ALL advertising is going the digital way, and all digital buying will be programmatic, said the nation’s largest media buying company GroupM India, part of the advertising communications holding company WPP Plc., as it unveiled its bi-annual advertising expenditure futures report This Year Next Year (TYNY). The report forecast India’s advertising investment to reach an estimated R48,977 crore in 2015.
This represents a growth of 12.6% for the calendar year 2015 over the corresponding period in 2014. As per GroupM, the country’s ad spending was R43,490 crore for the calendar year 2014, an increase by 12.5% over 2013. This growth was attributed to the heavy ad spending due to the Lok Sabha and Assembly elections in several states, besides high spending categories such as e-commerce and telecom.
The fast moving consumer goods (FMCG) category, which contributes to nearly a third of the ad expenditure, had a steady year, growing broadly in line with the industry average. Last year began with uncertainties on the political and economic front, said GroupM but once a stable government came to power the mood changed to one of cautious optimism. The report also outlines some key trends that are likely to play out this year. Non cricket sports will expand the eco-system and multiple sports leagues will come up. The lines between entertainment and sports will continue to blur. Consolidation spree will continue in print and radio. Phase 3 digitisation will impact viewership in later half of 2015. The HD (high definition) space will witness more entrants.
According to GroupM , digital media continues to show the maximum growth with 37% in 2015. Digital has been growing at an average rate of 35% over the last two of years.
This year within digital media, the biggest growth drivers will be video, mobile and social. Television shows a higher growth percentage in 2015 compared to last year with 16%. TV channels will especially be bullish with cross media integration via their own digital platforms. The big ticket event this year is the ICC Cricket World Cup in February and March, with scope for programming and advertising innovation during the tournament. Even with pressures on advertising revenues, the print medium shows an increase by 5.2% as against the 2014 estimate of 7.6%; however print magazines continue to be on the decline, as several are looking at digital delivery mechanisms. The surprise element in the media mix has been cinema advertising which finally closed 2014 with a 25% increase. This year too, GroupM estimates this media category to grow at 20%, as multiplex chains consolidate, leading to a more organised and accountable environment. With technology fuelling exhibition and distribution, especially in smaller towns, consumers will get a better viewing experience.
CVL Srinivas, chief executive at GroupM South Asia said that the television growth rate is impressive, given its already large base. “With a new government coming to power the negative sentiment has lifted but there is still some bit of caution amongst advertisers. We continue
to operate in the same zone as last year at an overall level. Digital, television and cinema are expected to be the high growth media channels. We are seeing a lot more confidence amongst local businesses to invest in brand building than before. This is a positive sign for the industry.
Penetration of smartphones coupled with the popularity of online video is making FMCG spend more on digital.”
Print, he admitted, was a slightly different story. “A fall in growth is coming for the business press, and also the general magazines. But Hindi dailies continue to do extremely well. We expect a lot of our publisher brands to move to digital content and formats. But I would still say that print is relatively robust, because there are not too many markets in the world, where the medium is able to register this kind of growth rate. E-commerce companies continue to spend heavily on print. They are coming back campaign after campaign, which means that the medium is working for them. I don’t usually get calls in the middle of the night. But yes, we do have an occasional client calling up in the late hours and saying that they are not getting that front page solus ad. That is the power of print, and it will always be so.”
Srinivas noted that native advertising will increasingly be the future. “Native advertising is called by many names—branded content or contextual advertising. The big point is that the reader or viewer doesn’t distinguish between the brand message and the content that he or she is reading. People are shifting to smaller screens. It changes consumer behaviour and the way content is done. Advertising has to change into smaller and digestible formats. Nobody has the time to watch ads, the way they did during the Chitrahaar days on Doordarshan. In fact, we enjoyed the ad breaks then. Increasingly all media buying will be programmatic—in other words automated,” said Srinivas.
He added, “Our entire eco-system, whether it’s from the media owner’s side or agency’s side, is not very different from the way it was, when
I started out as a media planner. But thanks to digital, a lot more technologists are coming our way.
A lot more emphasis is on automating stuff. It results in buying efficiencies for clients.”
E-commerce is expected to lead the charge in 2015 in terms of ad spend growth although from a relatively smaller base than more established categories. There is increased competition in this sector and no dearth of funding. FMCG, auto and telecom are expected to do better than the previous year. More multinational entrants under single brand retail are likely to add to ad spending in the retail category. The recent rate cuts by the Reserve Bank of India will stimulate the banking sector, reactions of which are evident on a buoyant stock market. This year will possibly see a number of IPOs as there is a sense of stability in policy and investors are willing to take more risks. The market will also see higher spends from the central government as it showcases its new initiatives.
Prasanth Kumar, managing partner, central trading group, GroupM South Asia and CEO Mindshare South Asia says that ad-versioning—local ads tailored for local markets—will play out in a big way in 2015. A lot of local Indian advertisers will take centre stage and the interiors of India are really a goldmine with both brands and media owners barely having scratched the surface, he says. “Over the last few years, Indian media has been in a state of change. The next three to five years will be about embracing technology, which will allow both advertisers and media owners to customise distribution to a premium niche audience with a very nominal margin of error. In 2015, programmatic buying will see an impetus, as all media in the future will see automation, backed by smart data and analytics,” he added.
Vinit Karnik, national director– entertainment, sports and live events at GroupM says that while non-cricket sports will lead the eco-system in 2015, product consistency should be maintained. As also realistic pricing. “Advertisers should get fair pricing in order to leverage the platform well.” he said.
Suresh Srinivasan, senior vice president of the Hindu Group admitted that print is witnessing a sluggish period. “Print media has registered a low rate of growth in 2014 because of an impacted BFSI (banking, financial services and insurance) segment and a slow real estate market.
Some amount of recovery happened because of the robust retail industry. But I wouldn’t call either 2014 or 2015, as double-digit growth years for print. Still, we continue to hope that things will pick up. At a macro level, India’s prospects look far better than it has in a long, long while. It is coming up as an investment destination, and with China’s momentum slowing down, the story could change dramatically.” Srinivasan says that for television, it is a resurgent phase with more channels launching, and ad spends going towards the World Cup and other sports properties. The 16% growth rate is well within possibility.