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Broadcasters expect healthy ad revenue growth in 2014 as sentiments improve
MUMBAI: India’s advertising expenditure seems to have gathered some momentum. While the first half of 2014 got some push from the general election, the soccer World Cup and the Indian Premier League (IPL), the second half is expected to benefit from an overall improvement in business sentiment following the formation of a Narendra Modi-led BJP government at the Centre.
Television broadcasters are forecasting an upsurge in ad revenues this year, better than what their initial outlook was at the start of 2014. The reasons are many: a definite increase in ad spends by retailers including e-commerce portals, mobile companies and a resurgence of the auto sector. A stable government at the Centre has also fostered an overall upbeat sentiment.
A couple of days back, WPP’s GroupM revised its annual estimated advertising expenditure (AdEx) for 2014 to 12.5 per cent from its earlier forecast of 11.6 per cent.
According to GroupM, ad expenditure on television is set to grow to 14.8 per cent as against the previously predicted 12 per cent in 2014. At the end of 2013, total AdEx on TV was at Rs 16,860.2 crore (Rs 168.60 billion), and the media agency had forecast it to grow to Rs 18,883.4 crore (Rs 188.83 billion). The revised forecast is of Rs 19,355.51 crore (Rs 193.55 billion).
Broadcasters are attuned to GroupM’s belief that retail, FMCG, auto, telecom and BFSI sectors will fuel this growth.
Multi Screen Media president Rohit Gupta agrees that with a positive sentiment back in the market, there will be a healthy ad revenue growth this year. “A lot of ad revenue for television came from the elections. I would put that figure at Rs 5–7 billion. In addition, e-commerce players are advertising heavily. This category was not present last year. The FMCG category which accounts for around 40 per cent ad spend on television has held steady which is another positive sign,” Gupta opined.
According to Zee Entertainment Enterprises Ltd (ZEEL) chief revenue officer Ashish Sehgal, TV spends are going up and lately e-commerce, mobile and auto sectors have significantly increased their budgets. “While these three have exponentially increased their ad budgets, biggest spender of TV, FMCG sector, is also going to increase spends.”
He also believes that e-commerce and mobile are two categories which have large appetite for frequency and may also shift money from print to TV.
“A lot of print money will be converting to TV from these sectors. TV, after all, is the cheapest medium when you want more frequency. These brands [e-commerce and mobile] want more and more visibility as they are getting aggressive and competition is increasing,” Sehgal adds.
When it comes to mobile, apart from big players like Samsung, Apple and Micromax, new players like Gionee and Oppo Mobile have also joined the bandwagon.
In the e-commerce sector, India has seen lot of action lately with the entry of Amazon and Flipkart raising $1 billion. Both are looking to penetrate the market deeper. Other online portals like Snapdeal.com and Myntra.com have also upped the ante when it comes to ATL activities.
Incidentally, Colors has signed Snapdeal.com as the title sponsor for the upcoming season of its big-ticket reality show ‘Bigg Boss’. The deal is pegged at Rs 35 crore (Rs 350 million), according to market sources.
Colors CEO Raj Nayak is also upbeat. “The sentiment is definitely positive following the elections, and we are seeing some traction in advertising spends as well. With more channels launching and the TV audience getting even more fragmented, the advertiser has to spend more to reach the same number of viewers. Besides this, with e-commerce and mobile companies spending big monies and the auto sector bouncing back, I am very optimistic and positive that overall 13 to 15 per cent ad growth looks realistic,” he says.
However, he adds that it will be interesting to see which medium out of print, TV, radio, digital, outdoor and mobile will garner what share. “I still believe it will be challenging times for the long trail,” he notes.
Gupta believes that the auto sector has done well because many new launches have happened in that category. “They have to advertise somewhere,” he says.
In the automobile sector, car sales have seen an upsurge for three consecutive months after sliding for the last two years, as per industry body Society of Indian Automobile Manufacturers (Siam).
As per data for July, car sales have rebounded on the back of discounts and positive sentiments after the formation of a stable government. The sales saw a 5 per cent growth in volumes, led by Maruti, Hyundai and Honda. In fact, overall passenger vehicle sales rose 7 per cent in July. Even most two-wheeler brands have seen an increase in July. The sale is expected to go up further during the festive season.
Gupta is bullish on the festive season. “Last year, the festive season was a disaster for everybody. This year with the positive sentiment, brands that were earlier quiet will spend. Earlier, even if a company was doing well, it would not spend as much as it might have as the sentiment was negative. Now with a stable government coming in and the mood turning upbeat, brands which were quiet will start spending. They will open up,” Gupta says.
(With inputs from Ashwin Pinto)