Buoyed by positive market sentiments, the media and entertainment industry is looking at a good year ahead with ad revenues burgeoning
It’s achche din (good days) ahead for the media and entertainment industry, going by the predictions from industry experts. After witnessing high growth in 2014, ably assisted by the Lok Sabha elections, the Indian media and entertainment industry is looking to a good year once again, going by two reports on the industry which have come out in the last one month. A stable government at the Centre focused on the Indian economy, positive market sentiments and upbeat consumer confidence are what the industry is banking on to take its own growth story forward.
“I see companies doing much better in terms of business and consequently adding more muscle to their communication efforts. This should reflect in the ad spends that happen over the year,” says Sanjay Tripathy, senior executive vice president — marketing, product, digital and e-commerce, HDFC Life.
The just released Pitch Madison Advertising Outlook report for 2015, jointly brought out by Madison World and Exchange4Media Group, reflects this optimism. The report predicts that the advertising industry will grow by 9.6% in 2015, taking the total advertising market to R40,658 crore. In 2014, overall growth rate for the Indian advertising industry was 16.4%. “One must not forget that out of last year’s 16.4% growth, almost half of it came from elections and one-quarter from e-commerce. And with no elections this year, we are still doubling last year’s growth minus these two factors. So, yes, the market is bullish. And in the last two years, itself, it has grown by 27.5% which is a very good feat,” said Sam Balsara, CMD, Madison World.
This year, the main growth drivers will be organic spends across sectors and the ICC Cricket World Cup. The World Cup is expected to earn media companies, especially television, a revenue of R1,000 crore. “Unlike the elections which bought in almost R2000 crore of revenue, this year World Cup will be the high-impact property and see brands investing in,” says Helios Media MD Divya Radhakrishnan.
However, Pitch-Madison’s growth predictions are way more conservative than that of GroupM which came out with its own report early last month. The WPP media buying agency had predicted India’s advertising investment to reach an estimated R 48,977 crore in 2015. This represents a growth of 12.6% for the calendar year 2015.
HDFC Life’s Tripathy prefers to go with GroupM’s forecast. “If we were to look at the growth potential of two large sectors (which will contribute to ad spends) – e-commerce by more than 40% in terms of value and 10-15 million connections for telecom in the coming year, i.e., 2015 — the advertising spends should be substantial. If we were to assume that FMCG will contribute the same amount to ad spends that it does now (around 33% of all ad spends in the country) the growth should be in double digits.”
One needs to understand that last year FMCG sector didn’t see good growth but it is coming back on track this year,” says ZEEL chief sales officer Ashish Sehgal, chief sales officer, Zee Entertainment Enterprises Ltd. “Also, e-commerce will continue to invest especially in TV as they now need eyeballs everyday and it is difficult to get a front page ad of a leading national daily, everyday,” he says.
This year, ad spend on television is set to cross R15,500 crore, clocking a growth of 9.5%. “It is good that a lot of sporting leagues have caught on and will attract money rather than just depending on the World Cup or IPL,” says IPG Mediabrands general manager Dhruv Jha.
Even in the case of digital, the darling of the advertising industry, both the reports predict that video, mobile and social will continue to draw traction even in 2015. “Currently, the overall digital advertising spend in India is about $0.5 billion with 7% penetration. With digital offering a higher return on investment and greater scope of innovation, advertisers are now more open to investing in digital and this is expected to grow in 2015. Also, an increase in spends by small and medium businesses as well as family managed businesses that are empanelling themselves on e-commerce, is giving an extra impetus to the growth of digital marketing,” says Suveer Bajaj, co-founder and media operations director, FoxyMoron.
According to the Pitch Madison report, print ad revenue is expected to grow at 5.3% taking it close to R16,100 crore. While dailies will continue to get advertisers’ support, business press and magazines will suffer. BCCL executive director and president Arunabh Das Sharma agrees with the overall projection but believes that the percentage will differ across companies. “I, for sure, know that for us, the number will be higher. Perhaps not the same for some of our counterparts.
And yes, there is no denying that weeklies will suffer. Having said that, the year should be good for print in general.”