Indian Ad Industry: Are Happy Times Really Here Again?

18 Feb,2019

 

By Indrani Sen

 

Indrani Sen

Last week, the advertising and media industry probably had an overdose of data and information to chew, both GroupM and Madison released their annual reports on industry AdEx “This Year Next Year” (TYNY) 2019 and “Pitch Madison Advertising Report” (PMAR) 2019; Dentsu Aegis Network’s arm Posterscopre released a forecast for only OOH industry followed by the TAM AdEx Report and the results of the DD Free Dish e-auction held from February 11 to 14, 2019. It will not make any sense to discuss the implications of all the reports together. Let me today take a look at TYNY 2019 and PMAR 2019 released by GroupM and Madison.

By now, industry professionals are reconciled to the reality that there is a big gap in the estimation of the size of the Indian Ad Industry by the two agencies. However, as an academic I find it difficult to explain the reasons of the same to my students. I was alarmed to find earlier that since 2016, the gap in real terms increased year on year till 2018 as shown in the chart below. It is reliving to find from the recent reports that the same is not increasing further in the estimates made for 2019 by GroupM and Madison. We can probably hope that in another few years the difference between the two estimates will be reduced to 4% to 8%, the acceptable statistical margin of error at the 95% confidence level.

Estimated Size of Indian Ad Industry (Rs Crore)
2016 2017 2018 2019 P
TYNY 55671 61263 70602 80678
PMAR 49480 53158 60908 70889
Difference 6119 8105 9694 9789

 

A comparative analysis of the 2018 adspends by media made in the two reports show that the main bone of contention between the two is in the estimated size and share of TV media. Apart from TV, the differences in the estimated size in rupee value of Print, Digital and Radio fall within the acceptable margin of error ranging from 4% to 8%.The estimated size in rupee value are very close for OOH and same for Cinema. The detailed analysis is given below:

Indian Ad Industry 2018: Estimated Size (Rs Crore) & Share (%)

 Rs. Crore 2018 f   2018  
Media TYNY %share PMAR %share
TV 33577 48 23432 38
Print 17970 25 19467 32
Digital 12337 17 11706 19
OOH 3202 5 3365 6
Radio 2709 4 2144 4
Cinema 806 1 805 1
Total 70602 100 60908 100
Growth over last year 11%   12%  

 

In terms of forecasts for 2019, the growth rates predicted by TYNY for different media are lower than the growth rates predicted by PMAR, apart from Radio where TYNY has predicted a higher growth rate than PMAR. Both the reports agree that the highest growth rate will be in Digital media fuelled by mobile, online video and social media, followed by Cinema though on a very small base. In terms of overall growth, TYNY has pegged it at 14%, 2.4% lower than the prediction of PMAR at 16.4%.

Indian Ad Industry Forecast
2019p 2019p
Rs Crore TYNY %  Share Growth % PMAR % Share Growth %
TV 38612 48 15 27649 39 18
Print 18368 23 2 20442 29 5
Digital 16038 20 30 15612 22 33
OOH 3536 4 10 3750 5 11
Radio 3116 4 15 2401 3 12
Cinema 1008 1 25 1047 1 30
Total 80678 100 14 70889 100 16.4

 

Both the agencies have cited upcoming Parliamentary elections and ICC Cricket World Cup 2019 as major contributor to the growth in ad spends in 2019. While Madison have cited increase in government spending to showcase its achievements, the growth of OTT, increased spending in rural sector and India moving to a consumption society as the other reasons for predicting a high growth for the ad industry, GroupM has highlighted major trends like emerging technology, availability of data, content creation and distribution, etc. as factors contributing to the growth in advertising expenditure. There is no doubt that after two bad years in 2016 and 2017, Indian advertising industry has turned around in 2018 and is poised for further growth in 2019.

Let me turn around and play the role of Devil’s advocate musing over what can disrupt the rosy dreams of advertising industry during next year. Over the last four days all of us are reeling under the effect of the terrorist attack in Pulwama killing 40 CRPF jawans. The entire nation wants revenge and our expectations have increased since the last surgical attack. Such attacks and counter attacks may lead to unforeseen developments affecting our economy and business.

After the results of the last round of state elections, many political analysts think that BJP may have to depend on coalition with other political parties to run the Government in Centre after the next General Election which may affect smooth functioning of the Government. The gross overspending (Rs. 99610 crores over approved expenditure) by the Union Government as reported recently by CAG may have a diverse effect on various government approved projects in future as well as rural development.

If RBI falls in line with the directives of the Finance Ministry, then India’s financial ratings may suffer globally and rupee may face further devaluation in its foreign exchange rate. There could be changes in the domestic as well as foreign policies of US which will have far reaching effect on the entire world and India will not be an exception. To sum up, we are living in very uncertain times when any significant change in internal or external political situations or foreign/ economic policies can adversely affect the growth of our advertising industry. Let us keep our fingers crossed and hope that the predictions for the growth in advertising in 2019 made by TYNY and PMAR will be realised without any major disruption.

 

 

List of my articles related to this topic over last three years:

 

Feb 20, 2018 Mind the TV AdEx Gap

Feb 20, 2017 What is the real size of the Indian Ad Industry

Nov 21, 2016 Post Demonetisation, it’s boom to doom for ad spends

Feb 15, 2016 Boomtime for Media: A Review of Pitch Madison Advertising Report 2016

 

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