Ad spending to grow 10%, hit Rs61,204 cr this year: GroupM

Media agency GroupM, in its biannual report on the prospects of advertising expenditure titled, This Year Next Year (TYNY) 2017, estimates that ad spends in India will grow by 10 per cent this year over the last year.

According to the report, India remains one of the fastest growing ad markets globally.

The agency forecasts advertising investment in India to reach Rs61,204 crore this year. The ad spends in 2016 were Rs55,671 crore. Even though the year began on a very optimistic note, the overall advertising expenditure (adex) took a downturn due to lower-than-expected ad spend growth from sectors like FMCG, traditional retail, telecom and sporadic spending in categories like e-commerce.

In the January-October period, the adex was growing at a lower trajectory than forecast. Furthermore, demonetisation in the last quarter had a negative impact of about 2 per cent on the total adex in 2016, said the report.

Among the media, digital is still expected to grow the fastest at 30 per cent, touching Rs9,490 crore this year; however, it has slowed from 47 per cent growth in 2016.

TV will see the highest spends, although the growth would decline to single digit. Ad spends on TV will grow to Rs27,378 crore, up 8 per cent from last year. With free to air channels adding more inventory and pure HD content gaining ground, the market will also see a consolidation of niche channels.

The print medium is expected to grow 4.5 per cent, an increase from the 4 per cent in 2016. Ad spends on print are expected to grow to Rs18,258 crore. The increase in ad spends expected from print-heavy sectors like auto, BFSI, and e-wallets will contribute to this growth. Vernacular and regional newspapers will see a higher growth rate.

C V L Srinivas, chief executive of GroupM South Asia, said, "Despite a volatile 2016, we are estimating advertising expenditure growth at 10 per cent in 2017. The first quarter will give a slow start to the year, with the market picking up from March-April, fuelled by a stable recovery process post demonetisation. Sectors that are contributing to this positive trajectory include auto, media and e-wallets.

''In addition, government and political parties will increase spending with elections in several states this year."

He added, "Digital is leading the adex growth with a 30 per cent growth, while TV continues to be the largest medium in the mix. Print continues to grow at a stable rate of 4.5 per cent and is still the second largest medium in the adex."

While 80 per cent of incremental ad spend growth in major markets comes from digital media, in India the numbers are more evenly split between traditional and digital media. Digital media accounts for about 40 per cent of the incremental ad spend growth.

Radio is expected to grow at a little over 10 per cent, there is scope for the medium to pick up as the Phase 3 rollout is completed in 2017. Higher growth is expected as stations will see the supply impact of the full year.

Other media such as OOH will witness good traction from sectors addressing rural audience and premium niche audience.

As per the trend in recent years, Cinema advertising will grow at a high double-digit rate of 20 per cent. Cinema consolidation has led to investments in infrastructure, this coupled with the growing acceptance of premium Indian and Hollywood content by advertisers augurs well for the medium.