GroupM estimates 10% AdEx growth in 2017

15 Feb,2017


By A Correspondent


Media services conglomerate GroupM released its biannual advertising expenditure futures report ‘This Year Next Year’ (TYNY) 2017 on Monday forecasting India’s advertising investment to reach an estimated Rs 61,204 crore in 2017. This represents a growth of 10% for the calendar year 2017 over the corresponding period in 2016.


As per GroupM, the adspends in 2016 were Rs 55,671 crore. Even though the year began on a very optimistic note, the overall AdEx took a downturn due to lower than expected adspend growth from sectors like FMCG, traditional retail, telecom and sporadic spending in categories like Ecommerce. In the January-October period itself the Adex was growing at a lower trajectory than forecasted. Furthermore, demonetisation in the last quarter had a negative impact of about 2% on the total Adex in 2016.


Speaking on the TYNY 2017 report, CVL Srinivas, CEO, GroupM South Asia said, “Despite a volatile 2016, we are estimating advertising expenditure growth at 10% in 2017. The first quarter will give a slow start to the year, with the market picking up from March-April, fueled by a stable recovery process post demonetization. Sectors that are contributing to this positive trajectory include Auto, Media and e-Wallets. In addition, Government and Political parties will increase spending with elections in several states this year.” Explaining the media scenario, he added. “Digital is leading the Adex growth with a 30% growth, while TV continues to be the largest medium in the mix. Print continues to grow at a stable rate of 4.5% and is still the second largest medium in the Adex.”


Looking at the advertising industry worldwide, GroupM estimates the global advertising expenditure (AdEx) to grow by 4.4% and Asia-Pacific to grow by 6.3%. With an estimated adex growth of 10%, India remains one of the fastest growing ad markets globally. While 80% of incremental ad spend growth in major markets comes from digital media, in India the numbers are more evenly split betwen traditional and digital media. Digital media accounts for about 40% of the incremental ad spend growth.


GroupM estimates the Digital Adex to grow by 30% in 2017 to Rs. 9,490 crores. The digital Adex is estimated to take a 15.5% share of the total Adex this year. There will be a high emphasis on viewability metrics and outcome based optimization. Ad spends will grow on OTT platforms, as internet speeds improve and catch up TV gains ground.


2017 is estimated to be a modest year for newspapers with 4.5% growth. The increase in ad spends expected from print heavy sectors like Auto, BFSI, e-wallets will contribute to this growth. Vernacular and regional newspapers will see a higher growth rate.


Television continues to be the largest medium contributing to the Adex with close to 45% share. This year, the growth rate for TV is 8%, with ‘Free To Air’ channels adding more inventory, and pure HD content gaining ground. The market will also see a consolidation of niche channels.


While Radio is expected to grow at a little over 10%, there is scope for the medium to pick up as the Phase 3 rollout is completed in 2017. Higher growth is expected as stations will see the supply impact of the full year.


Other media such as OOH will witness good traction from sectors addressing rural audience and premium niche audience. As per the trend in recent years, Cinema advertising will grow at a high double digit rate of 20%. Cinema consolidation has led to investments in infrastructure, this coupled with the growing acceptance of premium Indian and Hollywood content by advertisers augurs well for the medium.


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