WHILE the advertising business has undergone dramatic changes in the developed world, with the print media being the worst-hit in terms of revenue loss, the overall industry — which includes print, TV, radio, digital and out-of-home — continues to grow at a brisk pace in India.

Leading international media agencies have come out with reports of late indicating the continued surge in ad expenditure by corporations. Last week, GroupM, one of the world’s largest advertising media firms, and part of WPP, came out with a report suggesting advertising expenditure in India would grow at 13 per cent in 2018.

According to its report, ‘This Year, Next Year,’ India’s advertising investment is expected to touch Rs693.46 billion in 2018. “It will be a relatively better year from an ad spends perspective,” says C.V.L. Srinivas, country manager, WIPP India, and CEO, GroupM South Asia. “But while growth in digital will outstrip other media, India will continue to see traditional media formats also grow.”

The fastest growing segment would be digital, expanding at a frenetic 30pc and accounting for 18pc of all advertising. Television is expected to continue to dominate the advertising business, accounting for more than 45pc of revenues (a 13pc growth), while print will see its share decline from 29pc to 26.6pc.

Interestingly, according to the GroupM report, India will emerge as the world’s fourth-largest print advertising market (it was fifth last year), and eighth-largest in TV advertising (up from ninth last year). And in digital, it will be the 15th largest advertising market in the world (same as last year).

Other leading international agencies have also predicted similar growth rates for the Indian advertising industry. Magna Global (part of IPG Mediabrands) had earlier predicted a CAGR of 12.1pc in advertising revenues in India over the next five years.

Television advertising is expected to dominate the market in 2022, accounting for 41pc, while digital and print will account for 25pc each of the total market.

And Dentsu Aegis Network, a subsidiary of Japanese advertising and PR major Dentsu, in its Global Ad Spend Forecast 2018, predicted that ad spends in India will expand at 12.5pc in 2018.

According to Kartik Iyer, president, Media Brands and Amplifi - Dentsu Aegis Network India, digital media spend in the country is expected to increase by 30pc, with 43.6pc growth in mobile spend.

A key driver of growth would be the fiscal policies of the government, which are expected to be pro-spending and supporting the middle income groups. “In India, the significant improvement in availability of high-speed networks at a lower cost is making a huge impact in the efficiency metrics of digital media,” he says. “This will continue and therefore will support the faster growth of digital advertising.”

While mobile spend will boost digital advertising and television and radio will also fuel growth in advertising, print is expected to gain because of the series of elections in eight states in India this year and general elections next year. Governments and political parties spend huge amounts in print advertising before elections.

WITH key sectors of the economy — including fast moving consumer goods (FCMGs), e-commerce, automobiles, retail, telecom and finance — continuing to expand at a hefty pace, analysts expect the country’s advertising segment to cross the Rs1 trillion-mark in less than five years, catapulting India to the top-five markets globally.

It is today one of the fastest-growing ad markets in the world. The growth witnessed by major agencies such as GroupM in India is three times that of the global ad expenditure growth rate and more than double that in the Asia-Pacific region.

According to a GroupM report, India will emerge as the world’s fourth-largest print advertising market, and eighth-largest in TV advertising

With India investing huge sums in expanding its digital network, advertising in this sphere will gain tremendously over the next few years, say analysts, especially with the growing popularity of free-to-air channels and HD channels.

The electronic media in India continues to grow at an explosive rate. With almost a thousand private satellite channels broadcasting news and entertainment round-the-clock, the ad market is also burgeoning at a rapid pace.

A recent report by London-headquartered IHS Markit predicts that TV commercials will expand at a CAGR of almost 15pc over the next three years. The number of subscribers to online services such as Netflix and Amazon is also expected to triple to 18 million by 2021, boosting digital advertising revenues to nearly $5bn in just three years.

Of course, the sector has been witnessing some pressures of late. Last week, for instance, the Competition Commission of India (CCI) found Google of having abused its dominant position in online general web search and web search advertising services in the country and imposed a penalty on it.

The CCI imposed a penalty of more than Rs1.35bn on Google after taking into account its revenue from its India operations. The commission said allegations against Google relating to search results essentially centred on the design of Search Engine Result Page (SERP).

Of course, since Google had opted for displaying such results on free-floating basis in 2010, the CCI appeared satisfied and content with the minor penalty. And last week, Google decided to block all intrusive ads on websites, which bombard users, by default.

“It’s important to note that some sites affected by this change may also contain Google ads,” said Rahul Roy-Chowdhury, vice-president, Chrome. “To us, your experience on the Web is a higher priority than the money that these annoying ads may generate-even for us.”

But the Indian government has no plans to impose a ban on advertisements of junk food on television, despite growing demands for such a ban. According to Rajyavardhan Singh Rathore, while the government had no such plans, nine major food business operators have decided not to advertise their products with high fat, salt or sugar on TV channels focused on children.

Even a company like Unilever, which spends huge sums on advertising, has warned that it will pull out ads from Google, YouTube, Twitter and Facebook if they allow ‘toxic’ online content.

“Social media should build social responsibility,” CMO Keith Weed told a major meet of global advertising industry leaders in the US last week. “We will not invest in platforms that do not protect children or which create division in society.”

Published in Dawn, The Business and Finance Weekly, February 19th, 2018

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