22 Sep 2017
Live Post
Hathway’s cable TV and broadband capex to be Rs 270 cr in FY18
Cut in interconnect charge may boost RIL's EPS by 8%
Package soon to boost economy; no cuts in fuel rates: Arun Jaitley
Global child bride racket busted in Hyderabad, 20 arrested
Tracked so far: Rs 75 crore in Dera bank accounts
Violence in Tripura: Journalist hacked to death, sec 144 imposed

Ad expenditure in India to see 13% growth in 2017: Dentsu

MUMBAI: Advertising expenditure in emerging markets will continue to grow faster than in the developed economies, Dentsu Aegis Network said in its new forecast report.

Ad spend in India is expected to grow by 13% in 2017. TV and cinema are forecast to grow at 12% while digital will grow by 35%. Radio and OOH should grow by 10% and newspapers by 8%.

Carat India MD Karti Iyer commented, “India continues to be among the few countries seeing growth rates in double digits. While this may be slightly lower than past expectations owing to various market drivers like demonetisation and GST, the growth is clearly expected to continue. Driving this growth is digital with a growth rate of over 35%, which is far in excess of that seen by other more traditional media. And with digital quickly progressing on its path of becoming the go-to media for entertainment, this trend is also expected to continue. Another medium that is driving growth is that of ambient [at over a 15% growth rate]. Considering the changing retail environment, the medium, in tandem with digital, is becoming pivotal for delivering quality engagement with consumers.”

The global ad spend growth holds at 3.8% (earlier 4.8%) amid cautious near-term outlook.

However, conditions are set to improve in 2018 with projected growth in ad spend of 4.3%. Events such as the Winter Olympics & Paralympics in South Korea, the FIFA World Cup in Russia and the US Congressional elections are all expected to stimulate ad spend growth.

Despite concerns about the economic impact of Britain’s decision to leave the European Union, UK ad spend growth held up better than expected in 2016 at 6.1%. While there are signs of caution in 2017, with growth dipping to 4%, 2018 is forecast to see growth bounce back to 5.9%.

A similar picture unfolds in the US, where a slowdown to 3.6% is forecast for 2017, followed by a slight improvement in 2018 to 4.0%. The US also remains the largest market in the world, accounting for 37.7% of global advertising spend in 2017. China is the second-largest market in the world by share of advertising spend—remaining the only emerging economy to feature in the top five largest ad markets.

The report is based on data received from 59 markets across the Americas, Asia-Pacific, Europe, the Middle East and Africa.

The report shows how digital technology continues to disrupt and drive innovation in the way brands connect with their consumers. In 2018, mobile ad spend will grow further to account for a total of $116.1 billion. With smartphone subscriptions set to reach 4 billion by 2025 and about a third of consumers reporting that their smartphone is their primary source of entertainment, this trend is expected to continue.

The forecasts suggest that in 2018 digital will be the top media in terms of global share of spend, taking over television for the first time. Digital’s share of total media spend is predicted to reach 37.6% in 2018 (up from 34.8% in 2017), versus 35.9% for television (down from 37.1% in 2017), amounting to a total value of $215.8 billion.

Reflecting the continued disruption by digital technology of the print media industry, paid search (advertising within the sponsored listings of a search engine) is forecast to overtake traditional print media (newspapers and magazines) in 2018. Print media has been on a downward trajectory for some years now, but will likely fall to a 13.8% share of total spend in 2018 (down from 15.1% in 2017), while paid search is forecast to grow to 14.6%, up from 13.6% in 2017.

While digital ad spend is set to overtake ad spend on television, within digital there are a number of new sources of growth that point to the future of advertising. For example, in 2017, online video is set to grow by 32.4%; social by 28.9%; and programmatic (i.e. automated ad buying) by 25.4%. Looking ahead, brands will need to embrace the potential of disruptive technologies such as virtual reality, artificial intelligence and voice activation. However, research suggests that only 8% of brands currently intend to use virtual reality for advertising purposes.

Dentsu Aegis Network CEO Jerry Buhlmann said, “We are reaching a tipping point in ad spend now as digital overtakes television, mobile overtakes desktop and paid search overtakes print. Digital and data must now be the default settings for advertisers. Evolving to people-based marketing rather than audience-based marketing and using data to increase addressability is essential for brands to manage tighter conditions in 2017 while positioning themselves for future growth. At the same time, the challenge for brands is to ensure that they are ready to embrace the potential of new innovation. As technologies such as virtual reality and voice activation become more prominent, brands must ensure that they remain relevant by creating new value for their consumers.”