Media Heads expect 2017 Adex growth to be restricted at 10%; lowest In five years
Media agency heads we spoke with said Indian Adex growth would be lower than expected due to the introduction of new policies like demonetisation and GST
The Indian advertising industry, which has witnessed a healthy growth rate over the last few years, is expected to show a lower than anticipated growth rate in 2017 as the Indian economy still struggles to get back on track after a number of new government policy decisions were introduced through the last quarter of 2016 and the first half of 2017.
Media planners we spoke with said adex growth in 2017 would be lowest in 5 years and hover around the 10 per cent mark.
"It does seem today that it might be a little difficult to reach the growth predicted earlier but we haven’t done a detailed analysis yet," said Sam Balsara, Chairman and MD of Madison World. The annual Pitch Madison Advertising Outlook report had pegged the industry to grow at a healthy 13.5 per cent in 2017.
"We have had a pretty bumpy year. There has been a lot of continuing impact of the previous year in terms of sluggishness of the economy and the impact of GST, demonetisation and so on. We have had a couple of good months, April for example, which had the IPL and was a sell out this year as well. We are hoping that the festive season will bring some cheer and we are looking at double digit growth in the next few weeks over the previous period. So I think we will end the year at close to 10 per cent growth, which is the lowest growth in the last five years. We are hoping things will pick up from here because a lot of structural changes that needed to happen have happened and hopefully these will not play out and start delivering good news to all of us in the years ahead," said CVL Srinivas, CEO (South Asia) at GroupM.
Nandini Dias, CEO of Lodestar UM India, estimated that the overall growth would be down from an estimated 13 per cent at the start of the year to around 10.5-11 per cent.
"The period between November 2016 to June 2017 has been tough for the industry. I think it is slowly picking up now. The early Diwali puts us at a slight disadvantage because we thought that the industry would get time to recover before the festival arrives but I think next year will be much better," she told us.
The impact of GST, demonetisation, etc. is still being felt in the industry with various sectors reporting a sluggish festive season where, traditionally, the last half of the year usually sees a major upward movement in terms of ad spends. Industry observers and media planners we spoke with agreed that recovery post GST has still been slow though the hope is that this will change by the beginning of the new economic cycle in 2018.
"Talking about this year's adex estimates, we had estimated it to grow at a lower pace than last few years. CAGR growth of industry over last 3-4 years has been 12 per cent but this year we had factored in demonetisation, GST, etc. and predicted 10 per cent. But these things are now history and the industry should look ahead. We are seeing recovery though it is slower than expected," said Amin Lakhani, Leader, South Asia, Team Unilever, Mindshare.
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