India is the world's 2nd largest telecommunication market, with over 1 billion subscribers as of May 2015. The wireless segment (97%) dominates the market. During FY 07-15, wireless subscriptions witnessed a CAGR of 25% to 970 million. It is also the 2nd largest country in terms of internet subscribers. India's telecommunication market is expected to experience further growth, fueled by non-voice revenues and higher penetration in rural market- IBEF. It is also one of the largest spender on advertising and marketing on various mediums.
According to the GroupM report, telecom, FMCG and auto sector are expected to be the highest spending brand categories during the year. A major portion of these ad spends goes towards television, which is followed by radio, print and digital. According to the Pitch-Madison report telecom/internet contributed 13.6% of the ad spends and was the second largest spender on the medium after FMCG. This category in 2015 is expected to see a very large growth of 51.2% on TV. While on radio its contribution was 9.4% in 2014 and in top 3 spenders, it is now expected to grow by a large 33.7%. Telecom on the print medium contributed to 5.9% of the ad spends which is expected to now grow by 48.8% in 2015.
The reason for this large growth in the ad spends of the telecom sector is due to the rolling out of 4G services various players. Currently Airtel is the only one that has rolled out its 4G services. However, other players such as Vodafone are expected to roll out its 4G services by December 2015. New entrant Reliance Jio is also expected to roll out its 4G services by March 2016 said a media report. Apart from this Idea Cellular too is expected to launch its 4G services around the same time. Media planners as well as media industry experts expect to see a very large increase in ad spends from these players during their 4G services launch.
A recent S-Group Insights report of TAM Media Research showed a large rise in the ad spends of particularly Airtel in Q3 (July-September) in 2015. The ad volumes on TV of Airtel increased in Q3 to just under 1,500 hours of promotion from around 600-700 hours of promotion on TV during Q2 (April-June) 2015. Airtel which started the year on a low scale bounced back with heavy TV spends in Q3 this year. Airtel in Q3'2015 had more than 50% advertisement share on Television. According to TAM viewership data in Q3'2015 Airtel commercial was viewed 39 times by an average viewer Vs 20 times of IDEA & Vodafone each. Airtel promos also reached out to a higher % of TV universe (94% Cume Reach) than IDEA & Vodafone (90% Cume Reach each). A reason for this high spends on TV was the promotion of the launch its 4G product. 85% of the total Ad Volume on TV for Airtel went towards the promotion of 4G. It is 40% more than it used for the promotion of 3G in Q3 of 2014. The total duration of promotion on TV for Airtel also increased from 1,159 hours in Q3 2014 to 1,317 hours in Q3 2015.
Radio is the 2nd most preferred medium for advertisement for Telecom players in terms of count of ads. It received 25% of total promotion in Q3'2015 for Telecom/Internet service category whereas the same figure for TV stood at 74%; Print receiving nearly 1% inventory for the category. Airtel which was shying away from the medium until Q2'2015, currently it holds the highest commercial duration on Radio. Its focus being on West Zone followed by South. Aircel & BSNL focus on South Zone whereas IDEA & Vodafone target West zone through advertisement on radio.
In print also Airtel holds the numero uno position for maximum ad volume. Times of India & Economic Times are the top 2 preferred publications for Airtel whereas Idea preferred to promote maximum on Dainik Jagran (Hindi) & Matrubhumi (Malayalam) in Q3'2015. Vodafone which was maintaining a competitive threshold of ad volume on print until Q1'2015 dropped it to a minimal level in next 2 quarters.
The category however has seen a drop in ad volume of 10% in Q3'2015 compared to Q3'2014. Tata Teleservices & Vodafone reduced the advertising volume by 49% & 37% respectively.
On a year trend the category has decreased the promo duration on TV in 2015 compared to 2014 but the numbers are actually higher than year 2012 and 2013. Main reason behind relatively higher numbers for the category in 2014 was heavy promotion of Airtel Money in first 3 Quarters of 2014 also Airtel 3G was promoted heavily in Q3.
With such large promotion and ad spends from Airtel on TV, radio and print for the launch of its 4G services, other telecom players are expected to do the same once they launch their 4G services soon. TV broadcasters can anticipate to get the largest share of the ad spends from the telecom companies in the next few months.