13.5% AdEx growth in 2017: Madison

16 Feb,2017


By Labonita Ghosh


In February 2016, when Madison predicted that the Indian advertising industry would grow by 16%, it seemed overly-optimistic. Now it seems that Madison’s annual forecast report for that year would’ve been on the mark but for a small detail: a ‘tsunami’ called demonetisation. This derailed the entire industry, which eventually grew by only 12.5% last year as against the projected 16.8 %. Demonetisation also knocked off Rs 1,650 crore to settle at an industry size of Rs 49,480 crore, in the wake of a cash crunch and a drop in consumer off-take, which led to a lot of advertisers pulling out of campaigns in the last two months of 2016.


Sadly, we haven’t heard the last of it. In 2017, the industry is expected to grow 13.5% mainly because the months of January to April will be the ‘recovery phase’ from the currency crisis. “My advice to advertisers would be to intensify campaigns during this period, and also have new product launches,” says Sam Balsara, Chairman of Madison World (who released the Pitch Madison Annual Report on Wednesday), mainly to make good the damage wreaked by demonetisation.


Still, 2017, says the report, promises to be an exciting year for advertising. At a projected growth of 13.5%, the size of the industry may be a likely Rs 56, 152 crore. And this optimism for robust ad expenditures, comes on the back of high government investment in infrastructure, lower corporate and personal taxes for small and medium companies, good government support for the disadvantaged, and the general expectation of yet another year of high GDP growth. While the projected growth in the first four months is likely to be only 8%, ad expenditure will pick up between the months of May and October, to stand at a projected 14% growth. And since adex touched a low in the months of November and December of 2016, growth in the corresponding period in 2017 might – by comparison –appear as high as 24%.


Television: Sector-wise, TV was still the biggest contributor to adex, registering a 9% and Rs 1,570-crore growth to reach the industry-size of Rs 18,831crore. This was largely propelled by FMCG (Rs 692 crore) and Telecom (Rs 475 crore), even though it lost an estimated Rs 850 crore to demonetisation. In 2017, TV will remain brands’ favourite medium and is projected to grow by another Rs 2,460 crore (13%) to close on Rs 21,300 crore. The forecasted reasons for this are organic growth coming from established FMCG advertisers as well as aggressive new players like Patanjali, and new channel launches by the existing networks.


Print: Print grew by 7% in 2016 (three percentage points lower than the forecast for 2016), to stand at Rs 18,151 crore. In 2017, it is expected to grow by 9.5% to touch Rs 19,869 crore. Most of this growth will be because of dailies, and regional publications and new editions introduced by current publishers. As well as advertising from ‘print loyalists’ like auto, education, durables and mobile phones


Digital: This was the (not-so-big) surprise. Digital was hardly affected by demonetisation, and grew by a whopping 43% to register an industry size of Rs 7,315 crore. Consumption of digital video content, which sparked huge spends on online video advertising in 2016, coupled with mobile displays, fuelled the growth of digital advertising, and will continue to do so. In 2017, digital is expected to grow to 25% to touch Rs 9,144 crore.


Radio: Grew by 13% to register an industry size of Rs 1,749 crore in 2016. BFSI, media and auto advertisers were the main contributors to this growth. In 2017, radio is predicted to grow by 15% to become Rs 2,008 crore, and the likely reasons are greater aggression by e-commerce and mobile-wallet companies; the emergence of new radio stations who have won bids in Phase III auctions, and organic growth among retail and local advertisers


OOH: The out-of-home market grew by 9% to register an industry size of Rs 2,910 crore, on the backs of retail, hospitals, education, real estate and restaurants, who are the biggest advertisers. As per the forecast, in 2017 OOH will grow by 11% to reach a size of Rs 3,234 crore, as e-commerce, M-wallet apps and telecom and mobile handsets will start advertising more aggressively using this medium.


Cinema: Big-screen advertising grew by 12.5% in 2016 to settle at Rs 523 crore – which makes it a marginal player of all advertising media. In 2017, it is expected to grow by 15% to reach Rs 601 crore.


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