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Digital to claim 24% of total adex by 2020, mobile-first strategy to drive growth: KPMG India

In a conversation with, Girish Menon and Bharat Rajamani of KPMG India say India's media and entertainment industry is on a cusp of digital transformation. They say digital advertising, which is likely to grow at 31% CAGR till 2023, will be fuelled by the mobile-first strategy, deeper regional penetration and advertising opportunity presented by OTT platforms

(L) Girish Menon and Bharat Rajamani (R)

The share of digital in India's total adex will jump to 24% from the existing 19% by next year, feels KPMG India.

The Indian digital advertising industry, currently pegged at around Rs 86.2 billion, is expected to grow at a CAGR of 30.9% till 2023, reaching Rs 434.96 billion.

The growth in digital is primarily being driven by sectors like FMCG, BFSI, e-commerce and real estate. The e-commerce portals have now emerged among the top 10 digital advertising platforms. According to KPMG, the next phase of growth for digital will come from deeper regional penetration. spoke to Girish Menon, Partner and Head, Media and Entertainment, KPMG India and Bharat Rajamani, Partner, Risk Consulting, KPMG India on the advertising landscape in India and new trends in the media and entertainment industry.

Talking about the latest consumer trends in the advertising industry, Menon said that the outreach of regional and news channels has increased 3X in the last 10 years. Also, the number of advertisers added on print is 4X of the no. of advertisers added on TV. The top 50 advertisers are contributing approximately 35% to the total adex. The share of the top 50 companies in the total adex was 43% last year. This signals that advertisers, other than the top 50, are pumping in money.

Additionally, science and data-based planning has finally arrived in Out of Home (OOH). KPMG, too, is using an Artificial Intelligence-based (AI) tool called ‘Radar’ to monitor the site placements and ‘Compass’ to plan the sites effectively on the basis of point of interests of its target audiences. Steps are also being taken to get traffic count. “Today airport advertising has firmly established itself and commands a healthy share of the OOH market,” said Menon.

Digital has seen the maximum change, growing in share from 4% to 19% over the decade and has been the only medium which has shown growth in spite of demonetisation. Video is the most preferred medium now with Rs 4,000 crore of adex being spent only on video ads. OTT has grown multi-fold going from just nine players in 2016 to 30 today.

The overall advertising share has grown about 2X in the last five years from Rs 321.06 billion to Rs 609.08 billion. In the total advertising pie, there has been a decline in the print medium while TV has been consistently commanding the highest share in the pie. The platform that has grown significantly in the last five years is digital media, which has gradually increased from 15% of the pie in 2016 to 19% in 2018.

Speaking about the consumer trends in the media and entertainment industry, Menon clarified that today the media and entertainment industry is converging their businesses to provide a content ecosystem to its consumers. “They are rapidly converging around three elements -- premium content, direct to consumer distribution, and high-speed networks -- which are required to transform the way media is distributed, paid for, consumed and created,” he added.

Rajamani pointed out that the media and entertainment industry, today, in particular, is on the cusp of a digital transformation with rapid changes in the traditional media landscape and rising levels of digital sophistication in consumers.

The industry is looking to benefit from the changing digital strategies of the companies, which are shifting to AI and IoT applications. The connecting of assets, processes and personnel enables the capture of data and events from which a company can bring in lean behaviour and usage, reach with preventive action or augment or transform business processes.

“Today, intelligent machines using AI technology capable of ‘knowing what type of content to create’ by processing terabytes of unstructured data from social media are being developed by digital media platforms. ML algorithms can analyse content based on formats, themes and interest and judge the extent of consumer acceptance of the AI-created content on various platforms in terms of adoption rate, views, likes and dislikes and viewer comments,” said Rajamani.

The maximum share in Media and Entertainment (M&E) is contributed by advertising. The industry is now being driven by digitisation and mobility where content is the king and accessibility anywhere is leading to the growth in the industry.

The Indian advertising industry is projected to be the second fastest growing advertising market in Asia after China. However, OTT is contributing to the growth wave as well, where it is emerging as a preferred platform for consumers in terms of offering quality content and content on demand. This is what has made them the choice of advertisers as well, giving rise to another revenue stream, namely subscription.

Also, digital marketing is taking shape in India, growing rapidly in the country. It had a growth of Rs 116.3 billion in FY 18.

“The growth is fuelled by advancement in digital infrastructure, increased inclusion and adoption of regional, non-urban users, increase in penetration of mobile phones and increase in maturity in the digital ecosystem driven by public and private investments. Affordability of data and increased reach in rural areas are also driving the digital usage and changing the demographics from niche to mass,” explained Rajamani.

What is the trend in social media advertising? Menon mentioned, “Social media advertising is growing with 28% contribution of the revenue on the back of rapidly growing user base fuelled by millennial growth with college students representing the highest 33% of active social media users in India.”

 An average Indian user spends around two hours and 26 minutes daily on social media. Hence, spends on social media is expected to grow by 25% in 2019 of the overall digital media pie.

If we look at the global picture, around 579 million internet users watched online videos as of December 2017. While social media platforms remain popular, OTT is steadily emerging as a preferred mode of viewing videos online and it is estimated that more than 40% of the video viewers in China will use an OTT service by 2019. This gives OTTs to monetise their platform by selling ad spaces and subscriptions, which is gradually adding to the adex.

Mobility and increase in internet penetration has helped in the increase in social media usage. Importance and value proposition of social media as a platform is increasing rapidly and barriers to connectivity such as cost of access and awareness are being resolved in India at a fast pace.

This growth is further expected to be fuelled by the addition of regional users, who are projected to increase to over 300 million by 2021. Marketers are conscious of this trend and are steadily increasing their allocation of digital ad spends on social media with an increased focus on regional markets.

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