Pitch Madison Advertising Report 2020 unveiled: Ad Market to grow at 10.4%

IPL, ICC T20 World Cup, festival season & good spending by OTT, mobile wallet brands and e-commerce platforms to help achieve estimates, says the report

e4m by exchange4media Staff
Updated: Feb 15, 2020 12:09 PM

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Pitch Madison Advertising Report

The Pitch Madison Advertising Report is here and while it predicts a subdued first half for Adex it expects a buoyant second half, especially for the fourth quarter of this year. The projected growth figure for 2020 is at 10.4% and the total Adex is expected to move up to Rs 74,650 crore, an increase of Rs 7,048 crore, of which Rs 4,387 crore or 62% will be contributed by Digital.

Last year was a challenging year for the industry on the back of the economic slowdown, TRAI’s New Tariff Order woes and weak consumer sentiment during the festive season. Therefore, the advertising industry grew only 11%, falling short of the projected growth rate of 13.04% for 2019. However, on the upside, Rs 6,695 crore was added to the Adex in absolute terms, which will be the second-highest addition to Adex in a single year in the entire last decade.

Talking about the year gone by Sam Balsara, Chairman and Managing Director, Madison World said, “What a year 2019 has been when media found itself battling serious headwinds. It started with the largest medium television battling the NTO order and got further bruised by the collapse of the popular FTA channels and ended with the dull festive season on account of the economic slowdown in Q3 and Q4, the only blip we saw was surprisingly in the second quarter because of IPL, World Cup and the Lok Sabha elections. As we see it the year can be neatly divided into two halves, H1 and H2 and the two halves behaved differently, H1 grew very well at higher than our forecast at 20 % on the back of the three events but H2 collapsed with a growth of just 3 % over H2’ 18. In fact, H2’ 19 grew by as much as 7% compared to H1’ 19, whereas in all previous years so far H2 has been the larger contributor to the year.” 

Speaking about global AdEx, Balsara says that mainly the 12 largest markets, is now estimated at $ 498 billion s with India at $ 9.7 billion. "Interestingly India grew by more than twice the average global growth rate of 5.4 %, however, we lost our pole position of being the fastest-growing advertising market in 2019 to Russia and slid to the second position,” he says.

He adds that despite taking many knocks during the year, TV continues to be the largest contributor to Adex with a 37 percent share and it grew by 8 percent, the 3rd lowest growth rate in a decade. Print follows with a 30 percent share of adex but with a low growth rate of just 3 percent in fact 2019 is the fifth consecutive year that print has grown the least of all mediums . "Digital that grew by 32 percent last year now contributes a whopping 23 percent to Indian Adex. I may mention though that globally digital has crossed the 50 percent mark," he points out. 

As has become the norm for the past several years, in 2020 too, as a medium digital is seen leading the growth at 28.4% and ending the year with 27% share of Adex at almost Rs 20,000 crore (precisely Rs 19,854 crore). TV will continue to be the largest medium with a 36% share of AdEx, but will have a subdued growth rate of 6.8%. According to the report, print will lose 3 percentage points in terms of share of Adex and end up with a 27% share, yet registering a 2% growth. 

Please find the detailed report here.

Following are the highlights from the report:

TELEVISION: SPORTS, ELECTIONS SAVE THE DAY
Television grew by only 8%, lower than the projection of 11%, adding Rs 1,860 crore to Adex in 2019, to reach a size of Rs 25,291 crore. FMCG, Telecom and e-commerce are the top categories in terms of ad spends on TV. In 2020, Television is expected to grow 7% to reach a total figure close to Rs 27,003 crore, on the back of IPL, ICC T20 Cricket World Cup and Hindi GECs’ premium shows.

DIGITAL: THE BIG GROWTH ENGINE OF ADEX
Digital grew by 32.1% in 2019, adding Rs 3,762 crore to Adex, to reach a size of Rs 15,467 crore. It now contributes a whopping 23% to Indian Adex.

Digital is expected to grow by 28% in 2020, to reach Rs 19,854 crore and possibly overtake Print to claim the second place next only to Television in the Indian Adex.

Looking at Digital Adex by various verticals, the report finds that it is more or less equally divided between four major segments - Search, Social, Video and Display, with each contributing between 20 to 30% to the total. Consumption of video is going up year-on-year and in 2019, video ad spends grew by as much as 59%, beating the Digital Adex growth rate of 32%. The Video vertical is now the highest contributor to Digital Adex at 30%, and almost all of Digital Adex (94%) is on mobile. 

Within Online Video, YouTube has the largest share, but OTT is now 20% of the pie and growing faster than YouTube. Today, there are 40+ OTT players in India. While this number continues to grow, we will possibly see a consolidation story starting to emerge in 2020. 

