Indian ad spends growth to beat global averages

In keeping with the slew of reports for 2016, the Carat Ad Spend Report points to India as one of the fastest growing advertising markets in the world

The Carat report (September 2016) says that the buoyant Indian advertising market continues to lead growth prospects in the region and, in fact, across the world. Growth is being largely fueled by the country’s burgeoning e-commerce sector and the traditional big spenders, the FMCG companies.

In FY2016, the report estimates that Indian ad spends grew 12 per cent, in FY2017 it is expected to grow by 13.9 per cent. This is way ahead of China where growth is expected to be moderate at 5.7 (FY16) and 5.5 per cent (FY17), “as the market adjusts to a ‘new normal’ economic landscape,” as per the report. However China is among the world’s top five advertising markets in the world today and growth is slower also because it is being measured off a large base. Global ad spends are expected to grow at 4.4 per cent in FY16 and 4 per cent in FY17.

The Carat report outlook is in keeping with several other reports released this year, including the recent Pitch Madison Advertising report (PMAR 2016) which projected that Indian ad spends would grow by over 16 per cent in 2016. In this report too, the maximum contribution to the growth figures is expected from FMCG and e-commerce companies

The Carat report puts India second only to Argentina (40 per cent) in terms of growth in ad spends in FY16. But the numbers for Argentina have to be discounted, given its high inflation rates. The report also states that digital spends in FY16 and FY17 will outstrip industry growth rates across the world. Jerry Buhlmann, CEO of Dentsu Aegis Network said in the report, “Expanding over three times faster than the global rate, digital reaffirms itself as the unrivalled driver of growth.”

Digital spends are the reason that growth numbers have ended up in the positive column for the global ad industry, although India is an exception, given that digital is still a small percentage of the total media budget. “As the leading media type in 13 (out of 59) of the markets analysed, digital continues to grow at double-digit prediction levels of 15.6 per cent in 2016, accelerating further at 13.6 per cent in 2017,” the report said.

Digital spending is being driven by the high demand of mobile, online video and social media, a trend that has been visible through the past year in the manner in which Indian companies have been planning their ad budgets. Digital is also redefining the relationship between brands and consumers by offering several points of interaction between the two, the report noted. “Digital, and the data created, is redefining brands and agencies’ understanding of people’s behaviour,” said Will Swayne, global president, Carat.