New Delhi: The ad spend proportionate to sales, by fast rising real estate and telecom companies has grown the most among a host of sectors, according to the latest Assocham Eco Pulse (AEP) study.
233 companies were interviewed for the study, witnessing an average 16% jump in their sales and total income during a seven year period.
* Real estate including construction and telecom firms increased advertising budgets in proportion to sales by an annual 36% and 21% between FY 2000 - ‘06.
* Aggressive selling coupled with increased ad spend revealed that these sectors were spending a lot more than the average FMCG companies.
* Next big spenders after real estate and telecom were white goods manufacturers especially air conditioners, refrigerators, liquor, passenger and multiutility vehicle companies. White goods producers showed 20% increase, followed by growth of 10% in liquor industry and 9.5% in passenger car companies.
* With services driving the Indian economy, advertising is seen as a tool to spread consumer awareness which in turn has led to growth in dynamic sectors like real estate and telecommunications.
* While Indian real estate market is growing at 30%, construction sector has grown at a staggering 16.6% in Q1 of current fiscal as compared to 15.6% in corresponding period of previous year. Average growth of sector during FY 2000-01 to FY 2006-07 at 9.9% surpassed manufacturing and service sector growth at 7% and 8.6%.
* Rising income levels, bulging middle class, rapid urbanization and emerging cities led to sharp rise in demand for housing properties in India and boosted advertising needs of construction and real estate companies.
* Growth in adspend of these companies surpassed marketing and total expenses which were averaging 6% and 12.8%. Ad expense of construction sector increased from 0.1% of sales in FY 2000 to 0.2% in fiscal 2006, registering 36% rise.
* Telecom sector is adding total mobile subscribers at a record rate of average 46% per month as total telephone subscriber base reached 225.2 million with 136 million GSM mobile users and 49.1 million CDMA users. Intense competition and huge growing youth population as target customers for telecom companies is leading to rising advertisement and marketing expenses by them.
* Advertising expenses in telecom sector rose from 0.9% of sales to 1.9% in seven-year period witnessing average growth of 13.7% in sales and 14.4% in total income during FY2000 to ‘06.