Mumbai: 2017 was a roller-coaster ride because of two radical economic initiatives – currency exchange and the rollout of the Goods and Services Tax. Both were aimed at modernizing the economy and the tax system but created short-term disruption. However there is now consensus building on the recovery from these temporary disruptions and IMF forecasting the growth to rebound in 2018 to 7.4% and 7.8% in 2019 (6.7% in 2017) is a positive sign for the market. India remains the fastest-growing market among large developing countries in Asia. Meanwhile consumer price inflation will accelerate, from +3.6% in 2017 to +5% in 2018 and 2019.
On the back of a good monsoon, the higher minimum support price for crops has increased the farm income and thereby boosting consumption in rural markets. Consumers will also benefit from the lower tax incidence post GST. This rationalizes FMCG, Retail and Automobile categories investments in these markets. Government push for finance banks in small towns and infrastructure spending will aid durable category to increase penetration. Digital infrastructure is helping e-commerce expansion to smaller markets and making it easy for brands to reach out to this consumer set. In this context, Magna escalates its autumn projection slightly from +12.1% to +12.5% in 2018. The ad market re-accelerates, after slowing down to single-digit growth (+9.8%) in 2017.
S Venkatesh, EVP, Director Intelligence at MAGNA:India advertising sales reached INR 600 billionin 2017 ($9.3bn) and will grow to INR 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.
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. Government’s thrust towards infrastructure growth in T2 and T3 cities will widen the OOH landscape
Hema Malik, COO, Lodestar and Managing Director, MAGNA, said, “At a 12.5% growth India is the fastest growing country amongst the top 20 ad markets globally. Boosted economy especially in smaller towns and rural markets expand the grounds for consumerism across categories. These markets will offer newer versions of regional media platforms leading to acceleration in Media growth.”
She further added, “It is heartening to see a promising print growth with a regained confidence in Print from IRS finding adding 110 million new readers. Contrary to global trends Print is here to stay in India.”
Arun Sharma, COO, Initiative and Managing Director, MAGNA, said, “Globally the growth in advertising spends is better than earlier projections. India at 12.5% would be the fastest growing market among all the large economies in 2018 with Digital followed by TV be the growth engines. India is probably the only exception where Print is still growing despite double blow of demonetization & GST rollout. It’s expected to show better growth in 2018 versus last year due to higher government spending, good monsoon and higher economic activity.”
Key Figures:
Media Owner Advertising Revenue Growth Forecast – Key Markets
| Key Markets | 2018 ($ Bn) | 2017 | 2018 | 2019 |
| United States | 206.6 | 3.3% | 6.4% | 2.0% |
| China | 69.2 | 9.1% | 10.3% | 8.0% |
| Japan | 38.9 | 2.7% | 2.8% | 2.0% |
| United Kingdom | 24.8 | 5.2% | 6.1% | 3.3% |
| Germany | 24.1 | 3.5% | 2.5% | 2.4% |
| Brazil | 16.4 | 7.7% | 12.6% | 8.8% |
| France | 12.7 | 2.7% | 2.9% | 2.3% |
| Australia | 12.4 | 3.3% | 3.0% | 3.7% |
| Canada | 11.7 | 5.5% | 5.0% | 3.5% |
| India | 10.4 | 9.8% | 12.5% | 13.2% |
Media Owner Net Advertising Revenues (NAR) Growth
| NAR | 2017 | 2018 | ||||
| Growth | Size (INR Bn) | Growth (June 18) | Growth (Dec 17) | Growth (change) | Market Share | |
| TOTAL OFFLINE | 6.5% | 546.4 | 9.5% | 9.4% | 0.0% | 80.6% |
| Television | 10.0% | 274.4 | 12.2% | 12.2% | 0.0% | 40.4% |
| 2.4% | 212.2 | 6.1% | 6.0% | 0.2% | 31.3% | |
| Radio | 5.4% | 22.8 | 10.0% | 10.0% | 0.0% | 3.4% |
| OOH | 7.7% | 37.0 | 8.7% | 9.7% | -1.1% | 5.5% |
| TOTAL DIGITAL | 28.7% | 131.9 | 27.0% | 25.2% | 1.8% | 19.4% |
| Mobile | 73.0% | 60.9 | 54.4% | 53.9% | 0.5% | 9.0% |
| Desktop | 11.3% | 71.0 | 10.3% | 10.4% | -0.2% | 10.5% |
| Search | 20.2% | 36.1 | 15.3% | 15.3% | 0.0% | 5.3% |
| Video | 26.9% | 22.4 | 32.7% | 32.7% | 0.0% | 3.3% |
| Social | 62.1% | 39.7 | 44.0% | 44.0% | 0.0% | 5.9% |
| GRAND TOTAL | 9.8% | 678.3 | 12.5% | 12.1% | 0.4% | 100.0% |
