Ad street is on a roll. Billing growth has been at top trot so far this year and analysts are already predicting a rocking '06 as well. Ad industry sources say a 13-15% estimated growth in '05 has set the pace for another bumper year.
“I expect '06 to be even better,” says JWT head Colvyn Harris. Agrees Santosh Desai, president, McCann Erickson, “The growth has been in the range of 12-15% this year, compared to 8-10% last year. I expect the momentum to be maintained next year as well as all indices look favourable.”
Contrast that with the first gear growth in the world's biggest billable market - the US. Indeed, Merrill Lynch has already lowered its US forecast for this year's growth at 3.2% (down from the earlier forecast of 3.7%) while '06 is due for a slightly higher 4.5% growth, down from earlier estimate of 5.2%.
Analysts say the reason for the billing bust-up is both macro and micro. While the net's claim on ad revenues has caused some leakage, the growth driver in top-dollar ad-spend sectors has moved to Asia. India's handsome double-digit growth has been powered by FMCG and automobiles. Competition between financial services and telecom has also helped. Realty and education are the other two drivers, with the property and market boom adding to the ad buzz.
What has helped is the rush of new models and marketing schemes in sectors like FMCG and auto. The biggest auto spenders this year are likely to flex their ad muscles next year. GM India, which has lined up three big-ticket launches for '06 (including the Aveo notch and hatch, and a sporty Optra), expects a substantial rise in ad spend.
Says Rajeev Chaba, president and CEO, GM India: “We expect volumes to go up from 31,000 units this year to 48,000-49,000 units next year, most of which will come from new car launches. So our spend will see much more than average increase.” Bike biggie Hero Honda also expects an increase in anticipation of fresh competition in the market.
Says PS Sunder, head of marketing at Hero Honda, “There is some justification in the rise due to higher revenues and more competitive pressures.” Hero Honda expects an at least 10% rise in ad spend over a 17-18% rise in volumes.
Industry watchers say the rush of celebrity endorsers have further fuelled the spend boom this year. With HLL, the biggest spender on ad street, roping in the likes of Amitabh Bachchan, Shah Rukh Khan, John Abraham and Bipasha Basu and car companies like Ford, Hyundai and Toyota roping in Abhishek Bachchan, Sania Mirza and Aamir Khan, respectively, the brand ambassador roster has been pretty full this year.
Sources also say that MNC autocos are increasingly moving towards a per-unit ad spend strategy thanks to which growth markets like India and China have seen big ticket spend increases.