Adspend to grow 9.6% in 2015: Madison

23 Feb,2015

 

By Labonita Ghosh

 

The advertising industry is likely to grow 9.6 per cent this year, says the Pitch Madison Advertising Outlook Report 2015 released last Friday. While this looks like a tepid sequel to a blockbuster year – in 2014, the industry grew by a whopping 16.4% – the forecast is not without promises. For one, the slight uptick takes the total advertising market to Rs. 40,658 crore by end of 2015, from Rs 37,103 crore last year. Last year’s spurt was largely because of the spend on the Lok Sabha and some Assembly elections, says Sam Balsara, CMD of Madison World, which put the report together along with Pitch magazine. “The projection for 2015 is bullish, though tempered by the fact that this is not an election year,” says Mr Balsara. “There are other options, like the World Cup, the continued aggressive push by e-commerce companies, the launch of new channels and the emergence of new advertisers and new brands.”

 

Among the more significant findings, print media continues to be the largest sector in advertising, and is expected to grab a 40% share this year. Brand advertising in print is likely to exceed Rs 16,000 crore. TV is next in line, and expected to touch Rs 15,500 crore. Digital, which has grown phenomenally in the last five years, is now larger than Outdoor, Cinema and Radio put together, will corner 12.6% of the market.

 

The report finds that the FMCG sector, which has always been a dominant player on TV (contributing over 50%) is now also the largest contributor to print media for a second successive year. Though this contribution is just 13%. “Projections for the FMCG sector appear rosy, which is heartening,” says GK Suresh, Head of Marketing (Foods Division) at ITC, adding: “If this continues, I don’t see any reason media spends should not keep increasing as well. This provides a lot of confidence to manufacturers to launch new products, and companies to invest more in existing brands. I think the report forecast is fairly accurate; perhaps even a little conservative when it comes to FMCG.” While the print market constitutes many categories, FMCG, auto, education and real estate together contribute 43% of the total. For TV, the big players are telecom, digital, e-commerce and auto.

 

“I would’ve expected FMCG spends in print to grow more rapidly,” adds Mr Suresh, “mainly because it offers many more opportunities to sharp-focus your advertising, and has less wastage than TV. But we in FMCG are really struggling with digital media right now. Everybody knows it’s growing and we need to be out there, but many of us are using it as just another medium.”

 

According to Piyush Mathur, President, Nielsen India, the 9.6 % projection, close to a double-digit growth, is a realistic one. “A lot is riding on e-commerce, which is at an early stage and that means a lot will happen in 2015 and 2016,” he says. “As e-commerce companies get bigger valuations, there will be more spending on advertising.”

 

Still, there are a few things advertisers need to do differently, says Mr Balsara. According to him, they should focus on effectiveness, and not just on efficiency, while always keeping in mind that the reason they advertise, is to increase their brand parameters. “I have seen marketing teams to be painfully slow on certain media decisions,” he adds. “We often suffer from analysis-paralysis.” Mr Balsara says most brands fail to take full advantage of what the media has to offer by under-resourcing their campaigns. “They will be well advised to focus on fewer brands of theirs, ignore some brands and advertise those few brands heavily,” he adds. “A corollary to this is that since budgets are often limited by P/L considerations, you need to prioritise markets sharply. Spend and exposure in Priority One markets should be at least three times that of Priority Three markets. Otherwise prioritisation is meaningless, and only remains in the hands of the brand manager.” Worryingly, Mr Balsara says he also finds that as media spends get larger and larger, media decisions get taken at lower levels. “These require greater involvement of the corner-room,” he says, and more participation by senior media agency leaders.

 

This story first appeared in ‘dna of brands’ issued dated Febuary 23, 2015

 

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