The Hindu Business Line : Ad industry mirrored growth in economy

The growth in advertising in 2006 was more a reflection of how the rest of the industries and the economy grew. Estimated growth levels ranged between 12 and 16 per cent with new emerging businesses being launched within the industry.

"The year 2006 was a growth year for the advertising industry — my estimate would be a growth of around 15 per cent over 2005 — and I expect this momentum to continue the following year," observes Mr Pranesh Misra, President & COO, Lowe Media.

Telecommunications was perhaps the highest growing sector, he said, given the growth in subscribers and the strong competition between players. Banking and finance also saw a great amount of increased action, with public sector banks, multinational banks and other financial institutions intensifying their activity. Many multinational banks started advertising — Deutsche Bank, Barclays and even PSU banks such as Bank of India launched theme campaigns following in the footsteps of SBI and Bank of Baroda.

Consumer durables

The consumer durables segment saw a bit of a slowdown in ad growth rates. "I think this segment will grow rapidly next year. FMCG grew at a steady pitch last year, after a three-year slowdown. This sector should continue growing in the ad investment,'' added Mr Misra.

Television and print continued to be the most dominated media. As Mr Misra explained, "The balance between media is still maintained — with domination by TV and print. Radio is growing at a fast pace, and should grow fast for the next five years. Outdoor is getting more innovative and should also grow faster than overall media expenditure. But given the small base of radio and outdoor, these would continue to be smaller segments for the next few years.''

Specialist divisions within agencies especially in the area of sports-led marketing saw a plethora of outfits cropping up. While O&M launched Ogilvy Sport, entities affiliated to other ad networks such as Havas Sports and Vyas Giannetti Sports also made an appearance.

According to Atul Hegde, COO, Vyas Giannetti Creative, "While the ad industry grew at a healthy rate, clients were looking for specialist solutions. Some of the agencies including ours added sports marketing as a new offering."

`A good year'

Describing the year gone by, Mr M.G. Parameswaran, Executive Director, FCB Ulka, said, "The year 2006 was a good year for the advertising industry, with double digit growth in spends across most product categories. However, media inflation started rearing its head again. Categories such as financial services/banks, telecom, auto and real estate were the big drivers of ad spend. The war for talent started getting fierce. Average tenure of a new recruit started getting shorter, while salaries and increments started moving up. This has made agencies look hard at their numbers and start negotiating better with their clients for a fair remuneration. The coming year should see ad spends moving up in a similar manner, with a greater pressure on margins and talent attraction.''

Giving further insights into media trends this year, Mr K. George John, CMD, TBWA/India, says that even though print has held on, the growth in value is a bit of an illusion. "The growth has come as a result of rate increase every year and hence inflation is the reason for growth. Secondly, it's the seven or eight English mainline dailies that are driving the growth and we have over 300 certified publications coming out. Print has almost entirely lost out on the FMCG business. Today, educational institutions and real estate are the biggest categories for print. The surge in TV has happened because of the expansion in news channels."

Mr John says that less than Rs 25 crore was contributed by the genre before 2000 and currently it is Rs 900 crore. The advertising inventory time has increased from less than 100 seconds in an hour to over 16 minutes in an hour. Today there are over 800 brands that use the genre regularly.

Outdoor as a medium gained visibility as the largest retailer in the country, Pantaloons, decided to make a foray into the businesses along with agencies such as Euro RSCG striking a strategic alliance with the Shanghai-based Focus Media. Observes Mr John, "Out-of-home as a medium will see more technological advancements. There will be more and more foreign companies buying out Indian companies in the future.''

Besides, retail media also emerged as a big opportunity as new companies such as Tag Media and Flash Media were launched. Adds Mr Parameswaran of FCB Ulka, "With the growth of organised retail, there will be a big growth in specialised promotional inputs tailor-made for the segment. Activities to engage the consumer while he/she is shopping will be the order of the day.''