- Disney set to take driver’s seat in India with the addition of Star, Tata Sky
- DishTV launches new offers in Tamil Nadu
- Nothing is finalised on pay hike of Indian cricketers: CK Khanna
- Exit polls predict BJP victory in Gujarat, Himachal Pradesh elections
- Govt. clears Bill banning instant triple talaq
- Congress Request Ahead of Gujarat Poll Counting Rejected By Supreme Court
Events & activation industry to grow 17% to touch Rs 57.79 bn in 2016–17: EY-EEMA report
MUMBAI: The events and activation industry grew at 15 per cent annually from Rs 2,800 crore (Rs 28 billion) in 2011-12 to Rs 4,258 crore (Rs 42.58 billion) in 2014-15, according to an EY – EEMA (Event and Entertainment Management Association) report titled ‘Making experiences in India: The events and activations industry’.
In 2016-17, it is expected to grow 16-17 per cent to touch Rs 5779 crore (Rs 57.79 billion) in 2016-17.
The growth will be on the back of marketers increasing their below the line (including digital) spends to 21 per cent of their total marketing spends. It will also be led by personal events, MICE (meetings, incentives, conferences and exhibitions), activations and sports.
Margins, however, are expected to decline from an average of 16 per cent to 13 per cent over the next two years, mainly due to a growth in overall costs by 12 per cent, and more particularly a rise in payroll costs by 15 per cent, as companies expect to increase their average headcount from 84 to 104 employees.
Managed events remain the largest service offering. But IP (Intellectual Property) and digital events are growing at a faster rate than managed events.
EEMA president Sabbas Joseph said, “With a new government at the helm, there is a growing interest in the culture and people. The events and activations industry is best poised to capitalise on this opportunity and there is a crying need for a new world order, one in which event companies work along with government to create an events calendar that drives tourism and related industries.”
There is a need for the industry to work on acquiring the right talent, managing costs, demonstrating return on investment (ROI) to marketers and increasing transparency in operations.
Non-metro markets are expected to increase in importance as marketers look to tier II and tier III cities for incremental growth, states the report.
Digital events and activation is also expected to grow significantly on the back of smart phone penetration, internet availability and the cost efficiency of such campaigns for marketers.
While the industry has reported very few M&A transactions over the last few years, there exists scope for consolidation. Valuations are driven by IPs owned, advertising agencies’ interest in activations, and digital events and sports leagues.
47 per cent of agencies surveyed owned wholly or in part the IP in the events they conducted. This is a decline from 55 per cent in the 2011–12 survey, clearly showing that investing in IP is difficult, and needs sustained belief and deep pockets, states the report.
Digital events are a cost effective method to build IP, and have gained popularity with advertisers. TV, print and radio companies are creating their own event IPs and then sub-contracting the same to event companies.
Ernst & Young India partner and M&E advisory leader Ashish Pherwani said, “The events and activations industry holds great potential and this is evident from the considerable growth that the industry witnessed over the last few years. Our report aims to provide insights around key strengths of the industry and the challenges it faces. The report also looks into the opportunities for M&A transactions, implications around taxation and corporate governance.”
Double taxation, taxation across multiple states, and varying and inconsistent application of different taxes are some of the challenges faced by the industry. Also, the introduction of goods and services tax (GST) could have a significant impact on the industry in terms of rates and implementation across multi-state activities.
The introduction of the new Companies Act 2013 will result in some key changes in internal financial controls, compliance with over 60 acts and regulations and implementing a vigil mechanism to identify undesirable activities.
The industry must build robust policies, processes and information systems to manage business efficiently and safely, and implement technology and automation.
They also need to look at external aspects by working on its positioning to marketers, build an account focus and demonstrate returns more effectively. There is a need to improve the supply chain by developing quality vendors, implementing a system of vendor accreditation and improving overall risk management.
In addition, the regulatory ecosystem needs to be made more conducive by simplifying taxation, permissions and copyright issues.
In terms of strategic aspects, the industry must build more IPs focused on defined communities of interest to marketers and embrace the opportunity provided by marketers’ increasing spends on digital media.
The report is based on the findings of a survey conducted via discussion with over 60 respondents including the heads of events and activation companies across the country, along with inputs from advertisers and sponsors.
Majority of Indian event companies have built an international presence with an increased number of organised event companies conducting events in countries outside India. 73 per cent of the respondents indicated that while they provide services largely in India, they also conduct operations outside India. Only 19 per cent of the respondents have an India-only presence.