Advertising expenditure (adex) in India is expected to grow 12% in the second half of this year over CY 2022, said Elara Capital in a report. With ad money getting split between TV and digital and new age/e-commerce companies reducing spends to focus on profitability, properties like the IPL (Indian Premier League) have recorded a significant fall — of 30%–35% — in overall ad revenues, said the report. The property last year garnered Rs 4,300 crore (TV plus digital) and is expected to earn Rs 3,300 crore in the 2023 season.
The H1 adex is slated to grow by a mere 7%-8% over last year, with many big spenders having cut down their advertising budgets in response to inflationary pressures and macroeconomic uncertainty.
Agreeing with the findings, Pranav Agarwal, co-founder, Sociowash, said adex growth is expected to be slow in H1 owing to economic uncertainty and companies keeping a close watch on their bottom line. Having said that, he adds, H2 is expected to grow at a higher rate than H1 and upon entering the October-November-December period “adex is expected to increase with Diwali festivities and the most advertised sport in India, the Cricket World Cup, ending the year on a positive note”. When it comes to digital advertising, he notes that H1 spends will focus more on conversion-led activities that directly impact sales while in H2 money will move towards top-funnel and BAU (business-as-usual) plans.
Elara Capital also predicted that the India adex growth is likely to be revised downwards to 10-12% for the full CY23, from an estimate of 16% YoY growth projected by larger ad agencies.
GroupM in its TYNY report predicted Rs 20,000 crore of incremental ad spends in 2023 compared to 2022 — a 15.5% increase in ad spends overall. According to its projections, the overall ad market was expected to reach Rs 1,46,450 crore in 2023. For the records, ad spends in the country grew by 15.7% from Rs 1,09,636 crore in 2021 to Rs 1,26,818 crore in 2022.
According to Elara Capital, H2CY23 is expected to log a respite from adex slide as large advertisers from sectors such as FMCG, auto, and telecom have lined up numerous fresh launches, which had been put on hold till now.
TV is projected to benefit the most from this since these brands advertise substantially on the medium (54% of the TV adex is from these verticals). New-age companies will continue to play spoilsport and are expected to report a decline of 20%-25% in their ad budgets, which will have a negative impact on overall adex growth. On the other hand, alcoholic beverages could be one of the few segments to post strong growth in advertising expenditures in H2CY23.
“Our current estimates for ad revenue in FY23 may see a downward revision as TV adex is estimated to move back towards 90% recovery versus the pre-Covid levels as compared to a 96% recovery in FY22,” said Karan Taurani, senior VP, Elara Capital.
He says the upcoming general election will be a huge factor in CY24 ad spending, and that TV, particularly the news genre, will benefit greatly from it. Due to record GRP ratings, regional markets (particularly the southern states and Marathi) are important players in TV adex growth and will outpace the average growth of the TV sector. “Broadcasters may need to focus on SVOD (subscription video on demand) as a major revenue stream, as AVOD (advertising video on demand) in India remains highly competitive with global giants (search and social) and sports-driven OTT platforms commanding a lion’s share,” he summed up.