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Digital ad expenditure projected to grow 11% in 2015 to over Rs 4500 Cr: Report

With an increase
in consumer confidence and high-profile sporting events like the Cricket World
Cup, the advertising expenditure in India is predicted to grow this year at
almost twice the previously projected rate.

With an increase
in consumer confidence and high-profile sporting events like the Cricket World
Cup, the advertising expenditure in India is predicted to grow this year at
almost twice the previously projected rate.

The Pitch
Madison Media Advertising Outlook report for 2015
forecast a 9.6% increase in
spending during the year ahead, compared to an earlier figure of 5.6%. In terms
of actual spending the market is expected to grow by over Rs 3,500 crore to
reach Rs 40,658 crore.

Unveiling the
report, Sam Balsara, Chairman and MD of the Madison World explained, “The
Indian advertising industry in 2014 grew by 16.4%, almost at par with our
growth projection of 16.8%.” He continued, “In terms of absolute numbers, the
advertising industry increased by Rs 5,200 crore and touched Rs 37,100 crore in
2014.”

The two main
categories that fuelled the overall growth in 2014 were the elections, both the
Lok Sabha General Elections and the five state elections, and e-commerce
players. While the elections contributed as much as Rs 2,300 crore, e-commerce
players added Rs 1,150 crore to the overall growth. Out of the registered 16.4%
growth rate, nearly 7.2% was on account of elections, followed by 3.6% of e-commerce,
and 5.6% by existing categories.

Commenting on
the year ahead, Balsara noted, “Whilst the growth in 2014 was fantastic, mainly
because of election spends, we are equally bullish for 2015 too but our
forecast has to recognize that 2015 is not an election year.” He continued, “A
9.6% growth rate is what we forecast in 2015 which will take the industry to reach
nearly Rs 41,000 crore.”

Balsara said,
“That’s a spectacular growth of 27.5% over two years.” He also pointed out,
“This figure of 9.6% should be compared with the like to like category growth
of 5.6% achieved in 2014 and not the overall growth of 16.4%.”

A stable
government at the Centre that is focusing on growth of the Indian economy,
positive market sentiment, upbeat consumer confidence and India once again
attracting global attention, are the fundamental reasons for doubling the
growth forecast to 9.6% from the earlier years’ like to like growth of 5.6%.

According to the
Pitch report, e-commerce firms show no signs of reducing their spending, while
the Cricket World Cup is expected to earn revenue of almost Rs 1,000 crore, or
almost one third of the expected growth.

Balasara added,
“We are confident that the government will finally launch Phase 3 expansion no
later than September 2015, and since a very large number of radio stations are
expected to open up, this should pull in at least Rs 70 crore of additional
advertising revenue in the last quarter of the year.”

Print continues
to be the largest segment and accounts for 41.2% of the total market, followed
closely by TV at 38.2%. Digital occupies the third place with a share of 11%.
Outdoor, Radio and Cinema make up the balance 10%.

Digital
continues to be the only medium to grow share at the expense of TV, Print and
Outdoor, all of whom marginally lost share whereas Radio and Cinema have
maintained their share. Balsara pointed out, “It is interesting to note that
the combined share of OOH, Radio and Cinema is lower than the share of Digital
alone.”

Digital grew the
most in 2014 followed by Radio, Print, TV and OOH in percentage terms. In 2015,
TV is expected to grow faster than all other media, except Digital, at 9.5%.

Display
including video, social and mobile grew by 33% while search increased by only
26%. With more FMCG and telecom players getting into the fray, video, social
and mobile formats saw larger traction. Given the explosion of smartphone
adoption, the trend is expected to continue in the coming years.

Image Source: Pitch

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