In Focus

The Indian Advertising Industry – Projections for FY-19

The Indian Advertising Industry has evolved from being a small-scaled business to a full-fledged industry. It is projected to be the second fastest growing advertising market in Asia after China.
The Indian Media & Advertising Industry is on a high growth path. This is a sure indication that India Incorporated is optimistic about India's growing consumer market and has confidence that the economy will improve over a medium-term. India is likely to once again become the fastest growing advertising market in the World.

The last decade has seen the Indian Advertising Industry grow to thrice the size it was in 2009; crossing the 60,000 crore mark in 2018, registering a CAGR of 12%.

Growth came mainly on the back of Digital, which grew by leaps and bounds every year and clocked the highest growth rate among all media consistently. Internet penetration and adoption of Digital Media in India is growing at a rate faster than the World average; driven by affordable data and the smartphone revolution.

While Television continues to be the largest contributor to Adex with a 38% share, closely followed by Print at 30% share; Digital now is established as the third largest medium with a share of 22.5%, almost double the combined share of Radio + OOH + Cinema Adex.

The categories that have contributed maximum to the growth of Print, Television and Radio are FMCG, Telecom, e-commerce and Auto. Emerging categories are e-Wallets and OTT players. While Digital has grown substantially, traditional media has also grown significantly year-on-year with a compounded annual growth rate of 10%, and even today, contributes more than 75% of total Adex.

Adex is expected to grow at 13.4% in 2019 to touch rupee 69,073 crore with Television and Outdoor registering a sluggish growth according to a revised forecast report. As per the Pitch Madison Advertising Outlook original report published in February 2019, Adex was forecast to grow by 16.4% to touch
rupee 70,888 crore.

The revised forecast says Television Adex will be 26,050 crore versus 27,649 originally forecast in February. Print Adex remains unchanged at 20, 429; Digital Adex stays the same at 15,612 crore; Radio Adex remains unchanged at 2,401; while Outdoor Adex has been revised to 3,533 crore as against 3,750 crore in the original report. Cinema Adex also remains unchanged at 1,047 crore.

The forecast for 2019 says Television Adex will be rupee 26,050 crore in 2019 registering an unbelievable growth of 10.8% from rupee 23,500 crore in 2018. Earlier the estimated figure for 2019 was rupee 27,649 crore, but due to New Tariff Order (NTO) and decision of major networks to remove their Free-to-Air (FTA) Channels from DD-Free-Dish, there is a decline.

Number of Television Channels has tripled in the last 10 years; largely on account of Regional and News channels. Though Television has only 12,000 Advertisers, they contribute to 38% of the overall Adex.

FMCG continues to rule the roost, contributing as much as 50% to the total Television Adex, followed by Telecom at 12% and Auto at 8%. While the major factors contributing to the growth were Loksabha Elections, ICC Cricket World Cup, IPL and new launches in FMCG & Auto Sector.

More so Government spending on TV & Print has witnessed an over 100% increase in ad spends since the Prime Minister Modi's Government has come to power; given the importance they ascribe to communicating with the public. This is further boosted by spends by Political Parties during elections.

Print Adex grew 4.4% in 2018, marginally lower than the projection of 5%. Despite this, it continues to be the second-highest contributor to Adex, following Television, with a share of 30%. The Print share of Adex in India is probably the highest in the World. In 2019, the Print Advertising Market is expected to grow by 5% to come close to rupee 20,500 crore.

Another interesting fact that brings out the resilience of Print is that it has 2,00,000 Advertisers. However, just five categories – FMCG, Education, Auto, Retail, and e-Commerce – dominate the Print Adex. In terms of category contribution, FMCG and Auto are also the largest contributors to the Print pie, with a contribution of 14% each, followed by education at 10%. Contribution of e-Commerce is way low at just 4%. Telecom, BFSI, and Travel & Tourism Categories saw a fall in growth in 2018. It is significant that despite the sluggish Real Estate Sector, this category has maintained its 6% share.

In terms of volume, Hindi Publications continue to be ahead of English Publications, contributing 35% of the total volume while the share of English Publications dropped by 2%, and now stands at 25%. In terms of growth too, volume of English Publications has declined by 7% while Hindi publications grew by 2%. South Publications, except Kannada, show a decrease in volume.

Till 2014, Print saw growth in double digit in most years; however, growth has tapered off in the last four years. Magazines as a medium have failed to gain advertiser interest for a few years now, and in recent years, it has seen a negative growth.

Spends on the Digital Medium is expected to grow at 33% in 2019, reaching to rupee 15,612 crore market. FMCG, BFSI and e-commerce will contribute significantly and will be growth drivers for Digital Marketing.

Spends will be strongly focused on mobile and whether it is Search, Social or Video, about 90% of all Ad Impressions will be delivered on the mobile device. Video Advertising has gained traction rapidly and enjoys a massive 36% share of the Digital Market. Google and Facebook continue to dominate digital spends, cornering 65% of the total Digital Advertising pie.

Facebook has grown from 7.45 million users in 2009 to 280 million today and with WhatsApp, Instagram, Snapchat, Twitter, Quora and what not, social media contributes as much as 21% of the total Digital spend.

Internet penetration has increased from 4.2% to 41.4% over the decade. We have now become a Mobile First Economy, thanks to availability of cheap smartphones from leading Chinese innovators like Xiaomi, One Plus and Vivo.
Digital share of spends has seen the maximum change, growing in share from 4% to 22.5% over the decade. And it is expected to grow to become a rupee 25000 crore Industry by 2021, garnering a whopping 29% of the Adex.

With an overall share of 3% in the overall Adex, spends on the Radio will see a projected growth for 2019 at 12% to reach rupee 2510 crore from rupee 2150 crore in 2018. The biggest spenders in Radio are Real Estate, Retail, BFSI and FMCG Sectors. These categories have collectively contributed 44% to Radio’s growth.

In 2019, Outdoor Advertising is expected to grow by 5% to reach a size of rupee 3,533 crore from rupee 3365 crore in 2018. With a market share of 5% in the overall Adex, it is still one of the very important medium for the Advertisers.

Highest growth will be recorded in FMCG Category (33%), followed by Organised Retail (24%) and then Real Estate (18%); these top three categories will contribute to more than 75% of the overall growth. FMCG, which is the biggest category in outdoor Adex, has also started using innovative OOH heavily.

Science and data-based planning has finally arrived in OOH: Planning of most sites is being graded on multiple parameters and some baby-steps are being taken to get traffic count. Airport Advertising has now got firmly established and commands a healthy share of the OOH Market.

After a phenomenal rise of 37% in 2018, taking its Adex to rupee 805 crore, Cinema is expected to grow at 30% in 2019 taking Adex to cross the rupee 1,000 crore mark. Though the share of Cinema is just 1.5% in the overall Adex, it remains the favourite medium to reach out to captive audiences.

The factors showing the steady rise of Cinema Adex is due to increase in number of multiplexes in both larger cities and towns, digitisation of single screens, success of small budget films and growth in regional cinema.

Source
PITCH MADISON ADVERTISING REPORT 2019