Bland value: Ad revenues slow in 2019

By: |
Updated: December 23, 2019 3:10:54 AM

When the NTO came into effect in February, ratings of television channels were upended and viewership patterns took time to stabilise.

advertising, advertising industryIn the second half of the year, the GDP slowdown coupled with dip in consumer demand, especially rural demand, has been the second big blow to the advertising industry.

For the first time since 2012 the advertising industry’s growth has dropped below 10% in 2019. The strong growth prediction for the advertising industry for 2019 was undone by the chaos, which was a result of the implementation of the Telecom Regulatory Authority’s (Trai) New Tariff Order (NTO) and the ongoing economic slowdown.

GroupM, a media buying group under advertising network WPP, had estimated a growth of 14% for the industry at the beginning of the year. The actual growth is in “high single digits”, the group announced in its latest global report on the state of the industry. The industry would reach around Rs 77,000 crore in 2019.

Initial predictions for 2019 said the ICC World Cup and the general elections in the country would boost ad spend this year. But the predictions had not taken into account the impact of the implementation of Trai’s NTO.
According to Dentsu Aegis Network India CEO Anand Bhadkamkar: “The slow growth in 2019 can be attributed to two shocks — NTO implementation followed by economic slowdown — that the industry suffered at regular intervals in 2019.”

Dentsu Aegis Network, too, estimates the growth to be around 9% this year. “While it is not as bad as the slow growth we saw in 2008-2009 in the aftermath of the global recession, the industry did not anticipate a single-digit growth for 2019,” he adds.

Experts say growth in 2020 will not bounce back to pre-2019 rates immediately. With Hindustan Unilever chairman Sanjiv Mehta saying that consumer demand is yet to pick up, advertising industry experts are expecting marketers to continue to be cautious with their advertising spends in 2020. With no big events like the cricket World Cup or the general elections to attract advertiser money, growth is expected to be flat.

The first two quarters of next year are expected to see similar slow growth with marketers loosening purse strings, with caution, only in the second half of the year. “Initially, the anticipation was that this would be a passing phase that we may overcome in 3-4 months, but this is taking longer to revive. New budgets are expected to open up in the second half of the year. And that’s when the industry can make a comeback,” says Bhadkamkar. As per industry estimates growth in 2020 will be around 10-10.5% and reach Rs 85,000 crore.

Navin Khemka, CEO South Asia, MediaCom, points out that while the industry as a whole may have suffered in 2019, the digital advertising sector has continued to register strong growth. Digital advertising is growing at 30% CAGR in India, and industry experts predict that the sector will overtake print advertising and become the second-largest contributor to the advertising industry in India.

As per a revised Pitch Madison report released ahead of the festive season, the chaos in the television industry resulted in a de-growth of 5% in television adex for the first time in many quarters.

When the NTO came into effect in February, ratings of television channels were upended and viewership patterns took time to stabilise. In the meantime, brand advertisers took a cautious approach towards TV advertising (the largest contributor to the advertising business). “This turmoil in the media industry led marketers to spend their advertising budgets on television judiciously as they were concerned about the ROI of the money being spent on the medium,” explains Khemka.

In the second half of the year, the GDP slowdown coupled with dip in consumer demand, especially rural demand, has been the second big blow to the advertising industry. “Once the slowdown set in, we saw marketers cutting advertising spend which is a discretionary spend,” says Khemka. The festive season, which sees close to 40% of annual advertising spend, was affected as a result of the slowdown. Bhadkamkar says despite the government’s relief packages ahead of the festive season, consumer sentiment remained low and ad spend did not grow at a strong rate in the second half of the year.

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Next Stories
1CAIT writes to PM Modi seeking amnesty scheme to protect Delhi traders from sealing drive
2Oyo Hotels to expand in Rajasthan, targets 40,000 rooms by 2020
3IBA mulls bringing framework to address consortium lending issues