Adspends to grow 11.5% in 2017: IPG Magna

16 Jun,2017

 

By A Correspondent

 

​India​ is recovering from aftereffects of demoneti​sation introduced in Q4 2016 and the currency deficit faced during this period has helped the country leapfrog towards a lesser cash economy. The country is set to move towards a uniform tax regime with Goods & Services Tax (GST), effective July 2017, while this fuels growth it is likely to create a fleeting disruption in the short term when the industry realigns and adapts to the new tax structure. GDP in real terms is estimated to grow +7.2% in 2017 compared to +6.8% in 2016 according to International Monetary Fund (IMF). Within the next decade India will gallop to become one of the largest consumer markets in the world according. Rising affluence, ease of doing business, urbani​s​ation and enabling infrastructure will contribute to this status.

 

Advertising revenue which is accounts for 0.38% of GDP (gross domestic product) is likely to grow CAGR of +12.6% to touch INR 992bn by 2021. Within Advertising, offline is estimated to grow at a CAGR of +9.7%, while digital will grow at +25.5% CAGR in the next 5 years. Mobile is projected to overtake desktop by 2020. Television will still be the largest media in 2021 with a market share of 39%.

 

In 2017, Adex is estimated to grow +11.5% to touch INR 611bn, predicts ​Magna, ,the intelligence, investment and innovation strategies agency of IPG Mediabrands​ (earlier called MagnaGlobal)​. Adspends will be driven by sectors like social, fin-tech, and payment banks, telecom service, content distribution platforms etc., in addition to FMCG, Auto and Ecommerce

 

TELEVISION the foundation of advertising spends continues to dominate the industry with its market share of 41% and will grow+10.3%. With BARC release of rural audience data, new revenue stream in the form of FTA channels have gained significance. Quality locali
​s​ed content and HD experience will help regional TV to keep their audiences hooked. Sporting leagues outside of Cricket is finding way to generate mass involvement and Television will play a larger role. Star Sports Tamil demonstrating tangible results will increase fandom for local/state level formats.

 

PRINT in India has been successful in guarding its revenues well with revenue expected to grow by +5.7% and India is one of the large markets where circulation is still growing thanks to rising literacy. The second biggest category with 36% share despite growing is losing its share to Digital year-on-year. Traditional sectors like auto, telecom and education will contribute to ad spend growth. After a gap of 3 years, the category will invigorate with the release of new IRS and help publishers reali ​s​e merit based value. Audit Bureau of Circulation (ABC) measuring digital consumption will lend authority and help in moneti​s​ation. We expect the ad spends to grow beyond the estimated +5.7% in 2017 thanks to government’s focused campaign to populari​s​e their marquee initiatives.

 

DIGITAL will grow +28% and within digital, mobile is driving spends with a growth rate of +65.7%. The launch of 4G triggered low price data products there by increase in usage. With improved speed Video, native and customi ​s​ed content has tremendous potential to grow. BARC putting out a road map on digital panel takes India one step closer to a robust measurement not only for digital but also to showcase capabilities in incremental metrics. With expanding content library, OTT viewing is no more restricted to national languages. Aggressive push by Amazon and Netflix to address the original content gap will attract larger base of audience. With mobile increasingly being the choice of access, traffic will be higher than desktop resulting in advertising propelled by mobile which is estimated to grow at CAGR of 48%. E-commerce, Telecom, Auto, BFSI, Durables are large contributors to the revenue.

 

RADIO reach with around 150 new frequencies sold during phase III is set to deepen further and will help generate incremental revenue. We estimate radio to grow +13% and continue to grow at CAGR of 13.8% in the next 5 years. Currently the measurement is limited to 4 cities, widening this will help radio increase its share from the current 4%

 

OOH will grow +12% in 2017. Technology integration will increase effectiveness and helps drive adspends. Urbani ​s​ation in the form of new Metro lines and smart cities, moderni​s​ation of Indian Railways and their new advertising policy etc., will provide opportunities for a planned development of quality assets and also push the industry to innovate and move beyond billboards. Regional cinema is pushing boundaries to outdo Bollywood cinema which augurs well for the industry.

 

Table 1 – Media owner revenue by category in INR Cr Net

Media Category 2017 2018 2019 2020 2021
Television 24516 27416 31062 34774 39012
Print 20644 21916 23348 24696 25884
Digital 10227 12973 16538 20394 24868
OOH 3552 3979 4530 5074 5642
Radio 2227 2539 2920 3329 3762
Total 61166 68822 78398 88266 99167
Media Category 2017 2018 2019 2020 2021
Television 24516 27416 31062 34774 39012
Print 20644 21916 23348 24696 25884
Digital 10227 12973 16538 20394 24868
OOH 3552 3979 4530 5074 5642
Radio 2227 2539 2920 3329 3762
Total 61166 68822 78398 88266 99167

 

Table 2 – Traditional Vs Digital Adex growth rate

 

Table 3 – Mobile gaining shares over desktop

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