MUMBAI: Advertising expenditure in India will grow 12.5% to touch Rs 680 billion in 2018, IPG Mediabrands-owned media agency Magna has stated in its advertising forecast report released on Thursday.
The India specific forecast follows on from the “Spring Update” of Magna’s Global Advertising Forecasts, updated twice a year, which was released on 18th June.
In its revised report, Magna India escalated the projection it had made in December of ad spending pegged to grow at 12.1%. The ad market had grown by 9.8% in 2017. Pertinently, the agency is even more bullish in regards to 2019, forecasting 13.2% growth, with India remaining the fastest-growing market among large developing countries in Asia.
S Venkatesh, EVP, director Intelligence at MAGNA, said: “India advertising sales reached Rs 600 billion in 2017 ($9.3bn) and will grow to Rs 680 billion this year ($10.4bn). Anticipate even stronger growth in 2019 due to the combination of an accelerating economy, broader access to digital media, general elections and cricket World Cup (emphasis ours).”
Digital provides impetus to overall growth by contributing close to 40% of the incremental advertising rupee. Digital represents 19% of total advertising budgets currently and will touch a quarter share of media growing at CAGR of +22.6% by 2022. Retail, BFSI, FMCG, Telecom and Auto are major contributors to the growth. In 2018, the medium will grow +27%. As massive increase in Smartphone users and data consumption is witnessed, the market unanimously looks forward to digital ratings (EKAM) from the TV ratings body (BARC).
Television remains insulated from temporary economic policy implementation hiccups thanks to continued support from FMCG advertisers. TV still represents a significant 40% share of total budget growing at +12.2% in 2018. Furthermore, while digital takes the headline in every forecast, Television through 2022 will expand at CAGR of +11.9% and holding onto its share.
Print media struggled the maximum in 2017 with both newspapers and magazines advertising sales declining significantly (+2.4% in 2017 Vs 6.2% in the previous year) because of the structural reforms. However in 2018, the medium will see significant growth expansion as the market recovers. Elections in large states, as national polls loom political parties are setting the stage for the aggressive campaigning and government spending on publicity will push the print growth to +6.1%. The war between print and digital intensifies and by 2022 both will draw equal share of advertising budgets.
Radio will be the third fastest growing media with a 5-year CAGR of 11% through 2022. Broadcasters have started launching stations won during Phase III auction and this will expand the listenership base and revenues will go up both organic and in-organic terms.
While OOH will see high single digit growth of +8.7%, medium continues to be data scarce and shall remain a 3-4% share media.
GLOBAL FINDINGS
*Media owners’ net advertising revenues (NAR) to grow by +6.4% to $551 billion in 2018 in the 70 countries analyzed. That’s the strongest growth rate since 2010.
*Forecast for 2018 increased following strong market performance in first few months. 8+% in the US in the first quarter, and 31+% for Google and Facebook globally.
*The 2018 growth (6.4+%) is an acceleration from 2017 (4.5+%), mostly due to the $5 billion of incremental ad spend generated around cyclical events in 2018 (US mid-term elections, FIFA Football World Cup, Winter Olympics). Neutralizing cyclical revenues, the 2018 growth would be +5.5%, in line with 2017.
*Global ad spend remains strong thanks to robust economies (US +6.4%, China +10%, Russia +12%, India +12.5%) and convalescent/recovering economies (Latin America +10%, Middle East +9%). Western Europe lags behind due to low economic growth and political uncertainty (+4.1%).
*Digital advertising sales will grow by +15.6% in 2018 to reach $250 billion or 45% of global advertising revenues. Mobile ad sales reached half of total digital spend last year, and will increase to 62% of total digital spend this year. Digital will to represent half of the world’s total advertising sales by 2020.
Globally, net media owners advertising revenues (NAR) are projected to grow by +6.4% in 2018, to $551 billion. This is above MAGNA’s previous forecast (+5.2% published December 2017) due to stronger-than-expected market performance year-to-date for digital media sales in particular.
69 of the 70 ad market analyzed by Magna are expected to show some level of growth this year, with Singapore the only market forecast to shrink this year. The fastest-growing regions in 2018 will be Central & Eastern Europe (+9.2%) and Latin America (+9.6%), followed by Asia-Pacific (+6.9%) and North America (+6.3%).
Digital ad spend will continue to be driven by Social (+31%) and Video (+27%) formats this year. Search will grow by +14% to $47 billion and remains the largest ad format.
Despite the scale reached by digital media spend and the controversies that hit some of the media owners in the first half of 2018, digital ad spend has showed no signs of slow-down yet. The combined advertising revenues of Facebook and Google grew by +31% year-over-year in the first quarter of 2018.
The majority of digital ad sales (62%) is now generated by impressions and clicks on mobile devices (mostly smartphones). Mobile ad sales will grow by +30% in 2018 while desktop-based ad revenues will shrink (-2%), due to ad blocking and the rapid shift of digital media consumption towards smartphones and away from computers.
