Television as a category would see a lower rate of growth at 8% vis-a-vis 10% last year.
GroupM, the country's largest media agency network, has lowered its advertising expenditure (adex) growth forecast for 2017, pegging it at 10 per cent this year against 12 per cent last year.
While India's adex would cross Rs 60,000 crore to touch Rs 61,204 crore (Rs 612.04 billion) this year, the interesting bit was that television as a category would see a lower rate of growth at eight per cent vis-a-vis 10 per cent last year, CVL Srinivas, CEO, GroupM, South Asia, said.
TV's lower rate of growth and key segments such as fast-moving consumer goods (FMCG) slowing down this year were contributing factors to the dip in the adex growth rate for the year, Srinivas said. The other contributing factor is the impact of demonetisation, whose effect was expected to linger till the end of March, he said.
"The impact of demonetisation is expected to shave off 100 to 150 basis points of adex growth," Srinivas said. The 10 per cent adex growth rate for the year had factored this in, he said.
While TV would touch Rs 27,378 crore (Rs 273.78 billion) in terms of overall size this year, print, the largest medium after television, would hit Rs 18,258 crore (Rs 182.58 billion) on similar criteria, Group M said.
Digital, cinema, radio and out-of-home will grow at 30 per cent, 20 per cent, 10 per cent and seven per cent, respectively, touching Rs 9,490 crore (Rs 94.9 billion), Rs 672 crore (rs 6.72 billion), Rs 2,464 crore (Rs 24.64 billion) and Rs 2,942 crore (Rs 29.42 billion) this year.
FMCG as a segment would see an overall growth rate "much less than 10 per cent" this year, Srinivas said, pointing to the challenges ahead for the market. GroupM's bleak forecast for FMCG's 2017 ad spends comes as rising input costs compel companies to rein in advertising and sales promotion expenditure.
If 2016 saw FMCG majors plough windfall commodity gains (thanks to lower input prices, especially those of crude oil) into advertising and sales promotion, the situation has gone into reverse now. From $20 a barrel a year ago, crude oil was now inching up to nearly $60 a barrel, sector analysts said.
FMCG is the biggest contributor to India's adex at 30 per cent, GroupM said, so a slowdown in spends hit overall growth figures, it added. For 2017, GroupM has lowered FMCG's contribution to overall ad spends to 27 per cent.
But the good news, Srinivas said, is that categories such as auto, e-wallets, government and media (TV channels) were likely to drive advertising growth this year.
Auto, for instance, will contribute eight per cent to overall ad spends this year, he said, while e-wallets would fuel contribution from the e-commerce category and so will the government and media to the "other advertisers" segment.
For 2017, e-commerce will contribute eight per cent to overall ad spends, while other advertisers (including government and media) will contribute 23 per cent.
Photograph: Reuters
