An ode to Advertising 3.0

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: The advertising industry was hardly $1 million (at today’s exchange rate) about 60 years ago. About 20 years ago, the volume had gone up 40 times to $40 million, ie we added about a $ 1 million every year after our independence as advertising spends. The role of advertising was limited since the supply side was restricted by control and quota. Let us call this Advertising 1.0.

Over the next 20 years, that is as of today the volume has gone up 100 times to about $4 billion in conventional media. The base was low, yes, but there is no taking away the robust growth our industry enjoyed primarily after the initial seeds of liberalisation were sown by Rajiv Gandhi in the mid to late 1980s. India has witnessed a heady growth since the turn of this millennium. We not only saw growth in creative and media agencies but also speedier progress in digital, healthcare, promotions, events, activation etc. The industry matured with many specialists shops being set up to meet the growing demand of both marketing communication and marketing services kind. We also saw India take root as a force at the world’s most prominent advertising festival like the Cannes. Our agencies also did well at the New York Rx Club Awards shows meant for healthcare. We could call this era, Advertising 2.0.

Many experts have found a strong correlation between size of the economy and the share of advertising investments in it. The larger the economy, the proportion of advertising spends also increases dramatically. Our current advertising to GDP ratio is about 0.35%. In many western markets it is well over 1%. In the US, it is about 2.2%. In China, it is 0.8%. PriceWater- houseCoopers (PWC) estimates that the Indian subcontinent is poised to outdo China in media and entertainment spends by 2012. China, predicts PWC, will show a media-spend growth rate of 15% within the next four years, whereas India is forecast to reach 19%. Because of the great growth opportunities, many multinational agencies took to India seriously and today, virtually every advertising company that is somebody elsewhere is here.