GroupM report: Ad revenue to touch Rs 57,486 cr, up 15.5 pc in 2016

GroupM has released its advertising expenditure report 'This Year Next Year' (TYNY), which forecasts India’s advertising investment to reach an estimated Rs. 57,486 crores in 2016. 

This number – which represents advertising revenue earned by media owners – represents an annual growth of 15.5 per cent in 2016.

Calendar year 2015 is expected to have registered growth of 14.2 per cent over 2014, with revenue of Rs 49,758 crore.

The third edition of the report was released at an event in Mumbai on 19 January 2016.

TV will continue to command the largest share of all advertising revenue in 2016, according to the report. Growing 17.6 per cent, it is expected to account for 47 per cent of total ad revenue earned.

Newspapers are expected to grow at a slower clip, at 6 pc, and account for nearly 30 pc of all ad revenue.

While magazines are expected to degrow from an estimated Rs 675 cr in 2015 to Rs 575 cr in 2016, digital is projected to touch Rs 7,300 cr in 2016, growing at 47.5 pc.

Digital’s share of all ad revenue will grow from 9.9 pc in 2015 to 12.6 pc in 2016 (not accounting for SME spends), according to the study.

Highlights by media:

CVL Srinivas, CEO, GroupM South Asia, said, "There are a number of positive factors that will help the Indian ad sector grow at higher levels in 2016. While FMCG, auto and e-commerce which have been the top sectors contributing to ad growth in 2015 will continue to invest, telecom, BFSI and the government sector will see a ramp up. Events like the T20 World Cup, IPL and many State assembly elections will give a further impetus to ad spends. While digital will remain the fastest growing platform, India is one of the few large markets where all traditional media platforms will show positive growth.”

FMCG to contribute 28 pc

The report estimates that FMCG will remain the most dominant sector contributing 28 per cent share of ad revenue in 2016. Despite facing volume pressure, the sector is expected to continue ad investment aided by the softening of commodity prices.

Another big contributor to the Indian ad spend in 2016 will be the auto sector, accounting for 8.2 per cent of ad spends on the back of multiple launches across 4-wheelers and 2-wheelers, according to TYNY. 

E-commerce ad revenues are expected to be 8.1 per cent of the total on the back of increasing competition, market expansion and newer players entering the space.

Another exciting development, according to GroupM, is the opening up of e-commerce as a platform for advertising, which will see further traction in 2016. 

With the advent of 4G services in India, telecom service providers are expected to roll out extensive marketing campaigns across media. This roll out will also see global and domestic handset manufacturers launching new models of 4G/ LTE handsets. 

Cross-screen campaigns

Lakshmi Narashimhan, chief growth officer, GroupM, South Asia, said, “With digital media achieving audience reach numbers that are next only to television, multi-screen planning is the order of the day. We have seen focused targeting of digital and native advertising with programmatic buying over the last two years, and this momentum will continue in 2016, as automation increases."

A significant part of digital growth is expected because of higher investments in cross-screen campaigns.

Milind Pathak, COO, Madhouse, added that while mobile increases in significance, marketers will demand higher accountability in mobile. He said, “Gone are the days people say that I just want my app to be downloaded. They want some kind of returns. The ecosystem will work towards developing common metrics and standards to address the needs of marketers.”