Advertising spend in India to grow 12% this year

Source: The Economic Times, June 16, 2017

NEW DELHI: Advertising expenditure (adex) in India is likely to increase by about 12% this year to touch Rs 61,100 crore, with television retaining its leadership status in an industry that closely tracks overall economic expansion and consumer expenditure in a specific geography.

Advertising revenue, which accounts for 0.38% of India’s gross domestic product (GDP), is likely to increase at a compounded annual growth rate of 12.6% to touch Rs 99,200 crore by 2021, according to IPG Mediabrands India, the media agency conglomerate that is part of the US-listed Interpublic Group.

India’s advertising spend-to-GDP ratio trails those in the developed economies, where domestic consumption has roughly a similar share in total economic output as it does in the South Asian nation. In the US, for example, long-term advertising spend has remained largely within a narrow band — between 1% and 2% of the GDP — according to a Bloomberg report that cited data from researcher DB5.

“Within the next decade, India will gallop to become one of the largest consumer markets in the world. Rising affluence, the ease of doing business, urbanisation, and enabling infrastructure will contribute to this status,” said the report put together by Magna Global, the media unit of IPG Mediabrands.

Besides traditional advertisers such as the FMCG and automobile industries, ecommerce, payment banks, telecom services, financial technology, content distribution platforms, and the social sector will help drive growth.

The goods and services tax (GST), effective July 2017, may disrupt the adex in the short term, with the industry aligning its operations to the new tax structure.

Advertising spends on television continues to dominate the industry, with a market share of 41%, and it will increase by 10.3%: Advertising over the print medium is expected to grow by 5.7%.

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