How demonetisation and GST impacted Indian media and entertainment industry

By: |
Mumbai | Published: December 20, 2017 5:09:45 AM

Industry watchers have a general consensus that the industry grew only at 10-11% on the back of big-ticket events like IPL 10, with Sony Pictures Networks (the official broadcast partner earlier in the year), raking in Rs 1,300 crore.

Having enjoyed a good year in 2014, the Indian AdEx (ad expenditure) has undergone fluctuations since then, but the worst shocks were seen in 2017, thanks to demonetisation and GST.

Having enjoyed a good year in 2014, the Indian AdEx (ad expenditure) has undergone fluctuations since then, but the worst shocks were seen in 2017, thanks to demonetisation and GST. According to the FICCI-KPMG India Media & Entertainment industry report 2017, demonetisation led to a decline in consumption across sectors such as FMCG, auto, banking, financial services & insurance and real estate. This led to a pullback in discretionary spends in marketing and advertising, the repercussions of which were felt across the M&E industry. “The period January-April is expected to grow at just 8% instead of the expected 14% growth. So you could say that the lower growth is the loss on account of demonetisation,” Sam Balsara, chairman, Madison World, had said to FE. In 2017, the industry witnessed a drop in the AdEx predictions made by most media agencies at the start of the year. As per the predictions — GroupM saw the overall AdEx at 10% growth corresponding over last year’s growth. Publicis’ Zenith and Madison were a tad more optimistic when it came to overall percentage increase, with Zenith predicting the ad expenditure growth for India up by 11.2% over 2016, while Madison forecasted growth at 13.5%. Industry watchers have a general consensus that the industry grew only at 10-11% on the back of big-ticket events like IPL 10, with Sony Pictures Networks (the official broadcast partner earlier in the year), raking in Rs 1,300 crore. Sectors that contributed to this positive trajectory include auto and e-wallets. In addition, the government and political parties also increased spending with elections in several states this year.

Mid-year, though, saw some hurdles as the government introduced GST. Says Navin Khemka, managing partner, Wavemaker India, “The GST quarter saw a negative impact with most brands having a very cautious approach, as inventories were piled up with traders and retailers due to compliance with the new system.” While the GST had varied levels of impact across media segments, on an overall basis, M&E is the net beneficiary. The festive season continues to contribute a large chunk to the overall AdEx. The industry, reportedly, spent close to Rs 24,000 crore on advertising, marketing and promotions during the festive season which started in August this year. Says Ashish Bhasin, chairman and CEO – South Asia, Dentsu Aegis Network, “AdEx picked up during the festive season and we are seeing the year end at a 10% growth which is good. We are expecting the overall industry to grow at 12% in CY18.” As per Zenith’s Advertising Expenditure Forecasts, 2017 will close at Rs 53, 918 crore, registering a slightly slower pace of growth on account of demonetisation. The total AdEx for India will climb up to Rs 58,422 crore in 2018, growing at 8.4%, led by television.

Most agencies foresee digital as one of the key drivers of ad spends. Growing internet penetration accelerated by operators such as Jio will significantly enhance digital ad spends in the country and give access to previously untapped markets. In 2018, mobile handsets, FMCG, automobiles, BFSI, travel and tourism and political ads will dial up the ad spends. According to the CII-BCG report released recently, the M&E industry shows signs of registering 11-12% growth in the next five years. Agencies are also betting on political spends to lead the way due to state elections and general elections in early 2019. Additionally, the first IPL under the Star Network in 2018 will see a renewed interest with the Chennai and Rajasthan teams making a comeback.
(With inputs from Chandni Mathur)

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
1Apple gets a rare downgrade after rising more than 50 pct in 2017
2Tata Steel seeks to raise $2 billion to fund Indian expansion
3Indian origin steel tycoon purchases ArcelorMittal’s US steelworks