After two disappointing years, brought on by the body blow dealt by demonetisation and Goods and Services Tax (GST), growth in advertising expenditure is expected to climb to 12.03 per cent in 2018, according to the Pitch Madison Ad Outlook 2018 report. Growth in 2017 was a mere 7.4 per cent, as compared to a projected growth rate of 13.5 per cent, with traditional media growing only 4 per cent.

Ad spend or advertising expenditure (Adex) relates to advertising and estimates expenditure across key media properties like television, print and online. Announcing the Adex forecast for 2018 at an event in Mumbai, Sam Balsara, Founder, Chairman and Managing Director, Madison World, said advertising spend is expected to reach ₹59,530 crore in 2018, from the ₹53,138 crore clocked last year.

Print adex slumps

Amongst other media properties, the Print medium continues to be the second highest contributor to Adex after TV, with a share of 35 per cent. Though Print Adex grew only 2.7 per cent in 2017, “the lowest seen in nine years, Print Adex will grow at 5 per cent in 2018 and is expected to come close to ₹20,000 crore in 2018, with regional publications leading growth.”

Balsara said Print Adex would grow at 5 per cent versus total Adex growing at 12.04 per cent in 2018. “Whilst this is the lowest growth among other media, with Digital at 25 per cent, Cinema at 14 per cent, Television at 13 per cent, Radio and Outdoor at 10 per cent each, the growth forecast of 5 per cent for Print Adex must be viewed in the context of global readership trends because of which Print Adex is declining in almost all countries of the world. India is possibly the only major country where Print Adex is growing,” Balsara told BusinessLine .

Commenting on the just released Indian Readership Survey (IRS) figures, Balsara added that print readership is “still strong and growing in India. However, the earlier habit of reading a newspaper every day without fail seems to be fading, and whilst people still read newspapers in very large numbers, they seem to read them 3-4 times a week. That is why IRS Reports no increase in Average Issue Readership but a 40 per cent increase in Total Readership.”

In order to take advantage of this growth in Total Readership, Balsara said publishers should offer corporate and brand advertisers incentives “to repeat the same ad in the same title 3-4 times a month at progressively reduced prices. This would help publishers garner additional revenue and help advertisers tap into additional readership.”

The prognosis for 2018 is clearly upbeat, with Adex growth pegged at 12.03 per cent. Despite the fact that the Indian media and advertising industry had to face the twin burdens of demonetisation and the introduction of the GST, which severely stunted growth of Adex in 2017, the economy is expected to recover and the market to swell, adding ₹6,392 crore to Adex to reach a total size of ₹59,530 crore.

‘GST, demonitisation hit Adex’

Last year, the fall was very severe. Though the Indian advertising market had clocked a healthy 16.5 per cent in 2014 at ₹37,405 crore, it climbed 17.6 per cent in 2015 to ₹43,991 crore. However, 2016 saw a dip, and the market grew just 12.5 per cent at ₹49,480 crore. In 2017, growth almost halved to just 7.4 per cent.

Balsara said “with advertising, or for that matter the Indian economy, you can't keep a good thing down for too long.” The optimism was, however, tempered by the fact that the government is set on its reform agenda for the long-term good of the economy.

Adding a note of caution, Balsara pointed out that some other reforms introduced during the year, “which is good for the economy in the long run, but may have the short-term impact of destabilising the economy once again, the way demonetisation and GST did,” could provide a drag to the the growth of the advertising expenditure market.

Some signs were clearly positive, like the return of consumer spending, as well as the accrual of some benefits of GST. The eight State Assembly elections scheduled during the year, preceded by State Government publicity drives, as well as increased publicity by the Central Government on account of the ensuing Lok Sabha elections in 2019 were the other positives for ad spends.

Moreover, as many as 16 new launches by automobile companies were expected in 2018, indicating huge spends by auto majors, as well as increased activity in the sporting arena from both cricketing and non-cricketing leagues and the FIFA World Cup, coupled with a strong come-back by fast moving consumer goods (FMCG) companies on the back of increased rural demand, and launch of new Ayurvedic lines by FMCG companies, were some of the other indicators.

Biggest brunt

If all the indicators proved right, Adex is expected to touch nearly ₹60,000 crore in 2018.

The Print medium bore the biggest brunt on account of demonetisation and GST. Like the overall Adex, Print de-grew in the first quarter by as much as -5 per cent, and then marginally grew by 3 per cent in the second quarter, before growing at 9 per cent in the last quarter, according to the report.

FMCG, auto, education and the retail sector, the main categories that used Print, increased their dominance from 50 per cent share last year to 62 per cent in 2017. In terms of category contribution, FMCG and the auto sector continue to be the largest contributors to the Print pie with a contribution of 14 per cent each, followed by education at 10 per cent. The real estate category, again a staple for newspapers, saw a degrowth of -7 per cent, thanks to RERA, the report added.

While only four categories account for 75 per cent of television advertising, it takes as many as 13 categories to contribute the same percentage to print advertising, demonstrating once again that print has a wide-spread clientele and, therefore, is less vulnerable.

The report added that Print loyalists like the auto sector and mobile handsets, both because of new launches, and the education sector, besides the government and election-related advertising, are likely to be growth drivers for the print industry.

Massive strides

Digital grew by 27 per cent, adding nearly ₹2000 crore to Adex, to reach a size of

Rs 9,303 crore in 2017. It now contributes a whopping 17.5 per cent to Indian Adex, with video category gaining huge ground, along with search, display, native and programmatic advertising.

Digital advertising is projected to grow by about 25 per cent to cross the ₹10,000 crore mark and grow to ₹11,629 crore in 2018. The report noted that digital Adex continues to grow unabated and in 2017, grew by a further 27 per cent on the back of 43 per cent growth in 2016 over 2015.

Over the last five years, digital has grown at a compounded annual growth rate of 32 per cent.

At ₹9,303 crore, digital is 17.5 per cent of Adex in 2017. It was only 8 per cent of Adex in 2012.

The forecast for digital in 2018 is excellent. “Expect the momentum in digital to continue and project a growth rate of 25 per cent, taking the digital Adex up to ₹11,629 crore in 2018,” said Balsara.

As the reach of digital crosses 450 million and the smartphone Internet user-base crosses 300 million, digital is likely to hit the big boys of media in a bigger way than it already has, noted the report. FMCG, telecom, BFSI and real estate are set to continue to be growth drivers for digital, whereas e-commerce will remain its backbone. Facebook and YouTube will continue to dominate the video platform along with OTTs such as Hotstar, Voot and SonyLiv making their presence felt on the back of investments in original content.

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