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“Emerging categories are looking at digital as it is cost effective to reach the TG”: CVL

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One of the most awaited report, which brings out the trends of advertising spends for the calendar year, was released by media agency GroupM on 2 February. Called ‘This Year, Next Year,’ the report highlights a marginal increase in the AdEx: from 12.5 per cent in 2014 to 12.6 per cent in 2015.

Inaugurating the report, GroupM south Asia CEO CVL Srinivas said, “With achhe din at the centre, we are hoping that things will only go upwards from here.”

The media agency has forecasted the nation’s advertising investment to reach an estimated Rs 48,977 crore in 2015. Digital, as per the report, will show maximum growth with 37 per cent in 2015, which had been growing at an average rate of 35 per cent over the last two years.

With the whole industry looking very positive, Indiantelevision.com’s Seema Singh and Meghna Sharma caught up with Srinivas to get a few insights on the released report and the way forward.

Excerpts:

What is the highlight of ‘This Year Next Year’ findings?

We have just released GroupM’s ‘This Year Next Year’ ad spent forecasting and GroupM is forecasting ad spent growth of 12.6 per cent this calendar year, which is January to December as compared to the previous year. We are in the same level as we were last year, which we estimated to grow at 12.5 per cent.

General elections helped increase the ad spent last calendar year. Wouldn’t World Cup 2015, Indian Premiere League and Delhi elections help boost AdEx?

To an extent, the World Cup 2015 and the other opportunities offset the fact that we don’t have the general elections this year. Because last year, minus the general elections, the total AdEx grew at over 10 per cent. So on a like-to-like basis, if we remove the general elections, then the AdEx is growing from 10 odd per cent to 12.6 per cent, and this is definitely a growth with the rest of the industry. But if you bring the general elections into play, looks like we are in the same zone.

We see this year, once again, to be strong for e-commerce. While the base is still small, we expect them to increase their ad spent anywhere upwards of 50 per cent. We also see a good year for segments like auto and BFSI. Not only this, FMCG which is a very big contributor to the AdEx, while will be a bit under pressure, is expected to be steady on their ad spent.

The report also highlights the growth of digital. How do you see Star India’s Video on Demand (VoD) platform hotStar and MSM’s Sony LIV adding to the medium?

Digital has been growing, in fact by about 35 to 40 odd per cent year on year for the last many years and we forecast the ad spent growth by about 37 per cent for the current year and I think the reasons for that would be:

1) Lot more penetration of smartphones and we are seeing better infrastructure and hopefully we will see better bandwidth in months and years to come, and therefore using smartphones to connect with consumers with lesser wastage is a trend that will only catch on from here.

2) The other contributor to the digital ad spent will be digital video. The fact that as Indians we love consuming video on content and we are one of the highest consumers of video online, plus there are a lot of platforms opening up for video consumption, large broadcasters are launching their own platforms to disseminate content and hence more opportunities for advertisers on digital media.

3) A lot of emerging categories are looking at digital, because it is very cost effective for them to reach out to the target audience.

So all said and done, digital will see a strong growth.

What about broadcasters who are launching new channels?

TV, despite having a high base already and contributing to 44 per cent of the total AdEx, according to our estimate, will continue to grow at healthy double digits. Also this year, we have opportunities like the World Cup and various programming initiatives being taken by channels. We also have some increase in the supply that is available across newer channels. So overall, we see the medium to grow this year as well.

The report shows a drop in OOH. What’s the reason for that?

We have estimated that OOH will grow by four per cent this calendar year. I think these are estimates of what each medium will do. But the bigger story is that there is huge opportunity to grow across media.

We are still a nation, which is under branded and we are still scratching the surface when it comes to smaller towns, geographies, which are regional and we need to get more and more of those brands and clients to advertise. I think, the more we do that, the more we can open up revenue opportunity for media players in this industry.

The sky is the limit for all media - be it radio, OOH or print and hopefully 2016-2017 onwards, one would see the industry moving at higher growth rate when consumer sentiment improves and one actually sees off takes going up on the ground.

You have also stressed on native advertising being the trend to watch out for. How can one implement this?

It is one of the formats of advertising, which is gaining in popularity because of more consumption of content of digital media of smaller screens. So you cannot always use the same content or format of advertising for different screens and different modes of consumption. On smaller screens content is consumed on the go and is quick and easy. The consumption is very different and so there needs to be a different style of advertising.

Native advertising has been born out of this change in consumption habits. It is one form of advertising and will not override all the other forms of advertising because you will still need the traditional storytelling and brand advertising, but it’s definitely a format which is here to stay and provides opportunities to brands to communicate and connect with its consumers.

Last year, GroupM revised its report. Will you do that even this year? If yes, will it be upwards or downwards? Do you think ‘Achhe Din Aa Gaye Hai?’

The way we do the study is that we put out the number at the start of the year basis all the analysis that we do through our intelligence and analytics team. We get a chance to review our numbers in the middle of the year, because by then we can get real data and numbers. So we are able to go back and test our hypothesis and take a call if we have to revise our numbers.

Currently, it is very difficult to say if we will revise our numbers and if so, upwards or downwards, because it will all depend on the performance of the first five-six months. But if at all, we will need to revise the numbers, we will do it in July and not wait for the end of the year.

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