So will media spends grow at 12 or 8%?

22 Feb,2012


By Johnson Napier


A lot could be said about how the year 2011 has shaped up for the media industry in India. From a growth perspective, it possibly has shaped up the way brand marketers and industry observers had predicted it to be – a mixed year with its usual set of highs and lows. But despite the rise and fall, the enthusiastic performance displayed by the industry year-on-year is giving players from the space, as also research bodies, enough scope to track down this domain exclusively and come up with studies that predict the trajectory and also crystal-gaze into its performance for the forthcoming year.


In pace with its observations on the growth witnessed by the media industry in India, a couple of media (agency) firms have rolled out reports citing healthy growth numbers for 2011 and a cautious-yet-optimistic trend for next year. After Mindshare India released its annual report titled ‘This Year, Next Year: Indian Media Forecast’, it was the turn of Pitch-Madison to reveal its report last week. Joining the above two reports was another finding from research firm Media Partners Asia that unveiled its study tracking the performance of media in 2011-12. (Disclosure: MxMIndia partnered with Mindshare to publish the report digitally and in print form as ‘The Mindshare Indian Media Forecast 2012’)


2011 (cr) 2012 (cr) YOY % growth
Mindshare 33,388 37,397 12
Pitch-Madison 25,594 28,013 9
Media Partners Asia 31,400 34,100 8.7


While most studies have predicted a healthy growth trend what is noteworthy is the optimism in numbers that have been expressed through the various reports which range from a modest 8 per cent to a high of 13 per cent. This translates into adspend monies ranging from Rs 25,594 crore to Rs 33,388 crore approximately. As part of the ‘Mindshare Indian Media Forecast 2012’ published by MxMIndia, Ravi Rao, Leader, South Asia, Mindshare had expressed how predicting adspends has become more complex now than ever was. “The economic outlook is something that one can never get the handle right, with most studies not agreeing on one number. But this is what makes it exciting to look and estimate the Adex growth in India. Group M does yeoman’s service of providing some startling numbers based on science rather than gut, even though India tends to buck the trend away from global predictions.”


When analysed further, the Mindshare study predicts an AdEx growth of 12.8 per cent in 2011 with net revenue totalling INR 33,388 crore. This was driven largely by the medium of television that contributed 18 per cent to the growth followed by Print at 7 per cent and Digital at 30 per cent. In fact for 2012, Mindshare predicts an overall growth rate of 12 per cent that will be led by spends on television – 15 per cent, print – 8 per cent and digital – 30 per cent.


As for the insights by MPA, ad revenues in India for 2012 are expected to clock a growth rate of 8.7 per cent. According to MPA, this growth will be primarily driven by MNCs investing in India and stronger MCG sector, and if there are revisions carried out in 2H 2012. As for the advertising growth across key categories, MPA expects robust growth from the FMCG sector, which is the largest advertising category, contributing 30-35 per cent to total ad spend. The study predicts that MNCs are expected to report robust numbers while a few large MNC accounts are looking to increase spends by 50-70 per cent for the coming year. The other sectors that will see heightened activity include Auto – while traditional companies such as Maruti and Hyundai have reduced spends, global car manufacturers investing in India are driving the overall growth for the sector, Telecom and Life Insurance.


On its part, the Pitch-Madison study (published by Pitch magazine, conducted by Madison) predicts a sluggish growth rate of 8 per cent due to slowdown worries in the second half of 2011. It predicts a cautious trend for 2012 which is expected to pick momentum only in the second half. It predicts a growth a 9 per cent with revenues totalling Rs 28,013 crore.


The industry, on its part, seems undeterred with the varying figures being thrown up and appear comfortable with the current state of affairs so far. Divya Gupta, CEO, Dentsu Media India said, “The estimated adspend growth according to us stands at approx 9 per cent. Also, the growth trajectory may have slowed down versus what was reported in the last few years, but it is still very healthy!”


According to Shubha George, Chief Operating Officer, South Asia – MEC, “Our estimate of 2011 closing numbers is close to 13 per cent. When analysed further, the mediums of TV, Digital and Cinema have outperformed vis-a-vis the overall 13 per cent whereas Print and Radio have been below par. As for 2012, our estimates are a percent lower than 2011 at 12 per cent.”


Admitting that the so-called slowdown may have cast its effect on the growth of the industry, Anita Nayyar, Chief Executive Officer – India and South Asia, Havas Media said that “the actual rate that was predicted was in the range of 11-12 per cent but given the slowdown scare and also the volatility that was witnessed in the markets, the rate was revised to be in the region of 9-10 per cent.” Going forward, Nayyar feels that marketers will tread with a cautious approach as they are yet to see signs of recovery – a phenomenon that will start taking place in the second half of 2012. “Large clients like P&G and other FMCG units have announced a slash in the adspend rates. This indicates a cautious approach that’s being taken by the marketers. Even category-wise, sectors like FMCG, finance etc that used to spend heavily have taken a backseat for the moment. But what is surprising is the marketing drive that has been taken out by sectors such as education, real estate and to certain extent even auto, which are continuing to hike their adspend budgets.”


Presenting a rather comprehensive outlook, S Yesudas, Managing Director – Indian sub-continent, Vizeum India stated that while the industry will grow at 10 per cent, growth will come in largely from three areas. “At a broad level it will come from investments in newer markets with the definition of India changing for many categories and consequent expansions. Share of voice reduction by certain categories will be balanced with increase by certain others which will include new launches particularly in the financial, automobile, IT and healthcare segment. Growth will also come from increased investments in the digital as well as out-of-home space and will be further boosted by changes in the audience buying-selling structure of traditional TV medium,” he asserted.


While some clients may have decided to plug the unwarranted spends in advertising there are others who are jumping into the bandwagon to explore opportunities not found before. But slowdown or no slowdown, the industry appears to be keeping pace with its growth story the way it has been since the past few years and would continue to focus on ensuring that clients get maximum ROI for the monies spent.


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