News as it is -

Best Media Info

Partner Content

Magna mid-year adex forecasts digital to grow at 22.6% CAGR by 2022

Digital represents 19% of total ad budgets, while TV still has a lion’s share of 40%. Print struggles the most by growing at just 2.4% in 2017 unlike 6.2% the previous year

Magna Global Advertising Forecast’s spring update says digital represents 19% of total advertising budgets currently and will touch a quarter share of media, growing at a CAGR of over 22.6% by 2022. Retail, BFSI, FMCG, Telecom and Auto are major contributors to the growth, the report said.

In 2018, the medium will grow over 27%. As a 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). Digital provides impetus to overall growth by contributing close to 40% of the incremental advertising rupee.

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 modernising 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 the 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.

Hema Malik, COO, Lodestar and Managing Director, MAGNA, said, “At a 12.5% growth, India is the fastest growing country among the top 20 ad markets globally. A boosted economy, especially in smaller towns and rural markets, expands the grounds for consumerism across categories. These markets will offer newer versions of regional media platforms, leading to acceleration in media growth.”

On the back of a good monsoon, the higher minimum support price for crops has increased the farm income, boosting consumption in rural markets. Consumers will also benefit from the lower tax incidence post GST. This rationalises FMCG, retail and automobile categories investments in these markets. The government’s 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, 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.”

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 being the growth engines. India is probably the only exception where print is still growing despite the double blow of demonetisation and 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.”

Television remains insulated from temporary economic policy implementation hiccups thanks to continued support from FMCG advertisers. TV still represents a significant 40% share of the 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, and 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 an equal share of advertising budgets.

Malik added, “It is heartening to see a promising print growth with the regained confidence in print from IRS finding adding 110 million new readers. Contrary to global trends, print is here to stay in India.”

Radio will be the third fastest growing media with a five-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%, the medium continues to be data scarce and shall remain a 3-4% share media. The government’s thrust towards infrastructure growth in T2 and T3 cities will widen the OOH landscape.

Post a Comment