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Indian ad market rides on cricket World Cup to grow fastest among BRIC nations in 2015 : Carat

MUMBAI: Aided by the cricket World Cup, the Indian ad market is set to grow the fastest among the BRIC countries at 11 per cent in 2015.

Growth prospects in the country remain high, propelled by the election of a pro-business government in 2014 and the revival in investment. The ad market in India is expected to grow at 12 per cent in 2016, according to Carat.

In its latest Global Ad Spend report, Carat also predicts a positive outlook in 2016 with global growth of 4.7 per cent and $25 billion upsurge in advertising spends.

Dentsu Aegis Network South Asia chairman and CEO Ashish Bhasin said, “Carat’s latest estimate show that in India we should see a healthy growth of 11 per cent in Ad spends. We see the scenario improving even further next year and hence have revised the 2016 growth rates to 12 per cent.”

Based on data received from 59 markets across the Americas, Asia Pacific and EMEA, Carat’s latest global advertising expenditure forecasts that global advertising spend will grow by 4 per cent in 2015 to $529 billion, a slight decline from the 4.6 per cent predicted in March 2015.

Despite a slight decline in growth forecasts due to China’s economic downturn, Asia Pacific remains strong in 2015 with an above-global spend rate of 4.1 per cent, driven by high-performing India and growing Australia at 2.4 per cent.

Advertising spend in the Asia Pacific region is forecast to increase in 2015 by 4.1 per cent (revised down from 5.2 per cent) and by 4.7 per cent in 2016 (revised down from 5.8 per cent). Growth rates in the region have been lowered due to the slowdown in advertising spend in China, the world’s second largest advertising market, affected by decelerating economic growth.

Forecasts for seven out of the 14 markets analysed in the region have also been revised down since the March 2015 report for both 2015 and 2016. These include Indonesia, Hong Kong, Taiwan and Malaysia.

Consumer sentiment in these markets has been affected by weaker-than-expected global and domestic economic growth, states the report. Markets continuing to grow at double digits in 2015 and 2016 are India, the Philippines at 10.2 per cent in 2015 and 12.3 per cent in 2016, and Vietnam at 11.3 per cent in 2015 and 13.5 per cent in 2016.

The report states that the advertising market this year has faced a tough year-on-year comparison with 2014 when the Sochi Winter Olympics, FIFA World Cup in Brazil and US midterm elections generated significant investment.

Subsequently, growth this year is predicted at a slightly slower pace than the actual 4.6 per cent achieved in 2014. An encouraging rise in growth is forecast for 2016, with levels of year-on-year global growth of 4.7 per cent, reaching $554 billion. This is in line with continued global macro-economic strength and stability forecasts, combined with uplift from large upcoming quadrennial events like the US presidential elections, Rio 2016 Olympic Games and the 2016 UEFA European Football Championships.

Carat’s data also reports an encouraging outlook for 2016, with all regions predicted to increase year-on-year spend next year and Central & Eastern Europe to return to positive growth.

Dentsu Aegis Network CEO Jerry Buhlmann said, “Carat’s latest advertising spend forecast shows optimism balanced with realism during a year of increased volatility in major markets such as Russia and China. Noticeably, the landscape is becoming increasingly complex as previously grouped markets, such as the Bric economies, are now operating differently and economic situations can quickly change markets at pace. Our teams are well positioned to navigate our clients through this multi-faceted marketplace and successfully assimilate new market opportunities at speed.”

Fuelled by the rise in mobile and online video spending trends, the report reconfirms continued solid growth for digital media, evident through the upsurge in the predicted share of advertising spend in 2015 (24.3 per cent) and 2016 (26.5 per cent).

For 10 of the markets analysed, including the UK, Ireland, Canada and Australia, digital is now the principal media used based on spend, with the US market predicted to join this list in 2018 when digital advertising spend is forecast to overtake TV advertising by more than $4 billion.

By media, digital continues to be the only channel warranting double-digital growth, predicted at 15.7 per cent in 2015 and 14.3 per cent in 2016. This is driven by the high demand for mobile and online video advertising especially across social media, with 51.2 per cent and 22 per cent year-on-year growth expected this year.

Programmatic buying is also experiencing rapid growth at a rate of 20 per cent each year. The report adds that TV remains resilient with a steady 42 per cent market share in 2015 and is predicted to grow by over 3 per cent in 2016, as the upcoming Olympic Games and US elections are expected to drive considerable viewership.

38 out of the 59 markets analysed report TV still as their leading medium, with 17 out of these 37 markets showing that over 50 per cent of their advertising spend is still placed on TV including Italy, China and Brazil.

However, TV’s share of spend is showing a slow declining trend, as advertisers diversify traditional TV spend to AV (Audio Visual) spend, for example, online video pre-rolls, following changing viewing behaviour and the evolution of new digital services like SVOD (Subscription Video On Demand) sites. Given the size of spend on TV and the shift to digital, growth in advertising spend for TV is in low single digits of 2.6 per cent in 2015, increasing in 2016 to 3.3 per cent in a year of events.

Despite the on-going decline in print spend, Carat’s forecasts confirm year-on-year growth for all other media with updated predictions for 2015 highlighting year-on-year growth in cinema at 4.7 per cent, radio at 1.3 per cent and outdoor at 3.4 per cent, with the latter two slightly revised down from March 2015 figures.