Cash Crunch Blip Over, Ad­ver­tis­ing Spends Set to Soar

Me­dia agen­cies project dou­ble-digit growth on the back of in­creased con­sumer spend­ing; tele­vi­sion to out­pace print and out­door for­mats

The Economic Times - - Companies: Pursuit Of Profit - Gau­rav.Laghate@ times­group.com

Mumbai: The In­dian me­dia in­dus­try is bullish about a hand­some ad­ver­tis­ing growth in 2017, as it comes out of a tem­po­rary set­back on ac­count of de­mon­eti­sa­tion.

Ac­cord­ing to Deloitte, In­dia is one of the few large mar­kets where all tra­di­tional me­dia will wit­ness growth.

The global au­dit and con­sult­ing ma­jor has stated in its Tech­nol­ogy, Me­dia & Telecom­mu­ni­ca­tions (TMT) Pre­dic­tions re­port for 2017 that tele­vi­sion ad­ver­tis­ing in In­dia is ex­pected to grow at 11%, print ad­ver­tis­ing at 7.6%, and other me­dia (out­door, ra­dio and cin­ema) be­tween 7% and 12%.

Ashesh Jani, part­ner at Deloit­teIn­dia, said macro-eco­nomic fac­tors, GST and other re­forms would fuel the ad growth. “In terms of CAGR, TV ad­ver­tis­ing might over­take the print growth this year,” he said.

One of the key fac­tors for the growth of tele­vi­sion ad­ver­tis­ing is mass ap­peal of tele­vi­sion in the coun­try.

Of 225 mil­lion homes, over 183 mil­lion have TV sets and the medium re­mains the most cost ef­fec­tive to

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reach max­i­mum num­ber of peo­ple. More­over, in­crease in TV pen­e­tra­tion will lead to greater ad spends. Even me­dia agency hon­chos say con­sumers are spend­ing again and the ad­ver­tis­ing is go­ing to pick up — re­sult­ing in a dou­ble-digit growth in the ad­ver­tis­ing ex­pen­di­ture for the in­dus­try.

“The first cou­ple of months may re­main tight, but I am con­fi­dent that econ­omy will pick up, and in my es­ti­mate TV ad­ver­tis­ing will grow be­tween 11% and 12% in 2017,” said Shashi Sinha, CEO at IPG Me­dia­brands In­dia.

Broad­cast­ers had wit­nessed a sharp drop in ad­ver­tis­ing across TV chan­nels in the months of Novem­ber and De­cem­ber, in the af­ter­math of Prime Min­is­ter Naren­dra Modi’s an­nounce­ment of de­mon­eti­sa­tion of high­de­nom­i­na­tion cur­rency notes of ₹ 500 and ₹ 1,000 with im­me­di­ate ef­fect from Novem­ber 9, 2016. FMCGs, auto, re­tail and many other “high-spend­ing” sec­tors ob­served a sud­den fall in de­mand as de­mon­eti­sa­tion sucked out the cur­rency, re­sult­ing in re­duced ad spends.

Sinha, how­ever, em­pha­sised that this was a tem­po­rary episode. “There is no struc­tural rea­son for th­ese sec­tors to re­duce ad spends. It (de­mon­eti­sa­tion) was a tem­po­rary one, which will not last long,” Sinha added. IPG Me­dia­brands is ex­pected to come out with its own pre­dic­tions for ad­ver­tis­ing ex­pen­di­ture later this month.

Publi­cis Groupe-owned Zenith had ear­lier pre­dicted 11.2% in­crease in the over­all ad­ver­tis­ing spends in In­dia. Ac­cord­ing to Zenith’s re­port, which was re­leased in De­cem­ber last year, ad­ver­tis­ing ex­pen­di­ture was ex­pected to reach ₹ 54,344 crore by end of 2017. While me­dia agency ex­perts are agree­ing on early signs of re­cov­ery and a dou­ble-digit growth, ET was first to re­port the in­crease in ad­ver­tis­ing vol­umes on TV in the month of Jan­uary. Mean­while, global me­dia agency gi­ant GroupM and In­dian me­dia agency net­work Madi­son are also go­ing to re­lease their ad ex­pen­di­ture fore­cast re­ports for 2017 in the next week.

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