GroupM, released its biannual advertising expenditure futures report This Year Next Year (TYNY) yesterday, forecasting India’s advertising investment to reach an estimated Rs. 57,486 crores in 2016. This represents a growth of 15.5% for the calendar year 2016 over the corresponding period in 2015. The last calendar year closed on a promising note, with the advertising expenditure in India closing at Rs. 49,758 crores, growth of over 14.2% over 2014.
As part of the report, GroupM estimates the digital AdEx to grow by 47.5 per cent in 2016 to Rs. 7,300 crores from the earlier Rs. 4,950 crores.
We spoke to digital marketers to get their thoughts on the matter. The general opinion seemed to be that the estimation (of adex) was a little cautious from what can be expected in India, though most players agreed that most of the predictions were in line with industry expectations.
As, Madan Sanglikar, Co-founder of Affle, opined that the industry should take the report as a gauge of moods and something that shows that 2016 is off on an optimistic start.
However, he did opine that the real growth might actually be higher than the projected one, on the back of increased spends by regular/traditional advertises, continued/corrected growth from start up sector, higher spends from SME segments (specially in search and social) and also thanks to growth in devices owned and freshly created content only for digital (including mobile).
Amit Gupta, Managing Partner of Httpool, agreed with the findings. Giving his thoughts, he said, "One of the prime reasons I foresee is the government initiative to push all their programs through digital platform. Moreover, with government push for creating a bigger ecosystem where investors and young startups participate, will play a pivotal role. Furthermore, the ideas backed by greater investments will help Adex in digital. Secondly, a shift in spends from print and now TV will continue in Adex. Another area which will help surge in digital will be adoption of this media in SME space which though unorganized, still accounts for a big chunk."
On similar lines, Vishal Rupani, Business Head (M-Canvas) of Affinity, suggested that digital ad spends in India will largely be driven by mobile marketing spends.
In fact, one of the things that that the TYNY report spoke about the increasing spends in mobile advertising. It went as far as to say that mobile would drive the lion's share towards digital advertising; a sentiment that everyone we spoke with the industry agrees with.
As Charulata Ravi Kumar, CEO of Razorfish India, puts it, "This is not even a prediction as it is already happpening."
Mobile and video will be among the biggest drivers of ad spends on digital year, agree experts.
As Nadeesh Ramachandran, VP (Sales), Vserv, puts it, "The growth in digital ad spends as mentioned in the GroupM TYNY report for 2016 is promising and validates our vision as well. Within digital, as mentioned in the report, mobile alone will be as big as all digital was in 2014 and will be a key focus area for advertisers across verticals. In fact, we believe mobile reach could surpass TV by 2020."
"The TNYN report echoes what we expect in 2016. We already have a substantial percentage of population accessing internet only from a mobile device and with the increasing penetration of 3G & 4G across the country, India will soon reach a mobile tipping point. The last few months of our research has revealed that CMOs are willing to invest more branding dollars on mobile if their customers are provided the right experience. In 2015 we witnessed mobile budgets multiplying very quickly across sectors, telcos, FMCG, finance and even entertainment , and expect this to continue this year," Rupani further added.
One key thing that experts we spoke to mentioned was that digital ad spending would go beyond the "10 per cent of marketing budgets" phase.
Speaking about the approximately 40 percent new users being added to mobile internet as compared to 30 per cent (approx) new users being added to Internet users, Abhay Doshi, SVP (Product & Marketing) of Flytxt opined, " They (GroupM) have captured trend for India market very well. 2016 will be the year where gap between mobile ad spend as a per cent of digital ad spend should decrease significantly Mobile may account for close to 25 per cent of the digital spend. We expect mobile to at least double from last year." On the same lines, Ravi Kumar also agreed that 2016 would be the year when digital ad spends constitute more than 10 per cent of the marketing budgets.
Pancham Endlaw, Head (South Asia) at Opera Mediaworks, also agreed that mobile will continue growing at a faster rate with spends shifting from desktop to mobile.
Explaining why this happens, Rohan Patil, MD at AppLift India said, "India is the world's fastest growing smartphone market. This is leading to an increased interest levels of marketers to target the customers on mobile screens and the same can be seen by the growth in mobile advertising industry which is growing at a fastest pace in the country. Mobile advertising also brings in transparency and is much more precise in targeting the right customer and hence becoming favourite amongst the marketers day by day. We are seeing e-commerce and travel industries leading the race in adopting mobile advertising in India and many more are opening up very fast.”
However, Ravi Kumar also opined that any predictions only take into account digital advertising, which she called a something with a lower base. "The entire mindset of corporates is changing towards digital transformation with a lot of investment on technology. A lot of budgets are being spent on digitization of the company where the budgets might not always be spent by the marketing team."