Study says advertising, media industry in for negative growth
Study says advertising, media industry in for negative growth
Mumbai: The advertising market this year won’t be as bad as previously estimated, said a study released Tuesday.
It will be worse.
But the second half of the year will still be better than the first.
After projecting a wafer-thin, 2% growth in ad spending for 2009 earlier this year, media agency Madison Communications Pvt. Ltd in association with trade publication Pitch has now readjusted this figure to a negative 5% for this calendar year in the “Pitch-Madison media advertising outlook 09" mid-term survey. The shrinking of the market is a major setback for the Rs21,000 crore media and advertising industry, coming as it does after many years of rapid growth.
The latest study, based on market analysis and conversations with marketing and media executives, says that despite an anticipated sharp upswing in the second half of this year, the overall outlook for ad revenues in 2009 is still negative. “Our detailed forecast for the July-December period shows that while the media industry earned only Rs7,452 crore in the first half, we estimate the industry to net Rs12,325 crore in the second half. This is a massive 65% jump over the first half," said Sam Balsara, chairman, Madison group. According to Balsara, this jump will be driven by a combination of higher ad rates and higher ad volumes.
Stronger macroeconomic signals—amid the looming threat of a drought—indicate that ad spends in the second half of the year could increase. Many companies have reported better-than-expected profits in the April-June quarter and June factory output grew at 7.8% over the same period last year, says the study.
Other global media specialists have been revising their earlier ad spending forecasts in recent times, though none of the studies has painted as grim a scenario as the Madison-Pitch study.
ZenithOptimedia group predicted in its report released 14 April 2009 that ad spending in India will grow by 6.4% in 2009, half the 13% growth it had predicted in December 2008. WPP Group Plc’s global media specialist GroupM recently said ad spends in 2009 in India would grow 6%, down from the 8.9% it had previously predicted.
According to the Madison-Pitch study, advertising revenue has been hit across media. Print media has seen a 32% drop in the first half of the year compared with the previous year; and television, 19%. Only the Internet saw an increase in ad revenue, by 16%.
Some media specialists, however, disagree with the figures. Shashi Sinha, chief executive officer (CEO) of media specialist Lodestar Universal Pvt. Ltd, said that judging by the budgets of his clients and the scenario in the market, there should be a growth of at least 3-4% in ad revenue this year. “I believe we have seen the worst already. So yes, there would be growth, but limited growth. And this growth would come from consumer products and telecom, two very strong spenders," Sinha added.
Ravi Kiran, CEO, South Asia, Starcom MediaVest Group, said he’s personally not noticed any decline in his client’s spends, with all of them growing at 15% or above. Kiran added that he could not speak for the rest of the industry, but the only two categories where he has seen a decline are airlines and financial products.
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