GroupM says ad spends to grow 12.6% in 20154 min read . Updated: 04 Feb 2015, 01:00 AM IST
E-commerce advertising will grow fastest, albeit from a small base, while among media platforms, digital media will grow fastest, the report said
Mumbai: Ad spending in India will grow 12.6% to touch ₹ 49,000 crore in 2015, with digital media seeing the fastest growth, albeit on a small base, global media-buying and planning firm GroupM said in its This Year, Next Year report, released on Monday.
Digital advertising will account for 9.51% of all ad spending in 2015, the agency estimated, up from 7.8% in 2014. Print’s share will shrink from 37% to a little over 34%. And TV will remain the dominant medium with a 45.8% share, up from 44.5%.
The big story of the year will be the same as in 2014—digital. Growth in digital ad spending will be the fastest at 37%, GroupM said.
The segment has grown at an average of 35% over the past two years. Video, mobile and social will be the biggest growth drivers, the report said.
Advertising by e-commerce companies will grow the fastest, the report added. In 2014, ad spending rose 12.5% to reach ₹ 43,490 crore, largely on the back of heavy spending by political parties in the general and state elections, and by telcos and e-commerce companies.
Companies in the packaged consumer goods, automobile and telecom businesses will do better than the previous year, the report said, and therefore spend more on ads. And the entry of more multinational companies in single-brand retail may add to spending, it added.
Television advertising will grow 16%, print 5%, out-of-home 4 %, radio 11% and cinema 20%, GroupM said. In 2014, cinema advertising surprised everyone by growing 25% on a very low base.
According to C.V.L Srinivas, chief executive officer, GroupM South Asia, the emergence of categories such as e-commerce and the increased competition in telecom are aiding the growth of traditional media channels including print and TV, even as they help the cause of digital.
Srinivas added that the most prized ads, for advertisers, are those on the front pages of newspapers (these are called jacket ads). “I still get calls from marketers, saying they want their ad to appear on the front page of newspapers... more than grabbing a TV spot or online space."
A senior executive at a large retail firm agreed.
“For us, spending on print has not gone up dramatically but we are buying the premium jacket ads. We buy television for national reach and have started doing tactical consumer connect programmes online. So we have presence on social media than expenditure on online ads," added this person, echoing trends that are clearly visible in the numbers. This person did not want to be named.
The big-ticket event this year is the ICC Cricket World Cup, set to begin this month, which will provide plenty of scope for programming and advertising innovation during the tournament to be staged in Australia and New Zealand. It will be followed by the Indian Premier League cricket tournament.
The two sports properties could see a combined advertising spending of between ₹ 2,200 crore and ₹ 2,500 crore. Of this, the World Cup alone could account for ₹ 1,200-1,500 crore, Mint reported on 28 January. PepsiCo India, Castrol India Ltd and Hyundai Motor India Ltd have already announced their plans for the World Cup.
Overall positive sentiment about the India economy and its prospects—manifest since a new government took charge in mid-2014—are reflected in the numbers.
“We are seeing a lot more confidence among local businesses to invest in brand building than before. This is a positive sign for the industry," said Srinivas.
If the packaged consumer goods business picks up, ad spending could grow 15-18% in the future, he added.
The most significant change evident in the numbers is the shift to digital.
“The next 3-5 years will be about embracing technology, which will allow both advertisers and media owners to customize distribution to a premium niche audience with very nominal margin of error. In 2015, programmatic buying will see an impetus, as all media in the future will see automation, backed by smart data and analytics," added Prasanth Kumar, managing partner, central trading group, GroupM South Asia and CEO-designate of Mindshare South Asia. Mindshare is a media communications agency.
Dabur India Ltd executive director, consumer care business, K.K. Chutani, said that the share of digital in total ad spending was increasing. “We are already seeing advertisers shift spends from traditional media like TV and print to digital. At Dabur, we have also started earmarking a percentage of our total ad spends for digital, which was never the case earlier. While it is still small now, this number will only increase going forward."
He added that youth was increasingly going online to not just seek information about products or to make purchases, but also to consume media. “So, we have put in place initiatives to use the Internet and various emerging social media platforms to communicate frequently and directly with our consumers... by creating interfaces on the digital social platform with four dedicated portals..."
Other interesting trends highlighted in the report include the rise in native advertising, which is expected to bite into the share of standard banner advertising, as well as a closer correlation between sports and entertainment, given the number of sports leagues that are set to take place. Local advertisers will also be showing a stronger appetite to invest towards brand building, the report said.
Native advertising is the practice of using seemingly editorial or sponsored content to win the trust of potential customers.