Mumbai: A new study by media agency Zenith Optimedia, part of the French advertising conglomerate Publicis Groupe SA, has forecast 9% growth for India’s advertising industry for this year. The agency has also upgraded its forecast for global advertising industry growth from 0.9% to 2.2% for 2010.
The survey said the Indian economy withstood the test of global slump and grew at 6-7% in 2009. However, the advertising market reacted sharply to the downturn and grew only at 1% during the year.
But recovery has been swift and India’s advertising industry will outperform most other markets in 2010. According to Zenith Optimedia, the total ad expenditure for India is projected to touch Rs23,631.9 crore this year. In 2009, the ad expenditure was Rs21,602.5 crore.
Newspaper advertising, which grew 5% in 2009, is likely to see 7-8% annual growth this year. Rising literacy levels and better distribution in the regions are steadily improving the reach of newspapers. The survey also predicts a healthy 11-12% growth for television in India riding on the digital wave and advertising opportunities offered by the new “larger than life” entertainment formats. Sports is growing in popularity, thanks to the success of the Indian Premier League (IPL), and this trend is likely to continue as the country hosts the Commonwealth Games this year.
Graphic: Ahmed Raza Khan/Mint
The study stated that Internet advertising in India will be driven by social media. The survey pegs Internet advertising growth at an annual 25% in the coming three years.
Satyajit Sen, chief executive officer, Zenith Optimedia, said most of the growth story will come from digital properties, especially those in the mobile domain. Other key contributors will be cricket and reality content apart from rising ad rates.
“Print, especially English newspapers, which have suffered in revenues because of the downturn, will emerge out of it. There will be a correction,” Sen said.
At least two other advertising surveys have predicted 12-13% growth for Indian advertising. A recent Pitch-Madison report said the ad industry will see 13% growth in 2010 to touch a turnover of Rs21,145 crore.
R. Gowthaman, leader, mindshare, GroupM India Pvt. Ltd, said that his company projected 12% growth for India in 2010. “The global figures are almost in the same league as Zenith’s. Last year, the global advertising industry was at minus 1%. This year, the total ad expenditure is likely to grow by 1 or 2%.”
According to Gowthaman, there are several factors that are contributing to growth in India. Around “6-7% of India’s ad expenditure growth comes from rate inflation alone. The rates for IPL, for instance, have gone up considerably. Also, it comes from broadcasters investing in a lot of high-cost, tent-pole programming,” he said, adding that categories that were silent in 2009 are bouncing back. This includes banks and other financial services as well as tourism.
The survey said that globally the worst-hit markets are stabilizing and will return to growth in 2011. The Internet’s share of ad expenditure will rise from 12.6% in 2009 to 17.1% in 2012 globally.
Ad expenditure fell 23.1% in central and eastern Europe, with drops as steep as 42% in Russia, 44% in Latvia and 48% in Ukraine in 2009. Zenith forecasts a 5.7% ad spending growth in central and eastern Europe in 2010, and 8.5% in 2011.