Mumbai: A fall in advertising by e-commerce companies and the absence of a marquee sporting event such as last year’s cricket world cup saw TV advertising in the first six months of the year grow by a mere 11%, according to a mid-year review by media agency Madison Media.
The Pitch Madison Advertising Report 2016, the annual report jointly published by Madison and advertising magazine Pitch, which was released in February, expected TV advertising to grow by 20% in 2016.
The agency also wrote down its full-year estimate for advertising spends across media to 13.2% from the 16.8% it had projected in February. In the first six months, it grew 12.9%.
Madison Media stuck to its original estimate of 10% growth for print advertising despite this growing only 9% in the first six months. That number has been met with mixed reactions by media executives. Those in English print media say it is an optimistic estimate, while those in regional language print media say it is achievable.
Madison’s mid-year estimate also seems to suggest that digital advertising is gaining ground faster than expected. The agency had originally estimated a growth of 30% for the year. Digital advertising grew by 37% in the first six months.
“This clearly indicates a shift in new advertising money coming into digital. It is a no-brainer that this shift will happen, considering the media consumption habits of the consumer groups,” said Chaaya Baradhwaaj, founder and chief executive of BC Web Wise, a full-service digital agency.
Madison, however, chose to leave its digital advertising spending forecast untouched, as it did with its estimates for print, outdoor, cinema, and radio. “The only change we are calling out at this stage is a reduction in TV growth from 20% to 11%,” said the statement from Madison Media.
“The drop in growth rates in television is led by a lower contribution of e-commerce, which is a category known to pick and choose high-priced inventory/impact programmes, substituted by FMCG users who resort to everyday advertising and seek high value for money,” said Vikram Sakhuja, CEO of Madison Media & OOH.
A more conservative approach with a focus on net revenue and not market share, and government policy that threatened to take a dim view of huge discounts prevented e-commerce firms from repeating their ad blitz of 2015 in the first six months. Since July, though, many of them have restarted their sales events and discounts, and, to a lesser extent, advertising.
With all signs pointing to a bountiful monsoon, consumer demand is expected to look up, especially in rural India, in the second half of the year, which typically sees more sales and advertising.
Ashish Sehgal, chief operating officer at Zee Unimedia Ltd, said things will pick up during the festive season (the second half of the year when many Indian festivals are concentrated). “As per our estimates, the growth in advertising expenditure (on television) should be around 12-13% this year,” he said.
Madison’s initial estimates might have been too bullish.
According to Rohit Gupta, president of Sony Pictures Networks, Madison’s original forecast of 20% growth in TV was very optimistic. “At an industry level, we expect closer to 15% growth, which in itself is a fairly good pace to grow,” he said.
The network, Gupta claimed, has not seen a decline in ad spends from the e-commerce sector owing to its Indian Premier League cricket tournament (which was a draw for e-commerce firms), but at the industry level there has been a slowdown, he admitted.
At its peak, the e-commerce category had close to 70-80 active clients who were advertising, and today that number has fallen to about 20, Gupta said.
Still, the fall in television advertising is only to be expected, said Baradhwaaj of BC Web Wise. “The newer generations don’t watch TV at all—on TV, that is. They are watching all they want online...,” she said.
Besides, clients increasingly want accountability for their advertising rupee, she said, and added: “The measurement of return on investment in digital is unmatched.”
Advertisers are also very keen to learn the ropes of digital advertising and that may have helped its cause, said Amaresh Godbole, managing director of DigitasLBi India, the marketing and technology agency of Publicis Groupe.
Although Madison’s numbers do not reflect it, many executives at print media companies say print, too, is facing the heat from digital.
“All the traditional big spenders in the print segment have been doing quite badly—whether it’s real estate, banking and finance (under pressure over non-performing assets and poor quarterly results) or even education, each of them has cut back on advertising expenditure, which to their mind is a discretionary spend,” said a top executive at a publishing house who asked not to be named.
“While this was also true last year, the drop in expenditure from these categories was covered by the boost in spends from the e-commerce and FMCG sectors. This year, both those categories have also pulled back their advertising spends,” the executive added. But he expects the situation in print to improve in the second half of the year.
A spokesperson for Dainik Bhaskar Group, which publishes Hindi daily Dainik Bhaskar, said that his company expects language newspapers to do better. “We are very bullish on print growth, especially language print growth,” he said.