GroupM has released a global version of its This Year Next Year report. The report predicts that downward revisions notwithstanding, India is expected to grow 7.1 per cent - 7.5 per cent in FY 2020-2021 (Fitch/IMF), with an investment cycle revival and sustained consumption being the key drivers. Downside risks remain: rising protectionism, a possible slowdown in global economy, and bad debt on bank balance sheets continue to hamper domestic investment. Inflation and deficits will mostly remain largely under control, as public investment will grow only modestly.
Here are some highlights from the Indian section of the report
• Auto: modest-to-high ad spend growth Recovery is expected in 2020 after a slowdown in 2019. Clearance of old stocks before new emission standards come into effect (April 2020) will boost sales in Q1. As usual, demand for motorcycles and tractors will be linked to a normal monsoon, improvement in farm/rural incomes and job creation - all of which remain uncertain at this point. Passenger vehicle, scooter and commercial vehicle advertising should see modest to high growth.
• FMCG: high ad spend growth FMCG will see robust volume growth as demand will remain broad-based. Rural demand will grow much faster than urban demand, aided by direct benefit transfers, farm support prices and other government schemes that increase household income. Urban demand will remain steady as a growing preference for premium and natural/ chemical-free products boosts volume.
• E-commerce: Very high ad spend growth Robust double-digit growth is likely as e-commerce expands to smaller towns, more millennials/GenZ go online and consumers adapt to digital payments. Internet and smartphone penetration growth will continue at a fast pace, leading to huge opportunities for e-commerce players.
• Retail: High ad spend growth consumer trends of experiential shopping and the need for wellness and premium products will drive good volume growth. Foreign brands entering India, consolidation among established players and e-commerce buying stakes in established names are all likely to support growth in retail advertising investment.
• Services: Modest to high ad spend growth services have been driving the economy over the last few years and will continue to do so in 2020. The major segments of health, travel & tourism and transport will see good growth as consumers' aspiration to travel and gain new experience rises with income.
• Telecom: Modest ad spend growth in telecom will remain mixed: Handsets will see tremendous volume growth (especially low tomid-priced handsets), but incumbent service providers will see low-to-moderate revenue growth as they fight to r etain market share.
• Media: TV will have good ad spend growth across key categories; the T20 cricket World Cup will be a fillip. Print will record minimal growth on the back of Hindi and regional language dailies; English will decline. Radio will remain a key medium for localized, tactical advertising and will be driven by auto, retail and FMCG. Cinema and outdoor will see robust growth as more people flock to cinema screens, the number of multiplexes increases and theater owners use better AV tech to attract audiences. As for digital, strong double-digit growth driven by video and e-commerce display may result in digital spends overtaking print at some point in 2019.
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