Jaldi 5 with Venkatesh S, Magna Global: Unlikely that web advertising will take over traditional in next 5 yrs

05 Dec,2012

This is the time when adspend forecasts are made and MxMIndia had featured the IPG Mediabrands’s Magna Global forecast for adspends in 2013 and a review of spending in 2012. Magna Global is the media intelligency and investment entity of IPG Mediabrands.


MxMIndia interviewed the Bengaluru-based Venkatesh S, EVP and Director Intelligence Practice at Magna Global on the study.


01.   We know it’s tough to forecast what’s going to happen in the next six months, but given past experience, do you anticipate much variance between the Dec 2012 and June 2013 reports?

Unlike stockmarket reactions to economic environment, the advertising industry will not see overnight changes.  The market will tread the cautious route and we are hoping that right policy actions and initiatives from the government will fuel the economic wheel in 2013.  Other than four State Elections in H1 of 2013, no significant additional media properties are in the pipeline which will attract advertising budgets and we expect the growth in H1 similar to that of 2012. Not ruling out marginal adjustments we don’t anticipate much variance in our June 2013 forecast review.


02.   The secondmost populous country in the world is nowhere amongst the Top 10 adspend countries until 2017. Is this something that we should be ashamed about? Can anything be done to shore up India’s position?

In terms of revenue per person, India is lowest in the world at 6$.  China in the region is far ahead at $28.  This will continue to remain low as long as we understand and respect the forces shaping the media value.  While product innovation, technology, competition, a growing middle class and lifestyle indicators will determine the demand side of the media value, rigorous understanding and interplay of supply, measurement and accountability by all the stake holders is the requirement. Once the balance between these forces is struck is when we see any improvement in ad per capita. Per capita being low is one of the advantages that make India attractive to global players.


03.   Internet has been growing at a phenomenal pace in the past, but in terms of adspends, it is still way below television and print. When do you see this gap between print-tv and digital narrowing?

Categories like technology and e-commerce have already overtaken print.  Telecom and BFSI spends are increasingly skewed towards Internet. On the other hand, verticals large like FMCG and Automobile are below industry share.  While the trend of eating into other category share will get increasingly significant, it is unlikely that web advertising will take over traditional in the next 5 years.  It took China 12 years to overtake newspaper but television still continues to be the lead category like in other regions.


In internet, do you see mobile galloping ahead of traditional web advertising?

Though Mobile penetration in India is significantly higher than PC penetration, the Mobile advertising market is also more fragmented and underleveraged compared to Web advertising.  The cost of access (both in terms of data usage and handsets) limits the audience base for rich media advertising formats.  Simpler, more basic forms of mobile advertising like SMS, IVR and other voice-based options like “Missed Call” (an option uniquely positioned for the Indian user) are being adopted by most advertisers for their shopper programmes and direct marketing channels on a regular basis but these are high volume, low value options and do not contribute in any meaningful way to the mobile advertising revenues for the industry.  We do not see mobile advertising galloping ahead of traditional web advertising.


04.   Newspapers are growing at a steady rate, and the third highest in terms of growth %. Can you throw some light on where is this growth coming from… regional, English, Hindi….?

India is one of the very few countries where the newspaper continues to be relevant and is growing and commanding a 39% marketshare.  Literacy rate at 74%, growing access to education and Print reach at 20% suggest enormous growth potential for the category.  While the readership growth story is favoring English marginally, the value and volume growth will come from Vernacular because of the sheer foot print.  And within vernacular, the growth will come from outside of top editions.


05.   The growth of OOH has been consistently high – globally as well as in India. Any noteworthy trends?

Display including Digital, Transit and Ambient makes the market and over 50% of the industry revenue is from billboards. The current generation of media owners are playing up technology and innovation, in addition they are also infusing transparency into the system which will boost confidence in this measurement short medium.  With the increasing focus on infrastructure development,  PPP model is emerging in a big way.  Opening up FDI in retail is an opportunity to grow ambient media


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