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India’s ad expenditure to grow at 11.2% amid demonetisation

MUMBAI: Demonetisation may upset India’s GDP growth in at least the next two quarters but Publicis Groupe-owned media agency Zenith has forecast advertising expenditure to grow at 11.2% in 2017.

India’s ad expenditure is expected to touch Rs 54,344 crore in 2017, Zenith has predicted.

The growth rate will be about 2% lower than Zenith’s forecast of 13% for 2016. The agency expects ad spending to touch Rs 48,797 crore this year.

Events such as state elections in Uttar Pradesh and Punjab, the upcoming Champions Trophy as well as growth of regional newspapers and television will drive ad growth in 2017.

Tanmay MohantySays Zenith India Group CEO Tanmay Mohanty, “India remains one of the few bright spot economies in the world. Ad spending in India is on a steady growth curve and likely to stay that way in 2017, buoyed by the state elections in Uttar Pradesh and Punjab, the upcoming Champions Trophy and continued expansion and growth of regional newspapers and television.”

Demonetisation of Rs 1,000 and Rs 500 currency notes will lead to temporary contraction but the economy will bounce back in the long-term. New categories of advertisers such as mobile wallets will be active.

“In November, the central government introduced reform in the form of demonetisation which is leading to some contraction in ad spends. We expect the demand for goods and services to pick up and this shortfall to be temporary. Demonetisation is expected to augur well for the economy long-term. In fact, we expect 2017 to see increased ad spending by categories such as Mobile Wallets, Telecom 4G, BFSI, Mobile Handsets, Fast Moving Consumer Goods (FMCG) and Consumer Durables,” avers Mohanty.

Television advertising is set to grow 11% in 2017, print 7.6% and other media (outdoor, radio and cinema) between 7% and 12%. Digital remains one of the fastest growing mediums in India but its base is still small.

India is among the top ten contributors to ad spend growth, along with others such as the US, China, Indonesia, UK, Philippines, Japan and Germany.

Fast-track Asia economies (China, India, Indonesia, Malaysia, Pakistan, Philippines, Taiwan, Thailand and Vietnam) are growing rapidly as they adopt Western technology and practices, while benefiting from the rapid inflow of funds from investors, the report said.

Fast-track Asia barely noticed the 2009 downturn (ad expenditure grew by 7.9% that year) and since then has grown very strongly, ending 2015 up an estimated 9.6%.

Zenith forecasts global ad expenditure to grow at 4.4% to hit $566 billion by the end of 2017. This is down by 0.1 percentage points from the earlier forecast in September after small downgrades in Asia Pacific, which nevertheless remains one of the fastest growing regions for ad expenditure.

Global ad spend will grow 4.4% in 2018 and 4.1% in 2019, according to Zenith.