Indiantelevision.com Team

(27 April 2009 11:45 pm)

MUMBAI: As against the projections of KPMG, the GroupM report on the media industry in India seems grimmer. The media buying arm of the UK-based marketing communications firm WPP Group has put the onus of the lower ad growth on the economic downturn.

However, this time, as there is uncertainty in the economy combined with “negative sentiments,” GroupM has limited its predictions to 2009 and made no prediction for 2010.

Overall, the report titled ‘This Year, Next Year – India Media Forecasts’ – suggests that the Indian media advertising market will see a dismal growth of 4.7 per cent this year, as against 14.7 per cent in the year ago period, to reach a total of Rs 237.55 billion.

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The advertising revenue of newspapers (print) will see a negative growth of 2 per cent (Rs 98.32 billion), as against a healthy growth of 12 per cent in the last year (Rs 100.33 billion).

“Print has taken a beating towards the latter half of 2008 with significant drops in inventory and will continue to do so. The only respite will be the General Election,” the report says.

The television industry will grow at a much slower rate of 7 per cent (Rs 89.88 billion) after enjoying advertising revenue growth of 18 per cent in the last two years. In 2008, the actual ad revenue of the TV genre was Rs 84 billion.

“Given that it is the medium of choice for the categories that are continuing to spend well, it faces a less risky future in the coming year,” the report adds.

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Radio, on the other hand, will still be able to see a growth of 15 per cent (as against 49 per cent) while digital media will be growing at 25 per cent (unlike previous year’s 74 per cent).

“Radio is expected to do reasonably well as it has established a widespread network of markets and is a relatively less expensive medium than TV and Print, (whereas) the response-driven nature of digital media will ensure that they continue to do well, though growth will be a little lower than that seen in past years,” the report says.

Television

According to the report, there were two big events in the TV industry in 2008 - emergence of cricket as televised entertainment i.e. Indian Premier League, and the successful launch and quick and sustained rise of the Hindi general entertainment channel (GEC) Colors.

TV has done better than expected in 2008, on the back of strong viewership. The report also adds that with most of the new GEC players emulating the leaders in their programming, the overall GEC share remained more or less same while the audience base fragmented. This eventually led to softening of advertising rates in GEC content. The rate cuts were not, however, as steep as the fall in audience, so cost-per-rating point rose.

The key drivers for the growth of the TV industry in 2009 will be: FMCG, Telecom and Education categories; increase in advertising rates and audience fragmentation in key genres, resulting in higher cost per contact; increased time spent at home resulting in higher viewership; increased hours of cricket telecast: potentially 33 per cent more days in 2009 compared to 2008; regional and news channels' growth on the back of increasing regional focus of advertisers; and elections resulting in an increase in advertising rates.

The report also predicts that the rest of the year (2009) is unlikely to see any major channel launches owing to the adverse economic conditions and ever-increasing entry and distribution costs. Accountability, network-wide deals and greater flexibility in offering tailored deals will set successful broadcasters apart from the rest. GECs will grow on the back of better advertising yields while erstwhile big-ticket money-spinning properties will face pressure.

Radio

2008 was a successful year for the radio industry which saw a whopping ad spend growth of 49 per cent, from Rs 5.9 billion in 2007 to Rs 8.8 billion in 2008. Radio industry’s contribution to the overall AdEx rose from 3 per cent in 2007 to 4 per cent in 2008. The government-owned All India Radio (AIR) was the single largest contributor with revenue of Rs 2.9 billion.

The opening up of several new markets in 2008 resulted in growth of 62 per cent for private FM (frequency modulation) players. The resultant increase in reach prompted advertisers to spend more on the medium. National advertisers bought inventory across markets and contributed to 70 per cent of the total revenue. The remaining 30 per cent came from local advertising which in some cases accounted for 60 per cent in smaller towns.

The main categories advertising on radio have been media and entertainment, telecom, FMCG, services, retail, education and automobiles. Financial services and real estate, which were key contributors till 2007, have shown a decline in spends owing to the economic downturn.

At present, there are a total of 238 FM radio stations from 40 broadcasters across 90 cities in India. The players with the highest number of operational stations are Big FM with 44 stations, Radio Mirchi with 32 stations, Radio City and South Asia FM with 21 stations each and My FM with 17 stations.

The biggest revenue earners of 2008 are Radio Mirchi followed by Big FM, Radio City and Red FM in that order, says the report.

The growth in radio will be triggered by: Increased spending on radio from categories such as telecom, media and FMCG, which now have a more cost-effective option compared to TV and print to reach more markets; radio being an effective and efficient medium for local advertisements, smaller markets will gain from categories such as retail and education; and six-city coverage by Radio Audience Measurement (from TAM Media Research) plus ad expenditure tracking, thus increasing the credibility of the medium.