A Roller Coaster Ride of Adspends

10 Feb,2020

 

By Indrani Sen

 

It appears from GroupM’s This Year Next Year (TYNY) 2020 report that the Indian ad Industry is on a roller coaster ride in spite of the slowdown in certain sectors of the manufacturing industry and hits and misses in agriculture during 2019. Prasanth Kumar, CEO – Group M South Asia expects sustained and stable investment across the media in India in 2020.

 

GroupM predicted in TYNY 2019 that the World AdEx will grow by 3.67% from 2018 to 2019 and the Indian AdEx will grow by 14%, higher than the CAGR growth of the previous four years. In TYNY released last week, GroupM has estimated that world AdEx grew by 3.7% from 2018 to 2019, but Indian AdEx grew by only 9% against the earlier estimated growth of 14%. However, there was no comment on the drop of growth rate in the press release issued by Group M.

 

I initially thought that probably the drop in the growth rate of adspend was due to the slowdown in the industry, but a closer look at TYNY2019 and TYNY2020 statistics showed that upward revision of the estimate of the total adspend in India in 2018 led to lowering of the growth rate from 14% to 9%. A comparison of the two reports is shown in the following table.

 

Indian Adspend (INR crore)

 

It is interesting to note that the forecast for 2018 for Digital as shown in TYNY2019 was increased by 40% in actual adspends of 2018 shown in TYNY 2020. Estimate for Print was also increased marginally while all other estimates remained the same. These changes in Digital and Print adspends resulted in an overall increase of total ad spend from 70,602 crore to 75,956 crore in 2018. GroupM should have added an explanatory note in their press release to warn the users of TYNY about these changes in their estimates as reflected in TYNY 2019 and TYNY 2020.

 

As per TYNY 2019, India was 10th largest market in adspends in the world, the 3rd highest contributor to incremental global ad spends and the fastest growing major ad market in the world. In TYNY 2020, India continues to be the 3rd highest contributor to incremental global adspends and the fastest growing major ad market in the world and has come up to 8th position in the list of largest markets by ad spends by beating Canada and Australia. In 2020, adspends in India is predicted to grow by 10.9% against a global growth of 5.1% in adspends.

 

According to Kumar, Digital would garner 65% of incremental ad spend in India in 2020. Tushar Vyas, President Growth and Transformation – GroupM South Asia further commented: “There are multiple advancements happening in technology which is transforming digital advertising and other mediums. India being a diverse country, digital will keep growing, especially with the rise of content platforms and its availability in multiple languages powered by the growth of 3Vs (video, voice and vernacular)”.

 

In conclusion, I agree that Digital media has gained its own momentum of growth in India and most advertisers do not want to miss out on the opportunities offered by the new media. Slowdown in certain sectors of manufacturing industry is unlikely to affect the investment in digital advertising in particular which would be the engine of growth in ad spends in India in 2020 as predicted by TYNY 2020.

 

 

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