Ad spending in India to accelerate to 15.5% in 2016

Advertising expenditure in India is expected to grow 15.5 per cent in 2016 to touch Rs 57,486 crore with digital advertising expanding at the fastest pace of 47.5 per cent, media agency GroupM, which is part of global advertising group WPP Plc, said in its ‘This Year, Next Year’ report released on Tuesday.

The projected growth is not only higher than the 14.2 per cent growth at Rs 49,758 crore in 2015, but the highest rate of growth in six years.

While digital advertising will account for 12.7 per cent of all ad spending in 2016, up from 9.9 per cent in 2015, print media’s share will shrink from 32.4 per cent to 29.7 per cent, the agency estimated. TV will remain the dominant medium with a 47.1 per cent share, up from 46.3 per cent.

With the recent Netflix service launch in India, 2016 will see Video on Demand (VOD) services gaining popularity in India. The Asia Pacific region is expected to overtake Western Europe as the second-largest market for VOD services by 2020, fueled by rapid growth of smartphones in China and India.

Key drivers of ad growth in 2016 would be fast-moving consumer goods, e-commerce and automobile companies, backed by retail, telecom, banking and finance, and the government.

FMCG remains the most dominant sector with a close to 30 per cent share of the ad-ex. Despite facing volume pressure, the sector is expected to continue ad investment aided by the softening of commodity prices.

“India remains the fastest-growing ad market among all key markets in the world. The year 2015 saw the best in terms of ad-ex growth for India in five years. But if 2016 does see the rate of growth that we have forecast, then it will top 2015 numbers," CVL Srinivas, chief operating officer, GroupM South Asia, said in the report.

There has been an upswing in cinema advertising in the last few years, which will continue in 2016 with an estimated 25 per cent growth in ad spends. Recent acquisitions by larger multiplex chains will help create a far richer viewing experience for consumers, giving brands another avenue to capture their target audience. At present cinema advertising is less than 1 per cent of the total ad spend.

GroupM revises its January forecast in June-July to estimate whether numbers predicted at the start of the year will be achieved.

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