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Broadcasters need to focus on rural content to grow advertiser appeal
MUMBAI: Despite rural markets opening up in the country, broadcasters have not yet scratched even the surface of that potential. They need to make content that appeals to that market, which in turn would appeal to advertisers and help grow the ad pie. What is present now is urban content extended a bit to have some rural appeal.
Meanwhile, print needs to create niches. With the digital realm expected to grow, print could use that avenue and dovetail into it to grow revenues. This is important as digital revenues are expected to grow heavily at the expense of print in the coming years.
Television will grow at the rate of 15% this year. Sinha’s agency expects the overall adex to grow by 18.4%. However, he is very bullish on digital.
“In 2020 the digital ad pie will be as big as print. It will grow by 67% this year including TV digitisation. Richer formats of digital and advertising will come in as TV goes digital. Mobile will be 70% of digital spends in 2020.”
Sinha noted that FMCG and auto will be big in 2016 as will telecom with the advent of 4G. E-commerce, he pointed out, is not a top three advertiser. “Six to eight players will sustain spending. Other start-ups will come in. With a better monsoon, rural demand will pick up. That is good news for clients who target that market.”
Sinha said that the measurement of digital contribution to the adex will be difficult, but that it will be a significant contributor.
He expects the adex to grow by 15% CAGR over the next five years. TV is holding a 40% share in advertising, which will continue in the long term. Digital will make inroads into TV’s share as has happened abroad.
Sinha noted that one worry is about digital measurement for print publishers looking to transition to the internet. “They can leverage the digital boom to compensate for decline in print advertising.”
He expects India to be among the top 10 markets in the world in terms of ad spends in a few years.
BARC will get into cross measurement for TV in the last quarter of this year or next year. The plan is to get into digital measurement for print for ABC. Another key thing for him in terms of having a healthy ad economy is that the SMEs must grow. He noted that a print company executive had told him that 75% of that company’s revenue comes from local advertisers.
ZenithOptimedia group CEO Anupriya Acharya noted that the global adex has seen stable growth since 2011 with growth rates ranging between 4–5% per year. The 2016 growth forecast stands at 4.7%. Uefa football championships, Summer Olympics and the US Presidential elections are the key boosters.
Some markets will be negatively affected. For instance, the Middle East and North Africa cluster is being affected by crashing oil prices. In India there are headwinds due to global economic uncertainty. But it is the fastest-growing economy and the fastest-growing ad market. Business confidence is still there, but it has tempered down from irrational exuberance to rational optimism.
Urban demand is holding well. However, weak rural demand is there on the back of two back-to-back droughts. Nonetheless, India is seen as an investment destination.
The overall India ad pie will touch Rs 48,797 crore (Rs 487.97 billion) this year. In 2017 it will touch Rs 54,756 crore (Rs 547.56 billion).
TV will grow by 15% and touch Rs 18,946 crore (Rs 189.46 billion). Digital will grow by 25% and touch Rs 4,583 crore (Rs 45.83 billion). Cinema will grow by 10% to Rs 416 crore (Rs 4.16 billion).
Print will grow by 11.5% and touch Rs 21,311 crore (Rs 213.11 billion) while Outdoor will be up 10% to stand at Rs 2,219 crore (Rs 22.19 billion). TV’s share in the adex fell to 38% in 2015 from 42% in 2010. Print remained stable in this period as its share fell by just one% to 45%.
For print the key contributors and growth drivers are expected to maintain momentum—automobiles, consumer durables, education, e-commerce, FMCG, BFSI, mobile wallets/new banks/payment products, etc. The continued expansion and growth of regionals/vernaculars will continue. There will be good urban demand and increase in local retail advertisers. The state elections, ‘Jacket’ launches on 4G, e‐commerce, mobile handsets, etc. will all fuel growth.
“The IPL, T20 World Cup and state elections will drive growth in television advertising,” Acharya said. She further noted that tent-pole properties on television in the past were fewer. Now they are more frequent, which has helped the medium get healthier revenues.
The digital ad revenue growth of 25% for her will be fuelled by increasing penetration, cheaper smartphones, user-friendly interfaces and stronger ecosystems. Telco, 4G, BFSI, FMCG, e-commerce, travel are the key growth drivers.
But there are challenges in the different digital mediums for advertising. For example, in video there are only two large platforms. They are largely used as an add-on to TV rather than standalone. The standalone video strategy has a threshold challenge.
Clients are not mobile ready. Search is stagnating given the movement to product sites/aggregator sites/apps. She further noted that on social media clients now look more for reach and performance, and have moved from just likes and shares as a metric. Email as an ad platform is getting to the point of extinction, she added.
She noted that video advertising online has not reached the level of TV. OOH needs to get more organised as an industry. The metros are still the key contributors. Transit and airports are the drivers. In radio there is scope for content differentiation this year. Phase III will see the launch of more radio stations.
Cinema’s ad revenue growth is being led by the expansion of multiplexes, consolidation, digitisation of single screens and increase in the experience culture.
She added that her agency believes in a cautious forecast. “We have hardly revised our forecasts downwards. It is better to have a more measured approach.”
Both Sinha and Acharya believe that television’s ad revenue growth will come largely from inflation rather than from inventory. “In television inflation will account for two-thirds of growth, while inventory will account for one-third. There are many takers, but the supply is relatively limited.”
Acharya said that inflation will be there for all advertising mediums including television. “Inventory levels are not growing at the same level as demand for advertising. The demand side is much higher when you look at individual sectors and brand plans.”
Vikram Sakhuja’s take
Madison Media group CEO Vikram Sakhuja took a contrarian view on ad inflation, noting that it might come down due to the rise in inventory. He also noted that 2016 will be the third boom year in a row for the Indian ad economy. The Pitch Madison report expects Rs 51,365-crore (Rs 513.65 billion) adex this year, which is a growth of 16.8%.
Last year while the agency had initially predicted a 13.5% growth, the adex did much better by four per cent. FMCG is a 31% growth contributor. Auto contributes 14% to growth. In 2015 FMCGs, e-commerce, auto and telecom were the top ad categories.
2013–16 saw a 60% growth in adex, which is due to the 7% GDP growth. The government is creating positive attention of the globe onto the country. Rural and farm subsidies will continue, adding to the purchasing power of rural markets. Besides, commodity prices will be soft and 2016 will see a cricket-heavy calendar.
It took five years (2008–13) for the industry to grow by Rs 10,586 crore (Rs 105.86 billion) but only two years (2013–15) to grow by Rs 11,885 crore (Rs 118.85 billion) to reach Rs 43,991 crore (Rs 439.91 billion).
Sakhuja noted that FMCGs will greatly contribute to organic growth. There are four wheeler launches happening. There is the continued emergence of e-commerce advertisers. At the same time, Sakhuja does not think that profligate spending in e-commerce will continue in 2016. Instead, the focus will be on how effective the spend is.
His wish for 2016 is to see clients and agencies investing in driving outcomes. People should not only look at things like CPRPs. They should look to use advertising to drive advocacy, loyalty, etc. for their brands.
Television has the largest share of the adex overtaking print. It got Rs 17,261 crore (Rs 172.61 billion) last year marking a 22% growth. This year TV will grow by 20%. FMCG is crucial for this medium along with telecom, mobile handsets, e-commerce, and auto players.
He noted that digital spends this year will be more than radio, OOH and cinema combined. Digital spends will grow by 30% this year. Last year the growth was 29%.
The top advertisers in the overall adex are HUL, Amazon, P&G and Flipkart. Hindi GECs get 28% of TVs ad revenue. FMCG’s share in the TV adex is down to 52% from 65% some years ago. FCTs are up by nine per cent. Duration has dropped to 23 seconds. TV has overtaken print and has 40% of the ad pie.
Print will grow by 10%, but magazines are struggling. Hindi dailies continue to overtake English dailies. Both Sakhuja and Acharya are more optimistic about print’s ad revenue growth prospects compared to GroupM, which has forecast a far lesser growth rate for the fourth estate.
According to the Pitch Madison report, radio grew by 20% in 2015. Radio’s growth this year will be slightly less at 18% and reach Rs 18,00 crore (Rs 18 billion).
Cinema has benefited from the multiplex boom in the Tier I and II towns and from the digitisation of single screens. Hollywood and regional cinema is also helping the cause. But cinema’s ad revenue growth will fall to 15% this year compared to 21% in 2015. Outdoor was up by 14% last year. This year it will grow by 13%.