PMAR 2019: Cheer for industry; ad market likely to grow 16.4%
General Elections and sporting events like the ICC Cricket World Cup to drive ad revenues, says the 17th Pitch Madison Advertising Report
Published - 13-February-2019
The 17th Pitch Madison Advertising Report (PMAR) 2019 has given the Indian Media and Advertising industry a big thumbs up. The sector is on a high growth path, and appears to be finally reaping the benefits of demonetisation and the Goods & Services Tax (GST), says the report that was released on Wednesday.
In 2018 when Balsara presented the report, he said he was cautiously optimisitic about 2018, and indeed the year gone by has brought back the omptimisim for the industry. Surpassing the projected growth rate of 12.03 per cent for 2018, the advertising industry has grown by 14.6 per cent, and the bullishness is set to continue in this election year. Recalling an old Thums Up ad "Happy Days are here again," Sam Balsara, Founder, Chairman and Managing Director of Madison World and Madison Communications said that "in 2019, the market is expected to grow by 16.4 per cent, adding Rs 9,980 crore to the ad-ex, taking it to an all-time high of Rs 70,888 crore."
After the two dull years of 2016 and 2017, this bullishness will come as refreshing news to media owners.
As per the report, four of the top 10 advertisers were from the FMCG sector but the list also includes advertisers from other categories such as Telecom, Auto, e-Commerce and consumer durables. HUL, Amazon, P&G and Reckitt Benckiser continue to be the top four advertisers of India in 2018, as they were in 2017.
A large number of shifts in the pecking order have been noticed, with 26 advertisers gaining rank and 16 advertisers dropping rank. Among those who moved up many ranks were Flipkart, Reliance Industries, TVS Motors, Honda Motors, Google, Vodafone, and Airtel.
Patanjali which had entered the top 5 advertisers list last year dropped 27 places is down to 32 as per the latest report. The FMCG company backed by Baba Ramdev which has been giving stiff competition to multinational FMCG brands seems to have halved its spends from Rs 500-600 cr per annum to Rs 200-300.
Sam Balsara's Advice to Advertisers:
As per tradition, Balsara shared three guidelines for advertisers as part of his presentation on Wednesday. "Conquering one market and then moving to another seems like a powerful way to build an impregnable all India brand in India. Because India is a large and diverse country, media is getting expensive and fragmented. Rome, afterall cannot be built in a day," he said.
Balsara said that brands should not ignore the local/regional brands that are cropping up in the market. "Today's regional brands are tomorrow's national brands. The number of national brand with humble beginnings is increasing in India."
Finally, alluding to the recent development of Madison winning back the Marico business from Lodestar, Balsara said, “Please don't throw the baby out with the bathwater. Don't get carried away by consultants who advice you to call for a pitch and through that offer you a 20 percent savings in media pricing. There is unfortunately no quick-fix solution. Two of three Madison clients who had called for a pitch had to call for a pitch again in just one or two years. Every agency is as good as you make it out to be and as you are. A good agency can become a large agency; a large agency doesn't automatically become a good agency.
Read the full report here.
Or read the excerpts below.
TV makes a good recovery
According to the Pitch Madison report, TV is expected to grow further by 18 per cent in 2019. The overall market sentiment looks in favour of the TV industry, which has recovered from the blow that it suffered due to demonetisation and imposition of GST. The key factors that will lead to this high growth are:
• The general elections and sporting events like the ICC Cricket World Cup will drive ad revenues this year
• Many regional parties are also expected to spend substantially on TV in the pre-election period
• Star Sports selling IPL and ICC Cricket World Cup across TV and Hotstar to cross last year’s high revenue
• Growth coming from FMCG on the back of rural demand and new launches
• New launches in the Auto sector
The report also says that the confusion over the TRAI New Tariff Order will not cause as much disruption to the ad-ex like during the implementation of the Digital Addressable System in 2012.
Print continues to grow
Print has continued to be the second highest contributor to Ad-ex after Television, with a share of 32 per cent. The report says nearly 75 per cent of Print’s growth has been accounted for by just five categories – FMCG, Education, Auto, Retail and e-commerce. In terms of category contribution, FMCG and Auto are also the largest contributors to the Print pie, with a contribution of 14%, followed by Education at 10%.
The report estimates Print ad-ex to grow by 5 per cent in 2019, taking the Print market close to Rs 20,500 crore. The growth of Print is likely to be aided this year by political campaigns and Government ad spends.
Content is King for Radio
Radio has maintained its share of the advertising pie at 3.5 per cent, growing by 14 per cent in 2018. Real Estate, Retail, BFSI, and FMCG sectors have continued to be the biggest spenders on Radio, contributing 44 per cent to the total Radio ad-ex. In 2019, Radio is estimated to grow by 12 per cent.
Apart from election campaigns, many Radio stations have started experimenting with content and this should catch the attention of listeners.
Cinema to cross Rs 1,000-mark
As per the report, Cinema has grown by 37 per cent in 2018, taking the ad-ex to Rs 805 crore on the back of improved expansion of Digital distribution, infrastructure, and the emergence of multiplexes in smaller towns. Cinema is expected to grow at 14 per cent in 2019, and cross the Rs 1,000-crore mark to reach Rs 1,047 crore.
All good for OOH
In 2018, the Out of Home (OOH) market grew by 9 per cent and now stands at Rs 3,365 crore, the report said. Organised Retail, Consumer Services, and Real Estate have been the top three categories that contributed to OOH. In 2019, Outdoor advertising is expected to grow by 11 per cent.
Digital to grow courtesy video
Digital grew by 26 per cent, adding Rs 2,400 crore to ad-ex in 2018. Video and programmatic advertising have gained ground. Digital advertising is projected to cross the Rs 15,000-crore mark on the back of Video, e-commerce and Regional languages in 2019.
Bullish projection for 2019
The Pitch Madison report is bullish in its projection for the ad-ex in 2019. It says Indian ad-ex would have added in just two years about Rs 18,000 crore, i.e., a growth of 33 per cent and this is an indication that India Incorporated is optimistic about India’s growing consumer market and has confidence that the economy will continue to grow. With such high growth, India is likely to once again become the fastest growing advertising market in the world.