Advertising to grow at 16.8% in 2016: report

A report by Madison and advertising magazine Pitch predict a marginally slower rate of growth for most advertising media except digital

Photo: Bloomberg
Photo: Bloomberg

Mumbai: India’s advertising market is expected to expand 16.8% in 2016 to Rs.51,365 crore, as companies invest heavily in brand promotions to gain market share, according to the Pitch Madison Advertising Report 2016.

The annual report, jointly published by media agency Madison and advertising magazine Pitch, predicted a marginally slower rate of growth for most advertising media except digital. The estimated advertising growth rate is also lower than the 17.6% the sector achieved in 2015.

The report was released in Mumbai on Thursday evening by J.S. Mathur, special secretary, ministry of information and broadcasting.

Television as an advertising medium will grow 20% in 2016, slightly lower than the 22% pace at which it grew in 2015, according to the report. The growth rate for print is also expected to decline marginally from 11% in 2015 to 10% this year. Digital media’s growth rate will accelerate to 30% in 2016 from 29% in 2015.

In 2015, television pipped print to become the largest advertising medium, contributing 39% to the total market, with advertising expenditure touching Rs.17,261crores. In absolute numbers television advertising grew by Rs.3,023 crore in 2015.

Consumer products, telecom/direct-to-home television (DTH), e-commerce and automobiles paced the growth. The e-commerce category grew dramatically by 60% to reach Rs.1,223 crore. In absolute terms, it contributed only 7% to overall TV market.

Last year’s biggest cricketing event the ICC Cricket World Cup contributed approximately Rs.500 crore. The Indian Premier League had another successful year and netted almost Rs.1,000 crore of advertising in 2015.

In television, the Hindi general entertainment channels (GEC) contributed nearly 28% to the overall ad TV revenue and continued to lead the pack. In terms of growth, Hindi GEC, sports and south regional showed a substantial increase.

In 2015, print contributed 38% to the total advertising pie, at Rs.16,935 crore. While dailies increased their contribution by 12% in 2015 over 2014, magazines as a medium failed to attract advertisers.

In 2015, digital continued to grow and established itself as a firm number three in the advertising mix, contributing 12% to the total ad revenue. Digital ad spending crossed Rs.5,000 crore in 2015. Although the absolute expenditure on search has increased, its share in the digital pie has declined as video, social and mobile display have expanded at a faster clip.

Radio will grow at 18% in 2016 compared to 20% last year. It became a Rs.1,545 crore market in 2015 and maintained its share of the total advertising pie at 3.5%. Advertising growth on radio was led by e-commerce, which doubled its spending on the medium, as well as automakers, who increased advertising spending by 36% in 2015 to promote new launches.

Out-of-home (OOH), which includes digital OOH and malls, grew by an estimated 14%to reach Rs.300 crore in 2015. In 2016, the growth will decline to 12.9%.

According to Vikram Sakhuja, group CEO, media & OOH, Madison, “…the 2013-16 demand growth continues to be fuelled by the bedrock of Indian advertising – the FMCG sector. It has invested, and reinvented itself and been a contributor to not only the TV industry but also print, and to an extent digital.”

FMCG is short for fast moving consumer goods, or packaged consumer goods such as personal care products, food and beverages.

Hindustan Unilever Ltd led advertising expenditure with spending of about Rs.2,500 crore, followed by Amazon India, Procter and Gamble Hygiene and Health Care Ltd, Flipkart Ltd, Maruti Suzuki India Ltd, Mondelez India, Godrej, ITC Ltd, Snapdeal and Reckitt Benckiser Healthcare Pvt. Ltd, which spent between Rs.400 and Rs.1,000 crore.

“Our prognosis for 2016 is that it is going to be yet another good year for media,” said Sam Balsara, chairman, Madison World.

To arrive at a 2016 forecast for the report, Pitch and Madison were conditioned by the fact that the Indian economy has become the fastest growing major economy of the world, he said.

“Although Indian businesses have expressed concern that all the positive actions taken by the government have not resulted in growth on the ground, we feel that India Inc. remains very optimistic about India’s future and they will once again invest heavily in advertising to protect and gain market share of their brands.”

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