Ad spending to grow at 8.4% in 2018 in India: Zenith report

Advertisement spending in India is expected to grow 8.4% in 2018, led by growth in television ads, Publicis Groupe-run media agency Zenith forecasted.

Advertising expenditure in India is expected to reach Rs58,422 crore next year, the agency said. The estimated growth rate for 2018 is about three percentage points lower than the 11.2% forecast for 2017, when ad spending was estimated to touch Rs54,344 crore.

The media agency on Monday released its Advertising Expenditure Forecast report, stating that 2017 will close at Rs53,918 crore, registering a slightly slower pace of growth on account of demonetization introduced in November 2016. Internet ads will account for 11.6% of the spending this year.

India is one of the few large markets where all traditional media platforms will grow, the report said. Television advertising is expected to grow 9%, radio 10%, and print, cinema and outdoor at 5% each. Calling India a leading digital market, the report said internet advertising will grow at 20.4% in 2018 and internet will account for 15.4% of total ad spends in the country by 2020.

“Growing internet penetration accelerated by operators such as Jio will significantly enhance digital ad spends in India and give access to previously untapped markets,” said Tanmay Mohanty, group chief executive, Zenith India.

“India has seen some fluidity in overall ad-expenditure but remains one of the fastest growing advertising markets globally. With the dust settling down on demonetization and goods and services tax (GST), we expect a measured recovery on ad spends. Consumer confidence is on the rise. In 2018, mobile handsets, fast-moving consumer goods (FMCG), automobiles, banking, financial services and insurance (BFSI), travel and tourism and political ads will drive up the pace of ad spends.”

According to the report, India occupies the fourth spot in the top 10 contributors to global ad spend growth between 2017 and 2020 along with other markets such as the US, China, Indonesia, the UK and Japan. It also figures in ‘Rising Markets’ along with China, Indonesia, Brazil and Russia, which are expected to contribute 33% of new ad spend over the next three years.

The report predicts that global ad expenditure will grow at 4.1% to hit $578 billion by the end of 2018. The forecast is down by 0.1 percentage point from the forecast published in September after small downgrades in North America, Western Europe and Asia Pacific, and upgrades in Latin America and Central and Eastern Europe. The findings further state that advertising expenditure will grow more slowly than the global economy as a whole till 2020.

“The numbers are ballpark and there’s no reason to believe that it won’t hold up. Google has declared Rs7,208.9 crore turnover in India for the year ended March 2017. This is a pretty big number by the dominant player in digital advertising landscape in India, which also has other players like Facebook and Twitter further growing the market.

The digital ad spend will only soar further as internet adoption grows owing to cheaper data and smartphones. While the report states that the television is still the biggest medium in terms of ad spend, I believe digital will definitely overtake print and pose a serious challenge to television by 2020. With the onset of over the top (OTT) players like Netflix and data becoming cheaper, appointment viewing is becoming restricted, at least in urban India, except for sports matches and award shows.

TV, as a medium, is evolving and consumers want on-demand entertainment, fuelling the growth of players like Amazon Prime and Hotstar. Therefore, digital is where the consumer is moving and ad spends have to follow them as well,” said Amardeep Singh, chief executive, Interactive Avenues, an IPG Group owned digital marketing agency.