Indian ad industry to grow at 14% CAGR to Rs 426.9 billion by 2014

MUMBAI: The Indian advertising industry is set to grow at a CAGR of 14.1 per cent to touch Rs 426.9 billion in 2014, says a recently released Ficci-KPMG report.

The report notes that amidst an uncertain economic environment and low industry sentiment that prevailed in 2009, the Indian advertising industry managed to almost sustain its media spend levels of 2008, falling marginally by 0.4 per cent to stay at Rs 220.3 billion (Rs 221.2 billion in 2008) for the calendar year.
With the market picking up in the second half of 2009, the advertising industry is expected to grow by 12 per cent in 2010 to reach Rs 246.9 billion.

“While the worldwide advertising forecast for 2009 was estimated to fall by 5.5 per cent, Indian advertising revenues were not subjected to similar reductions. The marginal fall of 0.4 per cent was not pervasive across media platforms,” the report notes.
Television and Internet advertising managed a growth of 7 per cent and 25 per cent respectively, whereas other platforms registered a de-growth of over 5 per cent.

The year 2009 brought in focus on the bottom line margins and greater consciousness on discretionary spend amongst advertisers.

In segment wise distribution, television is expected to garner a greater percentage of the total advertising revenues and constitute the largest share of the overall media spend eventually.

While print continued to dominate advertising spend in 2009, it lost a fraction of its overall market share to other mediums. Despite a 4.6 per cent fall in advertising revenues, agencies continue to be bullish on print advertising in 2010 and 2011, the report states.

In 2009, with declining spot rates and an increased focus on market expansion, the total number of advertisers increased by 7 per cent on print and 11 per cent on television. Compared to 2008, both regional print and television gained a larger share of advertising volumes while national players marginally lost their hold.

Some interesting points in the report are that the advertising spends by Real Estate, InfoTech, Financial Services, Retail and Apparel sectors fell significantly in 2009 while that by FMCG, Telecom and Education are believed to have increased over 2008. However, the distribution of advertising spends across categories saw some shift. Several FMCG brands including Coke and Pepsi joined the online advertising platform.

Also, IT and Telecom players continued their digital spend while the share of BFSI sector in online advertising volumes declined. Education, which largely dominates advertising on print media, found coverage on national television and radio. The luxury segment which had until recently restricted advertisements to English newspapers and magazines, saw television and OOH campaigns for niche brands such as Mont Blanc.

For other Asian markets such as Singapore, Hong Kong, China, Japan and Philippines, advertising spend over the last few years has accounted for approximately 1.2 to 3.5 per cent of the GDP. However the share of advertising spends in India remained in the low range of 0.4 to 0.47 per cent. So, with India’s GDP expected to grow at nearly 7 to 8 per cent in 2010, the outlook for the year looks to be more promising with advertising growth returning to double-digit levels.

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