We are more optimistic for the industry than last year: CVL Srinivas, Country Manager, WPP India

GroupM's 'This Year Next Year' report pegs growth at 13% for ad industry; reveals that 2017 was the slowest year in five years

e4m by exchange4media Staff
Updated: Feb 14, 2018 9:00 AM

GroupM added cheer to the advertising world when on Tuesday it revealed its forecast for 2018. According to GroupM’s This Year Next Year report, the industry is expected to grow at 13% over the coming 12 months.“Things are actually coming back on track, positive sentiment is back. We are a lot more optimistic than we were at the beginning of last year; perhaps not as optimistic as early 2015 when we had put out a growth figure of 14-14.5%,” said CVL Srinivas, Country Manager for WPP India and CEO of GroupM South Asia.

As per the report, the estimated ad spend for 2018 is Rs. 69,346 crores. In comparison, ad spends in 2017 grew by only 10% (lowest in 5 years) and was estimated to be Rs 61,263 crores. Srinivas attributed the sluggishness of 2017 not only to demonetisation and GST but also to sectors like FMCG and e-commerce applying brakes in early 2016. He noted that in mid-2016 ad spends in e-commerce almost dried up due to rationalisation in the sector, lot of smaller players exited, lost of big spenders became more judicious. 
“The FMCG sector, which accounts for a third of the ad-ex slowed down due to market pressures, and these were followed by some structural changes by the government,” he said.

Srinivas also said that in comparison to other markets like China, India is one where all media are growing, albeit at different rates. “One end of the spectrum we have digital which is growing at 30%, at the other end we have print at 4%. We have seen that to deliver an effective marketing strategy in a complex ecosystem like India we need to have a judicious mix of all media. When you compare these numbers to other markets like China, India stands out as an unique market,” he said.

Presenting the This Year Next Year, Lakshmi Narasimhan, Chief Growth Officer, GroupM South Asia, noted, “In 2017, India was ranked 11 globally in terms of ad-spend, our estimate is that in 2018 we will be ranked 10. In 2018, there will be USD 23 bn incremental ad spend; India will contribute to 5% of this spend with US and China leading the pack at 27% and 19% respectively.”

Digital is expected to make up for 17.8% of the total ad spend in 2018. “Within digital, video is growing at the fastest rate - 54% growth - followed by display and search. India being a mobile-first market, almost 70% of all ads are targeted at a mobile device and that will grow at 40%, compared to the growth of ads for desktop which will grow at 10%,” said Narasimham.

Video, Voice and Vernacular

GroupM’s top leadership also highlighted the trends for 2018 that will drive business and lead innovation. Tushar Vyas, Chief Strategy Officer, GroupM, said that 2018 will see a heightened focus on accountability with the development of newer processes and technologies. “Generally, India a is a low ad-tech country. That is now changing, there is investment in the right amount of ad tech to measure accountability. This happening at the level of cleaning up the digital value chain, and measurement of ROI,” he said. He went to add that e-commerce is playing the role of a change agent that cannot be ignored in terms of consumer behaviour. Video, voice and vernacular will play an important role shaping the industry in 2018. “New growth will come from vernacular and by 2020 two-third of Internet users from India will be vernacular,” he said. Voice will also change the digital ecosystem, and video consumption will continue to see high consumption, he said.

Of Sports and Movies

Sports lovers will finally get to see the launch of VR and AR in the digital ecosystem, said Vinit Karnik, Business Head, ESP Properties. Technology will be able to simulate a real stadium-watching experience for viewers from the comfort of their homes, “that will propel a growth in audience and building a sporting community in India,” he noted. He also said that 2018 will see the growth of off-season, non-live sporting content, especially in the context of the IPL which is now a mature league. The other big change that the industry will see in 2018 will be the launch of movies on OTT platforms first, “this will change the dynamics of how movies are written and produced,” Karnik said.

Influencers and Branded Content

Branded content became a whole new entity in 2017, going forward branded content will begin to “mean more than just one idea for a video,” said Karthik Nagarajan, National Director, Content & Social Media, GroupM. “The definition of branded content will expand to include sponsorships in sports, activations, and TV, Radio, and Video strategy as well. This will become more of a journey and therefore the metrics that content will be measured against will no longer just be engagement but business goals.” He said that a lot of investment will now go into data and analytics to understand the real impact of content in the purchase channel. Pointing out what went wrong with influencer marketing, Nagarajan said that “We were looking at them as a means of amplification, that will change in the next couple of years and we will begin treating them as content creators and talent.” Click Here:http://exchange4media.com/TYNY_2018.pdf

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