GroupM forecasts AdEx to grow 13% in 2018

14 Feb,2018

 

By Rohit A

 

GroupM, in its annual marketing forecast, predicts 13% growth (vs 10% in 2017) in India advertising expenditure (AdEx). The Indian AdEx in 2018 is estimated to be at INR 69,346 crore ($10.8 billion) compared to INR 61,263 crore ($9.6 billion) in 2017, as per This Year, Next Year (“TYNY”) report released by GroupM.

As per economic experts, India is well poised with growth outlook of between 7.3% to 7.8% in 2018, giving India the fastest growing economy tag among developing countries. With demonetisation behind us and GST having implemented, a recovery in consumer demand and private investment is expected.

“As consumer sentiment stabilizes and spending increases, we estimate 2018 to be a relatively better year from an ad spend perspective. Growth in digital media will continue to outstrip other media but unlike most markets”said CVL Srinivas, Country Manager, WPP India and CEO, GroupM South Asia.

Between 2015 and 2017, Indian AdExgrew at a CAGR of 11% (expenditure of $9.4 billion in 2017 vs $7.7 billion in 2015), compared to World Ad spend, which grew at a CAGR of 3.5% in 2015-17.

 

Digital continues its dominance

While digital share of India AdEx is estimated to be ~18% in 2018 (vs 15.5% in 2017), however this space is expected to grow at a rate of 30% YoY (followed by cinema’s estimated growth of 20%). Digital witnessed the same growth rate in 2017 too.

In 2018, AdEx in digital is estimated to be at INR 12,337 crore ($1.9 billion) compared to INR 9,490 crore ($1.5 billion) in 2017.

GroupM estimates, Video advertising on digital is estimated to grow at 54%, as bandwidth improves and data and mobility device become more economical for the consumer.

As digital becomes 18% of the overall advertising spends in India, measurement and transparency become paramount. Last year, GroupM globally led the conversation on measurement and transparency in digital media, and released viewability standards that are higher than those stipulated by the Media Rating Council in the US. In India too, GroupM is working with industry bodies, brands and publishers to adhere to a standard viewability index that would become integral to the digital ecosystem. Along with viewability, GroupM also held knowledge and training workshops for client teams, on mitigating ad fraud and assuring brand safety.

 

Traditional media role in India

Given diversity in India, Television continues to be the largest medium, with its contribution remaining ~ 45% share in 2018 (same as 2017) and will see a growth of 13% YoY. AdEx in TV is estimated to be at INR 31,596 crore ($4.9 billion) in 2018, compared to INR 27,961 crore ($4.4 billion) in 2017.

Parliamentary elections in H1 2019 will stimulate advertising from the back half of 2018, says GroupM. Print will see a slight uptick in 2018 from the elections, with key markets in demand. The growth rate for newspapers is estimated at 4.2% with English papers growing slightly slower than Hindi and regional languages. However, print share of AdEx is expected to decrease from 29% in 2017 to 26.6% in 2018.

Other media such as OOH will continue having a share of 4.9% in overall AdEx and is expected to witness a good traction of 15% growth from premium transit sites (vs 7% growth in 2017).

 

Radio with a share of 4% in overall AdEx, is expected to grow at 15% in 2018 (vs 8% growth in 2017). This growth is predominantly due to the launch of new radio stations across the country

 

Cinema will continue to grow at 20% in 2018, as the infrastructure investment made last year will attract a larger audience to theatres for a blockbuster experience. The share of Cinema although continues to be approx 1.2% of overall AdEx.

 

Digital continues its dominance

While digital share of India AdEx is estimated to be ~18% in 2018 (vs 15.5% in 2017), however this space is expected to grow at a rate of 30% YoY (followed by cinema’s estimated growth of 20%). Digital witnessed the same growth rate in 2017 too.

 

Gamechangers

As per GroupM, 3Vs will be the key drivers for consumption in 2018 – Video, Voice and Vernacular.

Voice can have large impact on Indian consumers specially when voice enabled products can accept instructions in regional languages. Currently, the disruption is only at a high-level (Amazon Alexa, Google Assistant, Apple Siri) and it will be interesting to see how Indian consumer and developers adapts to this new change.

Esports will be a game changer in the sports space, says GroupM. The Olympic Council of Asia recently announced that it will include esports in the 2018 Asian Games and make it a medal sport in 2022.

 

Indian ranking in Global AdEx

India is among the top 5 global contributors of incremental AdEx in 2018 and has a share of 5% (vs 4.7% in 2015).

India is set to become 10th largest adspends market in 2018 compared to 11th largest in 2017.

 

Summary:

:: The overall India AdEx in 2018 will grow by 13% (vs 10% in 2017)

:: Digital will lead the growth with a 30% growth rate (~$1.9 Billion ad investment expected in 2018)

:: Things to look out for – Consumption of video contents; platforms having Voice connectivity; regional contents; e-sports participation; OTT content

:: India is a unique market where all media have headroom to grow.

:: India is the fastest growing ad market in APAC and among the fastest  growing markets in the world (amongst Top 5 contributors of incremental AdEx in 2018).

 

About TYNY:

This Year, Next Year (“TYNY”) is part of GroupM’s media and marketing forecasting series drawn from data supplied by holding company WPP’s worldwide resources in advertising, public relations, market research, and specialist communications. The TYNY report is the most comprehensive understanding of the estimated media spends by advertisers in the current year. It also highlights some of the industry sectors that will have a major effect on advertising spends across media.

TYNY 2018 PC presentation HANDOUT- 13218 – MM

 

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