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GroupM forecasts 11.6% rise in ad expenditure due to elections in 2014

MUMBAI: GroupM, the media investment management arm of the WPP Group, has forecast an improved advertisement expenditure (AdEx) growth for 2014 at 11.6 per cent from 10 per cent growth in 2013. Advertising on television will grow faster at 12 per cent.

Led by political advertising on account of elections in 2014, the industry will cross the Rs 40,000 crore (Rs 400 billion) mark, before closing the year at Rs 43,065 crore (Rs 430.65 billion).

GroupM’s observations are based on optimism stemming from an increase in rural spending by the FMCG and telecom sectors, in addition to expected rise in spending by political parties.

The auto and retail sectors are also seen fuelling growth in ad spend.

The report suggests that as the country braces for the general election and assembly elections in five states, the political parties will spend more on political advertising.

This will help record higher revenue generation for the ad and media industry amid an increasing growth rate, says the report.

Excluding the ad spends by political parties, the overall AdEx growth for the industry may struggle to even make up to what was in the last year, the company noted.

GroupM South Asia CEO CVL Srinivas said, “We are cautiously optimistic about the media industry in 2014. Sectors like FMCG, auto and retail will continue a stable increase in ad spends. We will see an increase in rural spending by FMCG and telecom.”

Srinivas is pessimistic about the first half of the year given the uncertainty in general economic and political environment. But he sees ad spends by political parties as boosting AdEx by up to 2.50 per cent in the second half of 2014.

Television to grow faster than print

Interestingly, the television segment is expected to corner bigger share from AdEx. TV is likely to net in revenues of Rs 18,883.4 crore (Rs 188.83 billion), an increase of 12 per cent over the previous year.

Newspaper and print publication will emerge second biggest beneficiaries of increased AdEx. The segment will corner revenues of Rs 15,459.4 crore (Rs 154.59 billion), marking a rise of 8.5 per cent. It may be recalled that newspapers collected maximum share of Rs 10,222.9 crore (Rs 102.23 billion) during 2009 when the last general election was concluded.

Digital, total out-of-home, outdoor and radio will fall in line in the pecking order

Digital will fetch Rs 3,402.2 crore (Rs 34.02 billion), up 35 per cent, whereas total out-of-home will earn Rs 2,483.4 crore (Rs 24.83 billion), an increase of 8.8 per cent

Outdoor will see displays worth Rs 1,999.6 crore (Rs 19.99 billion), which is a growth of 9 per cent, while radio commercials will get Rs 1,807.7 crore (Rs 18.07 billion), up 10 per cent.

While retail and cinema will round up the pecking order with respective growth of 8 per cent and 12 per cent, magazines will likely see low readership, thus suffering a 5 per cent cut in AdEx.

Media agencies under the GroupM fold in India include Mindshare, Maxus, MEC, MediaCom and Motivator. The report was released in Mumbai on Monday.

Along with the AdEx numbers, GroupM also released the mTrends, the list of the biggest media and communication trends in the country.