The country’s low advertising spend to GDP ratio and rising consumerism make it one of the most promising ad markets. However, the emergence of digital media is set to materially harm the print industry in the medium to long term, according to a report.

While English print media is at a higher risk compared to the regional print media, given the limited reach of the internet in rural India, there are certain India-specific factors that could help print face competition from digital media, notes the report by IIFL Institutional Equities.

While print media ad spends growth decelerated sharply from 16 per cent compounded annual growth rate (CAGR) during 2003-07 to a meagre 4.5 per cent in the past three years, the slowdown in English media was more pronounced than in vernacular languages.

Vernacular papers benefited from continued strength in smaller towns and villages, said the report, adding a drop in ad spend from large national categories such as banking, financial services and insurance (BFSI), telecom, and consumer durables, partly explained the weaker growth for print. Additionally, education and real estate, the two big categories, witnessed a sharp deceleration. However, local advertisers maintained their higher spends, riding on the buoyancy in consumption.

An analysis of ad spends for the past 10 years by the research house has revealed that print ad spend is more sensitive to economic growth. “These factors make television ad spend more resilient,” noted Jaykumar Doshi, co-author of the report. “A larger audience base and diversified viewer profile make television advertising indispensable. Additionally, television is a better suited medium for certain types of ads such as new product launches or brand building. Hence, the impact of the internet on television would be lower as compared to print,” said Bijal Shah, co-author of the report.

GDP percentage

In terms of the global average, India’s ad spend as a percentage of GDP is significantly lower despite strong growth in the last decade. India's ad spend to GDP ratio is now at 0.37 per cent.

The authors have noted that though digital advertising is gaining traction, its limited reach and minimal fresh and vernacular content are limitations.

In the medium term, TV and print should dominate ad budgets, whereas digital would play a complementary role, notes the report, compiled by the research team on the media sector and advertising spend trends.

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