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Indian AdEx to increase by 12.6 per cent in 2015: GroupM

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MUMBAI: India’s advertising investment is expected to reach an estimated Rs 48,977 crores in 2015, up 12.6 per cent from last year. This was revealed in GroupM’s biannual advertising expenditure futures report titled This Year Next Year (TYNY).

As per GroupM, for the calendar year 2014, the ad spending stood at Rs 43,490 crores, which was an increase by 12.5 per cent over 2013. This growth was attributed to the heavy ad spending due to the General and State Elections and industry categories like e-commerce and Telecom. The FMCG sector, which contributes to nearly a third of the AdEx, had a steady year, growing broadly in line with the industry average.

Last year began with uncertainties on the political and economic front. Once a stable government came to power the mood changed to one of cautious optimism.

GroupM South Asia CEO CVL Srinivas said, “With a new Government coming to power the negative sentiment has lifted but there is still some bit of caution amongst advertisers. We continue to operate in the same zone as last year at an overall level. Digital, TV and cinema are expected to be the high growth media channels. We are seeing a lot more confidence amongst local businesses to invest in brand building than before. This is a positive sign for the industry. Penetration of smartphones coupled with the popularity of online video is making FMCG spend more on digital. Another trend is the emergence of categories like e-commerce and the increased competition in telecom both of which are aiding the growth of traditional media channels including print and TV apart from digital.”

As per the report, e-commerce is expected to lead the charge in 2015 in terms of ad spend growth although from a relatively smaller base than more established categories. There is increased competition in this sector and no dearth of funding. The FMCG, auto and telecom sectors are expected to do better than the previous year. More multinational entrants under single brand retail are likely to add to ADEX spending in the retail category.

The report added that the recent rate cuts by the Reserve Bank of India (RBI) will stimulate the banking sector, reactions of which are evident on a buoyant stock market. This year will possibly see a number of IPOs as there is a sense of stability in policy and investors are willing to take more risks. The market will also see higher spends from the Central Government as they showcase their new initiatives.

As per GroupM’s research of the Indian media industry, digital media continues to show the maximum growth with 37 per cent in 2015. Digital has been growing at an average rate of 35 per cent over the last two of years. Within digital media, video, mobile and social will be the biggest growth drivers this year.

Television shows a higher growth percentage in 2015 compared to last year with 16 per cent. TV channels will especially be bullish with cross media integration via their own digital platforms. The big ticket event this year is the ICC Cricket World Cup in February and March, with scope for programming and advertising innovation during the tournament.

Even with pressures on advertising revenues, the print medium shows an increase by 5.2 per cent as against the 2014 estimate of 7.6 per cent; however print magazines continue to be on the decline, as several are looking at digital delivery mechanisms.

The surprise element in the media mix has been cinema advertising, which finally closed 2014 with a 25 per cent increase. This year too, GroupM estimates this media category to grow at 20 per cent, as multiplex chains consolidate, leading to a more organised and accountable environment. With technology fuelling exhibition and distribution, especially in smaller towns, consumers will get a better viewing experience.

GroupM South Asia managing partner - Central Trading Group and Mindshare South Asia CEO designate Prasanth Kumar added, “Over the last few years, Indian media has been in a state of change. The next three to five years will be about embracing technology, which will allow both advertisers and media owners to customise 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.”

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