India to enter top 10 ad markets list

Consistent double-digit advertising annual growth will ensure India will enter the top 10 league of ad markets for the first time ever this year.

A just-released mid-year forecast of advertising expenditure by Magna Global, a unit of IPG Mediabrands, puts India at the 10th position in the pecking order of global advertising markets, up two notches over last year.

IPG Mediabrands is the media arm of the world's fourth-largest marketing communications company IPG. India grew 15.9 per cent in 2015 and 13.9 per cent in 2014 in terms of advertising expenditure, according to Magna Global.

The latest forecast pegs India's ad market size at Rs 56,381 crore ($9 billion) this year, with advertising growth at 16.2 per cent, the highest in five years. India overtakes South Korea and Italy - valued at Rs 54,502 crore ($8.5 billion) and Rs 53,861 crore ($8.4 billion), respectively - to break into the top 10 league. One dollar has been valued at Rs 64.12 by Magna Global.

Shashi Sinha, chief executive officer, IPG Mediabrands, says, "The outlook is extremely positive as globally India remains one of the fastest growing markets."

While India's advertising to gross domestic product (GDP) ratio remains small at 0.36 per cent in comparison to the global average of 0.72 per cent, the long-term growth story remains intact, S Venkatesh, EVP and director, intelligence practice, Magna Global, says. "Our early prediction for 2017 is that India's advertising growth rate will be 15.7 per cent. By 2020, India will be the sixth largest advertising market in the world, valued at $16 billion (Rs 1.02 lakh crore)," he says.

In other words, India will continue to see double-digit advertising growth for the next four years. Venkatesh says not only existing companies, but new advertisers thanks to the evolving start-up and e-commerce ecosystem will ensure that advertising levels in India remain high.

Of the advertising categories, Venkatesh notes that e-commerce, automotive, fast-moving consumer goods, mobile handsets and telecom will be among the key spenders this year. Besides, events such as the T20 Cricket World Cup, state elections, Euro 2016 football tournament will all generate incremental ad spends, he notes. Further, the 4G (fourth generation) landscape is likely to explode making both service providers and handset manufacturers press the spend button, he says.

Government investment on infrastructure and social awareness projects will also go up this year, he adds.

In terms of media categories, television will grow at the rate of 17.3 per cent this year, touching Rs 23,545 crore in terms of size. This will constitute 41.8 per cent of the overall ad market.

Print, on the other hand, will grow 8.2 per cent to Rs 19,896 crore, 35.3 per cent of the overall market, and digital will grow 39.9 per cent to Rs 7,591 crore, 13 per cent of the market.

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel