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Political advertising will trigger growth in 2014: Sam Balsara
It’s that time of the year when media agencies come out with ad expenditure (AdEx) forecasts for the year. After GroupM, now Madison Media has unveiled the 11th edition of its annual advertising outlook report ‘Pitch Madison Media Outlook 2014’.
Madison Media CMD Sam Balsara is bullish about the overall AdEx growth, which he has projected at 16.8 per cent in 2014. He asserts that 50 per cent of this or Rs 2,500 crore (Rs 25 billion) will come from political advertising alone.
TelevisionPost caught up with Balsara on the sidelines of the unveiling of the annual report to get more details on the findings.
Why do you think the majority of the overall AdEx growth will be from political advertising?
What we have said is that 50 per cent of the total growth in the ad spends is going to come from the elections. There are not just the Lok Sabha elections but also assembly elections in states like Maharashtra, Uttar Pradesh, Odisha and Sikkim.
You have to understand that this is not just the spends by the political parties; hundreds of individual candidates may individually spend anything ranging from Rs 2 lakh (Rs 0.2 million) to Rs 50 lakh (Rs 5 million) in outdoors, print, etc. As a result, the total spend will increase.
As per your estimate, this 50 per cent is roughly close to 2,500 crore (Rs 25 billion), while GroupM expects political advertising to be in the range of Rs 1,000 crore (Rs 10 billion). Any reasons for being so bullish?
Our estimate is that political advertising will be roughly around Rs 25 billion. As I said, not just two parties, but many more individual candidates together will be a major growth factor for all the sectors.
You are projecting a 15 per cent growth in ad spends on television in 2014. This is despite the 12-minute ad ceiling which many of the leading players have started following. There is also the fact that last year TV grew by 8.2 per cent. So, will ad rates really climb?
The forecast for TV is 15 per cent to Rs 14,282 crore (Rs 142.82 billion). We believe ad cap, while it will decrease inventory, will have inflationary impact on ad rates in the long term. Ultimately, demand for TV is there. So, if the supply is restricted, demand continues.
We also believe that TV demand is price elastic. So when the price goes up, demand comes down. But, we hold the view that ad cap will lead to marginal price inflation and that will contribute to the growth.
Are you also expecting broadcasters to launch more channels to create additional ad inventory?
Yes, 56 new channels came last year and 25 closed down, which is why I said that there is a constantly moving balance.
On one side, the inventory is getting restricted; on the other, newer channels and newer inventory are being created. Now, obviously they are not able to fill that inventory. If you start a channel tomorrow, I will not come rushing to you. It doesn’t work like that.
Some channels will continue to go empty, while some channels will continue to go full.
In which categories do you see growth and which all are softening?
FMCG will continue to dominate TV advertising. In 2013, it was 56.6 per cent of the total TV advertising pie. Telecom (along with digital and DTH) and auto sectors have constituted 10.3 and 7.5 per cent respectively.
Thus, almost 75 per cent of TV advertising is concentrated in just these three categories.
Other categories, including BFSI, retail, media, and corporate are softening and have reduced spends on TV.
What other factors will give a boost? How much will be the share of sports?
There are big sporting events this year and they generally give a good fillip to television spends. However, we have not calculated it separately yet.
What about print? The report has projected it to grow more than TV?
Print has grown by 10 per cent in 2013 and we expect it to see a 17 per cent growth in 2014. Print growth rates are marginally higher than TV, again because of political advertising.
Another significant trend in print is that for the first time, FMCG has become the largest contributor to print, going ahead of auto.
But with the new IRS under attack, don’t you think advertisers’ confidence in the print sector will go down?
I hope that will get sorted out soon. They have now decided to revalidate the data. If something is wrong, it will get corrected.
In terms of spends, how much share print and other segments now have?
Print has the maximum share of 41.3 per cent. TV is closely following with 39 per cent. Third is digital with a 10 per cent share. Outdoor, radio and cinema combined are another 10 per cent.
In radio, is the growth primarily on the back of increase in inventory?
Radio is another medium which will gain with political advertising. In our view, radio has had a good year on the back of higher inventory sales across stations. In the last quarter of 2013, advertising per hour was at a staggering 26 minutes.