Indian advertising spend to grow at 11.5% in 2017, says IPG Media report
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New Delhi: Advertising expenditure in India will grow 11.5% in 2017 to touch Rs61,100 crore, IPG Mediabrands-owned agency Magna said. This is lower than the revised estimates of 16.2% that IPG Mediabrands put out for 2016. Ad spending was Rs56,400 crore in 2016.
Within advertising, offline is estimated to grow at a compounded annual growth rate (CAGR) of 9.7%, while digital will grow at 25.5% over the next five years. Television will still be the largest media in 2021 with a market share of 39%.
While the goods & services tax (GST) that takes effect on 1 July will fuel growth, it is likely to create a disruption in the short term, when the industry realigns and adapts to the new tax structure, the report said. Sectors such as social, fin-tech, payment banks, telecom, content distribution platforms along with fast moving consumers goods (FMCG), auto and e-commerce will drive ad spends this year, it said.
In terms of media channel growth, digital continues to be the fastest medium, and is expected to register a 28% growth rate. It is for the first time the digital ad spends are predicted to touch Rs10,227-crore mark. Within digital, mobile is driving spends with a growth rate of 65.7%.
The launch of 4G, customised content, over-the-top services focussing on regional content coupled with aggressive push by international players like Amazon Prime and Netflix will attract more viewers to digital. Television ratings measurement agency Broadcast Audience Research Council (Barc) India putting out a road map for digital measurement will further aid this growth, the report said.
With mobile increasingly becoming the choice of internet access, mobile traffic will be higher than desktop, resulting in advertising propelled by mobile estimated to grow at 48%. E-commerce, telecom, auto, banking and financial services (BFSI) and consumer durables are large contributors to the revenue. The report further added that mobile is projected to overtake desktop by 2020.
India is one of the few large markets where all traditional media platforms will grow, the report said. Television advertising is expected to grow at over 10.3%, with Free to Air (FTA) channels gaining significance, localised content and high-definition (HD) experience boosting regional channels’ viewership and sporting leagues outside of cricket becoming popular.
Meanwhile, print will witness a modest yet stable growth of over 5.7% with higher spending expected from sectors such as autos, telecom and education. The medium will also benefit from government campaigns promoting its initiatives. The report further noted that Indian Readership Survey (IRS) which is expected to be released in the third quarter of 2017 will help publishers realize merit-based value. Meanwhile, Audit Bureau of Circulation (ABC) measuring digital content consumption will help publishers in monetising their digital assets.
It is an interesting year for radio which is expected to grow over 13% with around 150 new frequencies sold under the Phase 3 of radio privatization which will help generate incremental revenue.
Meanwhile, technology integration will drive ad sales for the out of home (OOH) category which is estimated to grow at over 12% in 2017. The report stated that urbanization in the form of new metro lines and smart cities, and advertising policies being framed for Indian Railways will further provide opportunities for advertisers in this category helping them go beyond billboards.
“We held back our December 2016 forecast report because the market was way too volatile post demonetisation the effect of which lasted till Q1 of this year. The e-commerce sector which saw drastic reduction in spends in 2016 will continue to play cautious this year too. We also suspect that the Goods and Services (GST) Bill will have varying impact depending on categories. For instance, FMCG sector, owing to deep penetration, will take some time to settle with the uniform tax structure. Digital ad spends estimated to touch Rs100 billion with mobile advertising gaining significant ground is the highlight of 2017,” said S. Venkatesh, executive vice-president, Magna India.