal margin of error. In 2015, programmatic buying will see an impetus, as all media in the future will see automation, backed by smart data and analytics."

According to the report, digital media continues to show maximum growth with an estimated 37 per cent in 2015. Digital has been growing at an average rate of 35 per cent over the last two years. Within digital, video, mobile and social will be the biggest growth drivers.

Television shows a higher growth percentage in 2015 (as compared to last year) with 16 per cent. TV channels are expected to be bullish with cross-media integration through their own digital platforms. The upcoming ICC Cricket World Cup (February and March 2015) is expected to be a big platform for advertisers.

The print medium shows an estimated increase of 5.2 per cent as against the 2014 estimate of 7.6 per cent, says the report. However, print magazines continue to be on the decline, "as several are looking at digital delivery mechanisms."

In 2015, cinema advertising is expected to grow by 20 per cent, as multiplex chains consolidate, as the medium becomes more organised/accountable, and as technology fuels exhibition/distribution (especially in smaller towns). Cinema advertising, at the end of 2014, clocked a 25 per cent increase in spends.

The data in this report is sourced from WPP's global resources in advertising, public relations, market research, and specialist communications.

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