Ad industry to see 9.6% growth in 2015: report

Mumbai: Latest findings released by the Pitch Madison Advertising Outlook 2015 report, show that the Indian ad industry is expected to see some robust growth this year as well. While the previous year saw the industry ride the election wave, this year will witness more innovation in digital, coupled with growth in print, which continues to make up the biggest chunk of overall revenues.

In 2014, the ad industry grew by 16.4%, almost on par with the prediction of 16.8%, according to Madison Media, part of the home-grown diversified communications agency, Madison World. This year too, the industry is looking forward to bullish growth prospects, with the report forecasting a growth rate of 9.6% to reach nearly Rs41,000 crore, as compared to Rs37,104 crore in 2014.

The industry added Rs5,200 crores to the market in 2014 alone. This was primarily fuelled by advertising spends by political parties on account of Lok Sabha and State assembly elections (which contributed as much as Rs2,300 crore), as well as spends by e-commerce players to the tune of Rs1,150 crore, as per the report.

This year will see spends driven by new advertisers coming on board, separate sales of HD channels, an increase in geo-targeted advertising, new channel launches by existing networks and a further push by e-commerce advertising and mobile, the report said.

Phase III of Radio expansion is expected to pull in another Rs70 crore or so of additional advertising. There will also be an increase in government spending towards print, the report said.

If we look at a 13 year review, the ad industry in India has grown from Rs10,000 crore to touch nearly Rs41,000 crore, at a CAGR of over 13%, said Sam Balsara, chairman & managing director, Madison World. This year too, we expect a buoyant year for Indian advertising, he added. According to the report, India ranks 12th in the global advertising market and was one of the fastest growing markets globally the previous year, only to be toppled by China.

The biggest contributor to growth will be organic spends across sectors and the ICC Cricket World Cup, which is expected to bring in revenues of around Rs1000 crore, of which Rs500 crore is likely to be additional revenue. One of the big changes to watch out for in Indian Television will be the new ratings system which is expected to be implemented by the Broadcast Audience Research Council (BARC) in the first half of 2015. The report added that with the last set of Indian Readership Survey (IRS) data still in controversy and questioned by most print players, it now needs to be seen how the sector reacts to the new data this year.

Interestingly, print continues to retain the top spot and has emerged as the largest contributor in the overall advertising pie with a share of 41% , expecting to cross Rs16,000 crore in 2015 and growing on the back of increased government spending towards print and advertising by e-commerce players. According to the report, TV is trailing behind print to reach Rs15,500 crore in 2015, with a 38.2% share. Balsara added that Hindi GECs now contribute around 27% of overall TV revenues.

The FMCG category which has always been dominant on TV, contributing to over 50%, is also the largest contributor to Print for the 2nd year in a row, although just 13% in terms of contribution. Other major categories spending on TV include Telecom, e-commerce and Auto.

Digital on the other hand has seen significant growth over the last 5 years and is now larger than Outdoor, Cinema and Radio put together, making up 12.6% of the total market. Digital advertising is expected to cross the Rs5000 crore mark in 2015. While Display, Video and Mobile in digital have gained share, Search has somewhat slowed down, the report said.

Balsara added that advertisers would need to focus on effectiveness and not just efficiency, prioritize markets and not under-resource campaigns if they want to make the most of the dynamic media market in the country.