Mumbai: Advertising in newspapers and on television will grow this financial year at more than twice the pace of the last year, driven by sectors such as telecoms, consumer goods, financial services, automobiles and retail, a media research agency has predicted.
Spending on advertising in the media will increase 14% in the year, compared with a 6% rise in the year ended 31 March, says a report by GroupM, the media research arm of WPP Plc.
Advertisers are spending more on expectations of a good monsoon and higher economic growth, according to the report titled This Year, Next Year.
Traditional advertisers increased their spending between January and March 2010, and the upswing has continued in the next three months, driven by the popular Indian Premier League (IPL) cricket tournament.
Television advertising is expected to grow 20% in 2011 and print advertising 7%.
Expenditure on television advertising will touch Rs11,897 crore in fiscal 2011, up from Rs9,914 crore in 2010 and Rs8,820 crore in 2009, GroupM predicts.
Broadcasters have increased their ad rates, even as the fragmentation of viewers across an assortment of channels is pushing advertisers to spend more. Regional channels are also consolidating revenues as their viewership grows.
The economic slowdown boosted radio ad revenue as retail brands moved their expenditure to the cheaper broadcast medium. Consumer goods, consumer durables and telecoms contributed nearly one-fifth of radio’s overall ad revenue.
The growth in print ad spending will likely ride on new launches in the automobile and financial services sectors. Retail and consumer durables will also add to the numbers, the report says.
Newspapers will earn Rs11,088 crore in advertising revenue in fiscal 2011, up from Rs10,363 crore in 2010 and Rs9,832 crore in 2009, it forecast.
The increase in advertising revenue for magazines, however, will be relatively smaller, touching Rs864 crore in 2011, up from Rs808 crore in 2010.
GroupM has predicted a 3.5% increase in global advertising spending, according to foreign media reports. Inthe US, media spending is expected to decline by 1.3% in 2010.
GroupM executives were not available to comment on the report.
L.S. Krishnan, president of Mudra Group’s Radar unit, said advertisers are willing to spend more today, and a good monsoon could well pushup ad spending by double digits.
But he cautioned that a poor monsoon and high inflation could dampen sentiment, reducing the disposable income of consumers and hurting the sales growth of companies. “We would be back on a downward spiral,” he said.
Sam Balsara, chairman and managing director, Madison Group, said advertising had bounced back, and could potentially create an “inflationary pressure on media rates”. It’s a trend that’s already visible, he said.
Star India Pvt. Ltd credited a hike in industry ad rates for 9-10% growth in advertising spending. Executive vice-president Anupam Vasudev said the economic downturn did not hurt television channels, as they do not depend too heavily on real estate and financial sectors, which were seriously hit.
“But telecom and FMCG (fast-moving consumer goods) continued to advertise in a big way, and in the last six months advertising has picked up,” said Vasudev.