‘2019 promises to be an eventful year for advertising industry’

Ashish Bhasin

This year turned out to be reasonably good on expected lines. Advertising tends to be very susceptible to sentiment. In general, the sentiment from clients started improving and therefore we saw double-digit growth in advertising. Based on our Dentsu Aegis Network study, we will grow at around 11-12% in 2018. Advertising is also a reflection of the general economy.

The rule of thumb is that advertising grows 1.5 times the GDP growth. So if GDP grows by 7.5-8% annually then we can expect that for the next few years advertising will grow in the range of 11-12%. If that happens, then I think that the relative importance of India will rise globally given that the global market is seeing growth rates of 3- 4%.

When the tide rises all boats rise and that is the phase that the Indian advertising industry is going through. Advertising growth in India in 2018 has been cautious, but good. It has not been a period of runaway growth of 30-40% but a good, steady, double-digit growth has consistently happened. I think that in the next three to five years India will become a significant contributor to advertising growth worldwide.

This has been a year of cautious optimism. Our market is nearing the $10 billion mark which puts us amongst the major markets in the world. The advantage that we have is that our market is likely to continue seeing good growth, hopefully, double-digit growth, for the next few years, while many other markets will struggle.

2018 has worked out in the same pattern that we had anticipated. I am quite happy to see that the Dentsu Aegis projections of growth made a year ago have come pretty close to reality.

What was different this year is that there was a lot of variation in growth levels between different media. In the past, if we saw advertising grow at say 11% then some media would grow at 10% and others at say 13%. They would all grow in a similar range, some a little slower and others a little faster.

That has completely changed this year. Some media like English print and magazines have shown almost no growth. Then there are other media like digital, which is growing upwards of 30%. The range has become much wider.

Television gets the largest share of advertising followed by print, digital, outdoor, radio and finally cinema. The pecking order will not change in 2019. But I anticipate that in 2020 digital will have a 25% share of total advertising. The consumer is clearly going digital and every brand wants to reach the consumer in the most cost-effective and engaging manner.

If the consumer shifts to digital then obviously the ad bucks will also shift in that direction. Digital is taking away revenue share from other media given that its share was almost zero a few years ago but the fact remains that all media will grow in India, unlike many other markets globally.

Television

TV ad growth is expected to be around 12-13%. There has been general, all-round growth in TV. Because now rural and urban is measured, you get a better sense of television penetration. TV reaches about 800 million people now. We are seeing constant growth and there seems to be further headroom for growth.

Different channels or genres do well at some point or another but if you look at the overall picture the reach growing augurs well for television. For example in 2019, with the general elections coming up news channels will do well. You will have those ups and downs but if you look at the macro picture, 2018 was a good year for TV. This trend will continue in the coming three to four years.

TV’s advantage is the universal reach and also being an audio-visual medium it gives you a great opportunity to make an impact on the audience very quickly. If you want your brand to be seen across the country you have large properties like the IPL where, at one go, you can get millions of viewers of all age groups and all income groups.

OTT

This year, we have seen the proliferation of OTT platforms with as many as 34 such platforms operating in India. This has a lot to do with the falling data prices and better bandwidth availability. I do anticipate that going forward you will see consolidation as 34 OTT platforms do sound a bit excessive. But in general, OTT as a space came into its own in 2018. Mobile penetration is heading towards a billion mobile phones in the country and the relative penetration of smartphones is also increasing.

Digital

While we have 375 million people on the internet today, the expectation is that in the next three to four years another 300-400 million people will come on the Internet. There is a huge scope for an increase over there. Regional advertising, in general, whether it is TV, print or digital will become more and more important. The next phase of internet users will speak regional languages and therefore you will probably see a lot more advertising in regional languages on digital in years to come.

Clients have now understood the importance of digital advertising. Some clients are more evolved. At the agency level, the legacy agencies have been very slow in adopting digital and are now paying the price for it. At the same time younger, more agile agencies have adopted digital sooner and have done very well. At Dentsu Aegis Network 48% of our revenues come from digital. Digital is our biggest focus area. We are significantly overweight on digital and we are big believers in digital. We are therefore enjoying much better growth in digital, compared to the legacy agencies.

At the same time, consumers don’t see each medium as being separate. The separation only exists in the minds of marketers and media owners. Any sensible advertiser will use a strategy that uses a combination of several media. This is a no-brainer. It is a given. The combination of media used will be different for different brands and will depend on what the objective is.

Outlook for 2019

2019 has a lot of promise because it is an ‘eventful’ year. You have the general elections, Indian Premier League (IPL), and ICC Cricket World Cup. All these are things cause a spike in advertising. At the same time, there will be challenges. For one, businesses will be cautiously waiting for the outcome of the Lok Sabha elections before they commit large monies.

All in all, I think happy days are here again for advertising notwithstanding the grim predictions by the naysayers. The advertising industry is proving to be far more resilient than many thought it would be but it is definitely going digital rapidly.

(The writer is the Chairman & CEO – South Asia, Dentsu Aegis Network. The views expressed here are those of the author and do not necessarily represent or reflect the views of TelevisionPost.com)

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