Indian advertising market to increase +15% in 2022: Magna Global Advertising Forecast
Net ad revenues across digital formats will rise +19% to reach ₹254 billion in 2022, while linear ad sales will grow by +13% to reach ₹499 billion
Indian net ad sales revenue grew +14% in 2021 to reach ₹657 billion and growth is expected to accelerate in 2022, fueling an advertising revenue increase of +15% (above the APAC average of +11%). This is the finding of Magna Global Advertising Forecast.
Below are some of the other findings of the survey.
- Globally, media owners’ advertising revenues grew by +22% in 2021 to reach a new all-time high of $710 billion, following a decline of -2.5% in 2020. The global marketplace is now 19% larger than pre-COVID levels and will continue to grow steadily in 2022 (+12%).
- Ad spend grew in all 70 ad markets monitored by MAGNA and reached double-digits in 68 out of 70. Several of the world’s largest markets posted above-average growth including the US (+25%), the UK (+34%), Brazil (+30%), Canada (+27%) and Australia (+23%), while China (+17%) and India (+14%) experienced below-average growth.
- The Asia Pacific advertising economy grew by +16.5% in 2021, following the recession of 2020 (-0.8%). In 2022, the Asia Pacific ad market will expand by +11.2%, close to the global average of +12% and in line with the pre-COVID long-term regional growth. Growth is powered by large markets such as China (+16.7% in 2021, +8.0% expected in 2022), and India (+14.0% in 2021, +14.5% expected in 2022). In 2022, APAC advertising revenues will increase by +11.2% to $235 billion, 25% above the pre-COVID spending level, driven by digital advertising growth (+16.2%).
- The APAC advertising market is concentrated around the two largest markets China and Japan, combining to represent 70% of total regional ad spend and ad revenues. This has decreased slightly over the past year because China’s growth in 2021 has been slower than most APAC markets. This is due to a combination of factors including a difficult comparison in 2020 (China was one of the few markets that still grew spending in 2020), as well as a government crackdown on digital media owners which has crimped overall advertising revenue growth in digital formats. In 2022, the strongest growth in APAC will come from India (+15%), the Philippines (+14%), China (+13%), and Malaysia (+12%). The weakest growth, on the other hand, will come from Thailand (+3%), Vietnam (+6%), and Hong Kong (+8%), some of which are still struggling with their worst COVID outbreaks of the crisis.
India Key Findings
- Economic activity (real GDP) expanded by +9.5% in 2021 and is poised to grow another +8.5% in 2022.
- Indian net ad sales revenue grew +14% in 2021 to reach ₹657 billion and growth is expected to accelerate in 2022, fueling an advertising revenue increase of +15% (above the APAC average of +11%).
- Net ad revenues across digital formats will rise +19% to reach ₹254 billion in 2022, while linear ad sales will grow by +13% to reach ₹499 billion, 66% market share.
- Despite the +13% growth next year and the +12% growth in 2021, linear ad sales will remain 87% of pre-COVID levels, while digital ad sales will be nearly 50% above 2019 levels.
- Over 60% of the new gains came in H1 2021 thanks to Indian Premier League (IPL) moving back to the original schedule, and strong growth from print advertising (+12%)
According to Shashi Sinha, CEO, IPG Mediabrands India, “Waning fear of the virus, along with the opening of economic and leisure activities, has given a boost to demand and improved business sentiment. The Indian advertising marketplace is experiencing recovery and accelerated adoption of non-conventional methods by all forms of media to engage consumers is helping along the recovery path. Though the second COVID wave in 2021Q2 disrupted the momentum, ad revenue in 2021 will grow at a healthy rate after contracting -22% in 2020. Close to 60% of the new gains came on the back of linear formats. Brand and privacy safe media that the traditional formats boast off, keep them relevant. A strong growth predicted from print advertising (+12%) is the way advertisers have reinforced faith in the medium. Though the road to recovery is a long one and albeit at different rates, advertising revenue in 2021 is likely to exit 90% of 2019 revenues.
India’s economy is poised for a bounce-back after enduring a second wave of COVID infections in Q2 2021. The government relentlessly made efforts to restrict the economic damage with calibrated lockdowns. Government fiscal and health response supported the recovery and the new infections have fallen significantly with vaccination surpassing a billion doses. As of late November 2021, approximately 30% of the population is fully vaccinated and nearly 60% have received at least one dose of the vaccine. Reducing the likelihood of a prolonged pandemic will continue to be a priority and the introduction of production-linked incentives in various sectors like textiles, automobiles, appliances, etc., will boost manufacturing capabilities.
