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GroupM: Ad expenditure to see 14% growth in FY'11

MUMBAI: With the onset of what appears to be a good monsoon and strong GDP rates, advertising expenditure in India is expected to see a 14 per cent growth in FY‘11 vs FY‘10.


The latest GroupM study titled ‘This Year, Next Year‘ reveals that the period January-March‘10 has seen a significant upswing in spends from traditional large spenders such as FMCG and telecom as well as categories that had previously seen a dip - financial services, auto and retail. This upswing has continued into the second quarter of the year with IPL cricket season receiving significantly more spends than it did last year.


Also, the rest of the year expects to see over 10 new launches each of car brands as well as new insurance products.
 
 
Television: TV is enjoying a good run and is likely to clock 20 per cent growth.


Television advertising which currently stands at Rs 99.14 billion in 2010, is expected to scale up to Rs 118.97 billion in FY‘11.


TV has benefited from both the traditional big spenders of FMCG and telecom as well as new launches and the revenues are strengthened due to two factors:


The industry is aggressively strengthening rates. This is helped by the fragmentation of viewing which leads to less overlapping viewers. As a result, to deliver the same reach, a plan now requires more channels. As channels get picked for incremental reach rather than merely to deliver frequency, the rate they can command improves.



Improved viewership of regional language channels and the subsequent strengthening of their rates.



 
 


Print (Dailies): Print is swinging back and is expected to show a growth of about 7 per cent
 
 
According to the study, this is driven by new launches in categories that were traditionally print heavy. Retail and consumer durables have seen strong growth in sales which is expected to fuel spends going forward. The new launches in auto and financial services of course give print a significant boost. Between players, however, there is wide variation in growth levels, wherein some players have seen double digit growths and others have seen negative growths. This has been in part due to the economic strength of the respective regional markets.


Radio: Radio is expected to grow even stronger than last year at 20 per cent


Of the total growth, the incumbent government channel, All India Radio (AIR), contributed about 46 per cent. Parliament / Lok Sabha Elections and National Congress Party elections contributed to approximately Rs 900 million on radio.


Due to recession, a lot of retail players looked at radio as a cheaper option (Oct to Dec 2009 & Jan-Mar 2010 most of the radio stations grew by 25 per cent vs an estimated 15 per cent in the post recession scenario). FMCG / telecom players / consumer durables - increased spends more than 15 per cent (with all three categories contributing to approximately 20 per cent of overall radio monies).
Going forward, an inflation rate of 15 per cent is expected with key players having announced hikes. The retail segment is increasing its spend in this medium. Hence, combined with volume increases, radio expects to see at least 20 per cent growth.


OOH: The sector is expected to post a 10 per cent growth.


For this medium, FY‘10 stayed against the same levels as FY‘09. Going forward the overall spurt of spending as well as new launches will result in increased money in outdoors also. There will, of course, be an impact of the Commonwealth Games. However, the extent is as yet unknown and is an unusual occurrence that will only impact the coming fiscal. 2011 is expected to grow at 10 per cent on the back of additional inventory but it will also depend on the state of European economy and some global businesses.


Digital


As per IAMAI reports, the display numbers for 2009-10 has been Rs 4.3 billion, revealing a growth of 32 per cent compared to the previous financial year.
Over 25 per cent of the media spends came from online services (travel, job, matrimony).


As the economy stabilised, media spends showed an increase towards the last quarter of 2009.


This year, the industry is already seeing inflation in some top sites and some key properties. IPL on Youtube was able to draw in advertisers and 2010 will see most of the categories increasing spend. Some of the large spends are likely to come from online shopping - existing brands or new brands setting up online sales channel. Search and mobile advertising will also be key growth drivers.


Search is expected to grow by 25-30 per cent. The growth areas for the key players (read Google which covers over 90 per cent market share) are going to be broadly in three areas-


Online Search - Currently search volume is pegged at 2.8 billion search queries per month (April ‘10 data) with categories such as entertainment, telecom and technology registering a search volume growth of over 50- 75 per cent on query terms. This is due to the concerted effort of Google trying to integrate search database of different genre such as Bollywood, finance and news besides enabling itself to track activities on social media sites such as Facebook and Twitter as part of its searches.



Mobile search - Of the total search queries on Google, a whopping 27 per cent of the searches happened on mobile that is people accessing Google Wap on mobile.



Content Network - The avenues of growth is only expanding by the day with more and more sites (content and social networking) incorporating search ads through contextual targeting (through Google or on its own). Google has further consolidated its position as the largest ad network, by offering image and rich media creative options to the search advertisers with long tail sites across categories.
 
 
Another area of growth on content piece, which is also supposed to be the growth engine for Google, is ‘YouTube‘ that has led to one of the successful content tie-ups in the history of online with IPL-3. This is besides the ever growing video content (both user generated as well as aggregated) on the site, with a precision targeting technology in terms of content and demographics, which has led to a 20-30 per cent growth in traffic.



Growth implications on online ad industry


With Google covering 80 per cent of the entire online universe (estimated to be 100 million unique visitors), advertisers will continue to increasingly have Google as part of its online media plan.



The ad industry is already witnessing categories such as FMCG, auto, technology and telecom expanding their online pie in favour of search marketing.
Key happenings in the mobile space where most of the operators are opening up their inventory for advertising are:


Mobile is becoming part of every integrated plan (even for brands that may not use other digital media)


More consumer exciting formats have been introduced which allow rich media creative - Flash, Video streaming


Usage of advanced platforms such as augmented reality, location based advertising will be the future on mobile advertising


Introduction of 3G - mobile social media, utility applications and mobile TV will become a reality
Retail Media


As predicted in the last report, this medium stays flat. Digital networks have dropped revenue while the usage and spends on mall space has gone up. This is being driven more in the smaller markets, where the relative difference in rates vs. larger towns has lessened.


Cinema


The last 18 months have seen the demise of the minimum guarantee (MG) system. Theatre chains have begun selling directly to clients. This has resulted in a drop in rates in some cases. On the other hand, digital cinema share has gone up considerably. As a result, overall industry number is likely to have marginal growths.

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