The Pitch Madison Advertising Outlook 2015 estimates ad spends to grow at 9.6% in 2015. This is lower than the 16.4% growth in 2014, however the 2014 growth was said to be on account of the increased spends from the Lok Sabha elections and the contribution of spends from e-commerce players which emerged as big spending category during the year. The advertising market which is expected to grow by Rs.3,500 crore to reach Rs.40,658 crore will see contributions by Print at 5.3%, TV at 9.5%, Radio at 6%, Outdoor at 6.2%, Digital at 30% and Cinema at 9.2%.
E-commerce to continue fuelling ad spends
The rise of ecommerce as a big spending category is expected to continue in 2015. According to the report, e-commerce will be one of the biggest spenders in the outdoor medium along with spends on TV.
Ambareesh Murty, Founder, Pepperfry.com said, “I think the estimates indicated were in line. I think e-commerce companies have become larger. Advertising is a component of the sales that companies do and as companies become larger and do more sales you will see ad spends also increasing. So I do think the report would be fairly accurate for this sector. At Pepperfry, we are looking to increase our advertising spends substantially this year. You would see us spending, including digital media, between Rs.100-150 crore worth of spends in 2015 and the early part of 2016. So I do know that the trend is here to stay. We are connecting with more customers using a multitude of media and we are spending more marketing dollars to connect with more customers. And that trend is here to stay.”
FMCG to spend big on TV & Print
According to the report FMCG will continue be the largest spender on TV and will account for over 50% of ad spends. Incidentally, FMCG will become one of the largest spenders on the print medium as well in 2015. Print, which was largely dominated by spends from automobile, consumer durables and real estate, will now see larger spends from FMCG.
Pravin Kulkarni, Marketing Manager, Parle Products said, “It is good to hear that the total ad spend is going to grow by almost 10%. I was expecting that in TV because as it is there are lot of channels coming up now and there is a limitation or cap on the promotion time of 12 minutes. That is definitely going to result in lot of networks launching new channels and that also will lead to increase in spends of advertisers. Secondly, events like the World Cup and IPL are bound to result in higher spends by advertisers. Another good news is print is also growing and it is growing faster than expected. It is good news because everyone was thinking that it will ultimately lose out to television in the long run. I think that is not going to happen. And the good part is that a lot of FMCG clients have recognised the value of print media and they have started spending quite a lot of money now. A lot of FMCG companies have started launching premium brands and for creating awareness about premium brands, print is one of the best medium. Secondly there are a lot of consumer offers going on in the business and also a lot of them are creating awareness about the offers through print media. There are also many dailies which have come out with special editions which are targeting a specific set of consumers. So if a particular company wants to target a specific set of consumers, that special supplement is being used by companies who want to target them.”
Economic revival and budget to watch out for
While marketers agreed on the advertising growth projections, they all said it was dependent on the current revival in the economy that the country was witnessing in the past few months. Many are also looking to the budget and the even a good monsoon period to add to the good news and growth during the year.
Vivek Sharma, CMO, Pidilite said, “The projections given by the Pitch-Madison Media report of 9.6% is realistic and it is quite insightful to see there the growth of digital and radio and the importance of localized mediums or localized geo-targeting as an offering and will lead to more participation of local advertisers. The coming economic year is going to cautious for marketers and a lot depends on the Union Budget, a good monsoon and overall many segments of our economy picking up including real estate, automobiles, durables, etc. which have been lagging behind for some time. We have even seen a slowdown in FMCG which will pick up if the budget is encouraging and if the rain gods support Indians.”
G. K. Suresh, Head of Marketing, Foods Division, ITC said, “I think it is fairly realistic. Last year has been fairly bad for the FMCG industry. The growth rates have been declining but I think in the last couple of quarters, we are seeing some momentum reviving. And I think ACN report is projecting that the growth rates for 2015 is going to be fairly robust which is almost 11-11.5%, which is the growth that we had seen almost two years back. So when I see that and the Pitch Madison report along with it then it makes a lot of sense. I think if there is an upturn happening in the economy people are going to be confident of launching new products and investing heavily behind their existing products. So it is likely that the industry may actually exceed the Pitch Madison projections.”
Sanjay Behl, CEO, Raymond said, “The forecast which has been presented by the Pitch Madison report is pretty much in line with our internal business or industry forecasts. If you look at the consumer price index on inflation, it is the lowest India has seen in the last 4 or 5 years. If you look at the consumer confidence index as Nielsen data shows it has been growing in the last three or four months. We have seen a clear jump on that and it is the best that the last five years have seen, it is as good as in 2011 with the overall confidence. And typically one would see with a little better control on inflation and with petrol prices coming down and the forecast saying that it will stay down, all this is going to lead to more release of cash and with the confidence coupled with cash we can see more consumption happening across industries. It is just that some industries will have a lower lag and some industries could have a larger lag. For example FMCG could see an immediate correlation there, similarly lifestyle and fashion or service industries could see an immediate correlation there. But for some longer lead time industries like automotive sector could see a little longer lead time in terms real growth sticking into the balance sheets of these organizations.”