IBEF: February 17, 2020
The advertising expenditure (Adex) in India increased from Rs 60,908 crore (US$ 8.71 billion) to Rs 67,603 crore (US$ 9.67 billion), clocking an additional Rs 6,695 crore (US$ 957.93 million) or 11 per cent in 2019. This is considered as the second highest addition to the Adex in a single year in the entire last decade.
Irrespective of the challenges, Adex in India is expected to grow dramatically over the next five years, with India already growing at twice the rate of global Adex, with the latter pegged at 5.4 per cent.
The Pitch-Madison Advertising report was released at an event in Mumbai by Mr Sam Balsara, Chairman, Madison World. He said, "While 2019 has been a tumultuous year for Adex, Adex is bound to grow dramatically over the next five years given that we are one of the larger growing economies of the world and clocking twice the rate of global Adex (11 per cent versus 5.4 per cent)."
He added that India’s contribution to global Adex is currently under two per cent (1.9 per cent) and is expected to increase. He said, "Advertisers need to experiment more with media and do things differently to harness the power of media for brands. There is a same-ness in what most advertisers do; like with TV, a 30-second commercial with a blast for 25-days. We need to do different things. Advertisers are scared to experiment, but it is high time we junk old strategies and bravely take on something new. Media works best when there is some disruption."
The Adex growth rate of 11 per cent in 2019 is lower than Madison's mid-year projection of 13.4 percent and last year’s growth of 15 percent.
The report noted that Digital segment contributed 56 per cent of this growth, which has expectedly grown by as much as 32 per cent, whereas traditional media has grown by a mere 6 per cent.
The report forecasts total Adex to move up to Rs 74,650 crore (US$ 10.68 billion), an increase of Rs 7,048 crore (US$ 1.01 billion), of which Rs 4,387 crore (US$ 627.70 million) or 62 per cent will be contributed by Digital.
Mr Balsara added, "We have seen that even in a not so high-growth year, pole events continue to do well and attract advertisers' attention. Expect IPL and ICC T20 World Cup to pull in substantial monies. This combined with a good festive season in Q4 and good spending by OTT, mobile wallet brands and e-commerce platforms, should make our growth estimate of 10.4 per cent for Adex 2020 come true".
Indian Adex would then have added Rs 21,512 crore (US$ 3.08 billion) in three years by the end of 2020, registering a growth of 40 percent from 2017 to 2020.
The report added that TV, which is the largest medium, witnessed a growth of eight per cent whereas all others are at sub-5 per cent, with the exception of Cinema, which has grown well for the last two years.
The largest contributor to Adex remained TV with 37.4 per cent share, followed by print at 29.7 per cent, digital at 22.9 percent, outdoor at 5.2 per cent, radio at 3.3 per cent and cinema at 1.5 per cent.
The contribution of the digital segment increased in the last decade from Rs 1,030 crore (US$ 147.37 million) to Rs 15,467 crore (US$ 2.21 billion), and currently accounts for 23 percent of Adex.
Digital segment has witnessed a constant growth for the last 10 years and grew again in 2019 by 32 per cent and gaining three per cent share points from TV and Print which lost one per cent and two per cent share points, respectively.
According to the report, all mediums except Digital and Cinema lost share.
Mr Balsara said a quarter-wise analysis showed that unlike in most years, "when Q4 shows a blip because of the festive season, this year Q2 showed a blip on the back of IPL, World Cup and General Elections. In fact, Q3 and Q4 showed a de-growth of three per cent and seven per cent, respectively."
The Chairman added that a broad range of variation in growth rates across mediums was expected, with Digital medium leading the growth at 28.4 per cent and ending the year with 27 per cent share of Adex at Rs 19,854 crore (US$ 2.84 billion).
The forecast for 2020 is muted. While TV is expected to continue to be the largest medium with a 36 per cent share of Adex, it will have a controlled growth rate of 6.8 per cent. The print is expected to end up with a 27 per cent share in terms of share of Adex losing three percentage points while registering a two per cent growth. Whereas Radio and Outdoor are expected to grow at five per cent and six per cent respectively and maintain their share at three percent and five per cent.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.