PRINT: BEATING GLOBAL TRENDS, AND GROWING

Print Adex grew 3% in 2019, lower than the projection of 5%. Despite this, it continues to be the second-highest contributor to Adex, after TV, with a share of 30%, and has added Rs 588 crore to it in absolute terms. In 2020, the Print advertising market is expected to grow by 2% to come close to Rs 20,446 crore.

FMCG, Auto, Education, Real Estate and Retail continue to be the highest contributors at 50% to Print Adex in 2019.

OOH: SLOW MOVING TRAFFIC
The Out of Home (OOH) advertising market grew by 4% in 2019 and now stands at Rs 3,495 crore, contributing 5% to overall Adex. Organized Retail, Consumer Services and Real Estate continue to be the top three categories spending on OOH. In 2020, Outdoor advertising is expected to grow by 6.4% to reach a size of Rs 3,720 crore.

RADIO: WEAK SIGNALS

Radio grew 5.4% in 2019, adding Rs 116 crore to Adex, to become a Rs 2,260 crore market and maintain its share of Adex at 3.3%. In 2020, the Radio advertising market is expected to grow by 5% to reach a size of Rs 2,373 crore.

CINEMA: RESSURECTION
Cinema grew by 30% in 2019, taking the cinema advertising market to Rs 1,045 crore; it now contributes almost 2% to overall Adex. Greater digitization of screens and hence control over ad playout benefits advertisers, who are waking up to the huge local marketing opportunity of Cinema, expected to grow 20% in 2020, to reach a size of Rs 1,255 crore.

TOP ADVERTISERS OF INDIA IN 2019: DREAM11 - NEW KID ON THE BLOCK
Based on their ad spends the top 50 advertisers of India for the year 2019 have been listed in the report (view report to see list).

The Top 50 advertisers in the country account for 33% of the advertising market.

There are eight new entrants on the elite list. While advertising usually is a game of the Big Boys, and no new advertiser can penetrate the Top 10 list, surprisingly this year there is a rank newcomer making it to the Top 5 list. The new kid on the block is fantasy sports platform Dream11, a cricket-based digital game, ranked No. 3. The other new players (compared to 2018 list) are Oppo, BYJU’S, Swiggy, BJP, MRF, Havells and Kia Motors.

HUL continues to lead the pack with spends of about Rs 3,400 crore followed by Amazon, Dream11, Reliance, Maruti, P&G, Vivo, Samsung, Oppo and Vini to make up the Top 10 list.

Not only did Sam Balsara, Chairman, MD Madison unveil the annual Pitch Madison advertising report, he also left his advertiser community with some food for thought.

Based on a white paper released by Madison last month which highlights what advertisers should do in a slowdown, here is what he recommends:

Sam Balsara, Chairman and Managing Director, Madison World, shared his ten recommendations for the advertising community.

1) Temper Expectations from the rural markets:
The first recommendation is to temper expectations from rural markets for 2020. This is because for the first time in 7 years consumer growth is slower in rural areas than in urban markets.

2) Pick your markets:
We advise to pick your markets carefully because all states in India are not going through a slowdown with the equal intensity. Markets that are less affected by the slowdown are Kerala, Karnataka, Andhra Pradesh, Telangana, Tamil Nadu, Delhi, Haryana, Punjab, Maharashtra and Gujarat.

3) Go for premiumisation:
In the current context it makes sense to go for premuimisation. Because the well-heeled and the salaried are less affected by the slowdown. So, while generally the advice for a country like India is to go mass, we believe that in the current circumstances, as a short time measure, premiumisation may be a good idea.

4) Focus on modern trade and e-commerce:
Share of modern trade has crossed the threshold of 10 per cent. E-commerce is expected to grow from 2 per cent in 2019 to 5 per cent in 2022. So, you need to be prepared to ride this growth.

5) Invest in Brand Love:
Don’t succumb to temptation of running promotions but build brand equity. Invest in brand love. It is tempting in a slowdown for advertisers to resort to short-term promotions but our advice is to not succumb to such temptations and in fact focus on building brand equity at a time like this.

6) Manage Brand Portfolio:
Adopt brand portfolio management approach to maximise ROI and we believe this can be done very successfully with the use of analytics to help maximise your ROI.

7) Do not under-invest:
If you invest below the threshold point, the entire advertising budget is wasted.

8) Play E-SOV game:
Excess share of voice (over share of market) has a high co-relation with brand share growth so try and achieve that in the current context and you have a better chance of winning that share.

9) Milk existing assets:
Most advertisers change creatives too early before copy wears out.

10) Make TV and digital your ‘go to’ media:
Without TV, standalone ROI of digital campaigns comes down. And digital adds to incremental reach of TV at higher frequency at lower costs.

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