After a -7.3% contraction in 2020, the sharpest ever recorded in India, the IMF in their October 2021 update has predicted real GDP growth of +9.5% in 2021 and +8.5% in 2022. Supply disruptions have dragged manufacturing activity lower, while the release of pent-up demand has taken consumer prices higher. Consumer price inflation accelerated to +5.6% in 2021, though price pressures are expected to subside somewhat in 2022 (+4.9%).
Advertising revenues swung back to a healthy growth rate of +14% in 2021, rising from ₹577 billion to ₹657 billion. Digital ad formats grew by +20% (APAC average: +23%) to ₹214 billion, while traditional media rose +12%. Ecommerce, Retail, Durables, Beverages, Pharma, Real estate, Finance, and Education were the most active categories while automobile, government, personal care, and communication brands continued to hold back their spending.
In 2022, Travel & Hospitality will see a resurgence, with the relaxation in travel regulations. The automobile and handset sectors that experienced supply-side issues will bounce back, too, along with the Education, Realty, Retail, and Fashion sectors. Traditionally TV-heavy categories, like FMCG, Personal products, and Food are expected to increase their share of digital advertising.
The pandemic has reinforced agility and persistent digital engagement. This has accelerated the adoption of e-commerce as a channel and social commerce is increasingly getting popular. Advertisers will pursue every shoppable moment to offer “anywhere commerce” to their consumers. With local players in Reliance and Tata e-commerce platforms gaining more traction, the sector will further increase its share of advertising.
Digital adoption accelerated with increased use of devices and streaming services, gaming, and e-sports benefitting. Digital advertising is currently the second-largest segment at 33% market share at the end of 2021, following growth of +19.6%. Social has the highest share within digital (28%), followed by Display (26%), Search (25%), and Video (21%). Growth has come from Neo banks, crypto exchanges, fantasy sports, and online betting & gaming. In 2022, video and social platforms will gain significant advertising share followed by audio and display. Overall, digital advertising revenues are expected to grow +18.5% next year to top INR 250 billion.
Despite disruptions in 2Q21 caused by a surge in COVID cases, television performed well in 2021 (+10%) as original content never dried up. IPL matches were paused partway through the season, due to harsh situations posed by the pandemic; however, resuming them in the second half of 2021, along with the ICC T20 World Cup, helped television revenue growth. The top 10 advertising categories contribute to more than 80% of the revenues. Ecommerce, education, beverages, realty, pharma, and food advertising revenues grew, while government, automobile, personal care, and financial category eroded in 2021. With IPL media rights coming up in 2022, valuation this time is going to be even higher with the increase in the number of teams and the number of matches. With this factor, coupled with a few critical state elections, television is expected to maintain momentum and grow by +11% to reach INR 294 billion by the end of 2022.
Newspapers have nearly recovered on circulation and advertising volumes, though the market pricing is still soft. In 2021, overall print grew +12% from a low base (2020: -40%), despite the slowdown in business. Growth has come from Retail, Durables, Finance, Real Estate, and Government spending. 2022 growth is expected to be broad-based, with most categories increasing spends and elections in a few large states helping to drive an increase of +14%. With all COVID restrictions lifted, wedding season (which typically begins in October and lasts through March/April) will present another opportunity for print to thrive.
Radio’s recovery started off briskly before stalling due to the second lockdown in 2Q21. The rebound from the July to October 2021 period was far steeper and vertically driven; however, ad rates will take a while to get back on track. Radio is expected to gain back the transit audience listeners lost during the lockdowns. Growth in both listenership and revenue is expected to come from Tier 2 and Tier 3 markets. Overall, radio advertising revenues grew +20% in 2021 to reach ₹16 billion, nearly 70% of the pre-COVID market size. Growth was driven by E-commerce, Food, Pharma, and Retail advertising. Growth of +21% is expected for 2022.
OOH traffic numbers are already reaching pre-COVID levels, with passenger footfall in airports and the metro increasing rapidly. Increased waiting time due to the health check process makes transit assets more attractive for advertisers. While the recovery in revenue will happen in stages and vary on formats, street furniture, billboards, and transit format occupancy rate have all seen an increase. Cinema hall regulations have been relaxed in most states as of the second half of 2021, and the return of big-budget movies supports recovery for multiplexes. OOH (digital & static, not including cinema) revenues rebounded by +17% in 2021 and an acceleration (+20%) is expected in 2022, with revenues reaching 67% of the 2019 pre-COVID market size at the end of the year. Automobile, Real Estate, OTT & Finance are a few categories driving OOH advertising growth.
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