Ad spend: India would move up to 7th position by 2022

Ad spends to revive in 2018; India likely to add Rs 47,028 crore in the next five years

The media intelligence arm of IPG Mediabrands, which is part of the Interpublic Group, has joined peers GroupM and Dentsu Aegis Network to project a revival in Indian ad spends next year.

In its latest forecast, Magna has said advertising expenditure (adex) will grow 12.1 per cent in 2018, ahead of the 11.1 per cent expected at the close of this calendar year.

GroupM had said last week that India would be among six countries driving up ad spends in 2018, while Dentsu had forecast an ad growth of 12.2 per cent for 2018.

Magna, however, also said that India’s 2018 adex growth (of 12.1 per cent) would continue till 2022 by which time the domestic ad market would touch Rs 1.08 lakh crore in size, pushing India up the pecking order of global ad markets.

From the 10th position in 2017, India would move up to the seventh position by 2022 by virtue of adding Rs 47,028 crore in ad spends in the next five years. India’s ad market size for 2017 is forecast to touch Rs 60,972 crore, according to Magna.

This spurt in ad spends, the agency says, would be led by digital, which would grow at the rate of 21.6 per cent over the next five years.

Categories such as television and print, on the other hand, would grow at nine per cent each in the same period, the agency said.

But despite a slower pace of growth, television would still be the largest contributor to the overall ad market size in 2022 at 41 per cent, followed by print and digital at 25 per cent each, Magna said.

This is significant since many reports in the past predicted that digital would surpass television in terms of ad market size in India over the next years.

That is clearly not likely to happen anytime soon as television remains the medium of reach for advertisers.

Like GroupM, Magna also said that the impact of demonetisation and the disruption caused by the introduction of the goods and services tax has waned, resulting in economic activity picking up in India.

The July-September 2017 period, for instance, saw the country’s gross domestic product (GDP) bounce back to 6.3 per cent in terms of rate of growth after a five-quarter decline.

Chief executives of companies across sectors are already saying they see India’s GDP growth for the 2017-18 financial year in the region of 6.5 per cent to 7 per cent.

This could be higher in the 2018-19 financial year. From an advertising point of view, a growing economy augurs well for businesses since they would be spurred to invest more behind their brands.

Magna said a revival in the rural sector and a growing urban middle class bodes well for the economy, in particular, auto, e-commerce and consumer goods companies who depend on these segments for their business.

These categories, said Magna, would push up ad spends in 2018.

Banking and financial institutions would also increase advertising spends next year as they work to improve reach of their services.

Photograph: Mukesh Gupta/Reuters