Changing consumer behaviour making every touchpoint a media opportunity: Prasanth Kumar

Mumbai: India's advertising expenditure (AdEx) is projected to grow by 7% in 2025, driven by strong performance across media segments and evolving consumer behaviour, according to Prasanth Kumar, CEO of GroupM South Asia. 

The overall ad revenue is expected to reach Rs 1,64,137 crore in 2025, with an incremental Rs 10,730 crore compared to 2024, said GroupM India in its annual This Year Next Year (TYNY) report.

In an exclusive interview with BestMediaInfo.com, PK expressed optimism about India's growth potential. He said, "We have observed Indian media growth has outpaced global counterparts, which is a positive sign.” 

He further suggested that factors like increased consumption, new market entrants, and expanding audiences could propel this growth to 8% or even 8.5%.

PK attributed the positive outlook to strong media performance, evolving consumer behaviour and favourable economic conditions.

He suggested that encouraging higher ad spends from sectors like manufacturing, mining, and agriculture, which currently invest minimally in advertising, could improve the adex to GDP ratio, which is currently at 0.4%.

While acknowledging the dominance of major digital platforms like Amazon and Meta, PK emphasised the importance of a platform-neutral approach for advertisers. He recognised the challenges faced by smaller players in the digital ecosystem but stressed the importance of demonstrating value and building robust platforms to compete effectively.

Excerpts:

With the challenges pertaining to AdEx, were we able to meet the numbers that we predicted last year?

We start the year with a forecast, monitor it monthly and quarterly, and update it mid-year and at year-end. Like any forecast, this is a continuous process of refinement. We've never encountered a scenario where our initial projections perfectly matched the final outcome, which is not unusual.  

The real challenge lies in accurate prediction. Last year, we initially projected a 10.2% growth. This estimate was shaped by challenges in the latter half of the previous year, including underperformance in certain categories.

What would it take to do away with the uncertainty that has slowly engulfed the Indian advertising ecosystem?

There is some uncertainty, but we've estimated market growth at 7%. We have observed, Indian media growth has outpaced global counterparts, which is a positive sign. Additional opportunities, such as increased consumption, new market entrants, and expanding audiences, could push this growth to 8% or even 8.5%.

Looking ahead, key drivers for audience growth this year include upward trends across categories. Some categories were initially projected to grow at 10%, while others were estimated at 3%. If the 3% categories reach 5%, it could have a significant impact.

Moderately large categories achieving higher-than-expected growth could be a major advantage. Likewise, if a large category surpasses projections, it would further drive overall expansion. These factors present strong potential for even higher growth.

What is fuelling this optimism?

We are projecting 7% growth this year, driven by the strong performance of individual media segments in India, each outpacing global growth rates. For instance, digital media in India is expected to grow at 11.5%, compared to the global average of 10.2%. Similarly, print and television are growing at a faster rate in India than globally.

Another key driver is the shift in consumer behaviour, where every touchpoint is becoming a media opportunity. Brands are increasingly seeking integrated solutions, further fueling growth. Additionally, favourable economic factors, such as tax savings, are expected to boost consumer disposable income, leading to higher consumption volumes in the coming months.

Has the AdEx to GDP ratio improved this year? How can it be improved?

India's advertising-to-GDP is at around 0.4%. If the top GDP-contributing sectors—manufacturing, mining, and agriculture—increase their advertising spends, this ratio could improve. Currently, these industries invest very little in advertising.

From a global standpoint, India is moving rapidly in this direction. 

Over the past five years, the Indian AdEx CAGR (Compound Annual Growth Rate) has been 11-12%, significantly higher than the global CAGR.

When it comes to digital AdEx, while the industry is growing, most of the capital is going to Amazon, Meta, and e-commerce platforms. How do you see Indian publishers and small players surviving in this environment?

The objective always should be platform-neutral. Focusing on what the clients want to sell, it is our responsibility to advise them and show them the right direction. The size does not matter. If a smaller player demonstrates value commensurate with our investment, they could be included. 

Having said that, it's a given that there will always be larger and smaller players, and equal spending distribution isn't realistic. However, a fair share is essential. Determining a fair share, especially in the digital landscape, requires careful analysis. 

Comparing platforms like commerce, YouTube, and Meta involves significant data analysis. We conduct this analysis, and a spending mix is then developed for each client. Platforms like Meta, IPL, or Amazon, with larger user bases, naturally attract a greater share of spending due to their broader reach and viewership.

Building a platform requires a learning process. The success of the large platforms we see today is a direct result of their platform development. Their current scale wasn't achieved overnight.